Huge cuts to payments for boiler owners in RHI scheme

Boiler owners in the failed renewable heat incentive (RHI) green energy scheme face huge cuts to payments under new tariffs.

The Department for the Economy is seeking to slash current rates as its preferred option for the long-term payment structure for boiler owners.

The new set of tariffs, set to come into effect from April 1, will apply to small and medium-sized biomass boilers.

A voluntary buyout option will also be offered to those with low usage or higher than average capital costs that would lead to a low rate of return.

Those who take up the buyout offer will be given a one-off payment equivalent to a 12% return.

The Department for the Economy has said £120 million has been spent on subsidies and it expects to spend a further £70 million.

The RHI scheme led to the collapse of Northern Ireland’s devolved government in January 2017.

It was the subject of a lengthy public inquiry, which heard detailed evidence about the escalating costs to the taxpayer.

The initiative went massively over budget, running to hundreds of millions of pounds.

Renewable Heat Incentive inquiry
The chairman of the Renewable Heat Incentive (RHI) inquiry Sir Patrick Coghlin (Colm Lenaghan/PA)

Inquiry chairman Sir Patrick Coghlin is expected to deliver his conclusions later this year.

Richard Rodgers, head of energy at the department, said: “The department has announced the tariff that is going to be in place after a year of working with businesses in the RHI scheme.

“The work started with us engaging in expert external economic advice and it led to consultation which lasted four months.

“Last month, we issued the consultation report and today we announced the tariffs which will be for the remainder of the scheme for the next 16 or 17 years.

“A small proportion, less than 10% of the participants in the scheme, will not get the target rate of return, which has been set at 12% under the new tariff arrangements, so we are giving them the option of a buy-out and leaving the scheme at this stage.

“We think this will be attractive to the lowest user.”

He added: “This is about tariffs in Northern Ireland, energy is a devolved matter and the tariffs that have been produced had to be taken to the European Commission and we had to ensure that the tariffs published today are state-aid compliant.

“The tariffs are there to support the additional costs of the biomass boiler over the cost of the fossil fuel boiler.

“Biomass is the lowest cost fuel in the market today, it’s cheaper than the alternatives.”

Tariffs for the most popular boiler – 99kwh – have been reduced to 1.7p/kwh, while 100kwh and above boilers have been slashed to 1.2p/kwh.

The department will need new legislation to introduce these tariff changes.

Department officials have written to the Northern Ireland Office requesting the Secretary of State Karen Bradley brings the legislation to Westminster, which would give effect to its preferred option.

The department also said it has seen no evidence to support previous claims the changes made in 2017 regulations would result in significant job losses.

A total of 258 RHI users responded, the majority of which wanted the original 2012 tariff.

The department, however, said there was “little evidence” from respondents that this would be justified.

Concerns have been raised by those who signed up to the scheme, who say reduced tariffs have led to major cash flow issues.

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