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Waste and some wood drying dropped from RHI
30 January 2018 by Luke Walsh , Be the First to Comment
UK: Government now "urgently" needs to pass delayed RHI legislation, say trade associations
The UK government has published a long-awaited response to its consultation into overhauling the non-domestic renewable heat incentive (RHI). The response says the government will take away funding for drying of certain wood-fuels and of waste.
The response, published yesterday, comes from the consultation originally launched in December 2016. But the work was put on hold, following last year’s General Election, prompting the biogas and biomass sectors to both say delays were hitting businesses.
According to the response, there are "few benefits" to allowing waste to be dried by RHI supported installations and it will no longer support this practice. The government said it also wanted to avoid applicants claiming they are not drying waste but cleaning or processing it.
The government will also remove wood-fuel drying as an eligible heat use other than where the renewable heat installation is replacing a fossil fuel heat source. A transition period will be included to allow a wood-fuel drying plant that are in development to be accredited, according to the reponse.
But the response also stated the government was "content" to retain the drying of "other, non-woody" biomass as an eligible heat use.
The majority of these change will apply to new and to existing RHI-supported facilities, which add capacity on or after the date the reforms come into effect. This is currently "anticipated" to be spring 2018, according to the reponse.
Two respondents to the consultation also said wood-fuel production was subject to the economic rule of supply and demand and sector will only grow where there is demand for the product.
However, a number of respondents also expressed concern that as long as RHI payments are made to participants drying wood-fuel, the market will grow to "beyond the point of demand," according to the reponse.
Around 80% of respondents also agreed there should be "some tightening" of evidence requirements. A number of suggestions proposed including a requirement for applicants to submit a business case to Ofgem and also that Ofgem develop a set of minimum industry standards for different drying processes.
But other respondents expressed concerns introducing an "economic justification test" could "inadvertently lead" to legitimate projects being refused accreditation.
According to trade body the Renewable Energy Association (REA) the response will "strengthen industry safeguards", but it still needs to "ensure innovative companies aren’t punished".
REA and Wood Heat Association policy analyst, Frank Aaskov, said: "We welcome the principle of limiting eligible heat uses to ensure the scheme is used responsibly. The central goal of the RHI is to drive down emissions from the heating sector in a cost effective manner, and we must not be lost sight of that. The RHI is a complex scheme and the new rules will need to be tested and be open to change to ensure innovative companies aren’t being punished."
Anaerobic Digestion & Bioresources Association chief executive, Charlotte Morton, was "pleased" that not all drying practices would be be removed as eligible heat uses. She added: "This avoids the imposition of a blanket rule which, in our view, would have been a knee-jerk overreaction to what are important issues around drying practices.
"The evidence and case studies of fossil-fuel replacement that ADBA submitted to the consultation will have been instrumental in shaping the approach that is being taken forward, and we are grateful to our members in the AD industry for their input into our response."
Morton also said the government now "urgently" needs to pass the delayed RHI legislation that will guarantee higher tariff levels for renewable heat generation and restore confidence to the AD industry, allowing it to make a vital contribution to a range of policy goals."
The government also asked for evidence on removing aquaculture as an eligible heat use. Around 22% of respondents supported this position. However, "strong evidence" for removing it was not provided, according to the response.
It was also revealed last year, by Dr Oliver Quast head of market intelligence at the UK’s Department for Business, Energy and Industrial Strategy (BEIS) that "biomass projects exploited a loophole by adding a small amount of power, to gain the [better] CHP tariff" under the RHI.