Civil Service defends RHI scheme incentive cuts

The Renewable Heat Incentive (RHI) scheme was designed to support businesses taking on eco-friendly heating systems; however, drastic cuts to the funding are threatening the scheme’s future, with severe implications for both the businesses committed to it and for the government.

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Alarmingly for many, the cuts look to have been fast-tracked through parliament, with average payments plummeting. The average payment for a boiler has dropped from around £13,000 to just £2,000, leaving businesses claiming that they have been placed at a commercial disadvantage as a result. Unsurprising, scheme members are furious at the seemingly punitive changes.

The RHI scheme was launched in 2012. With massive subsidies, there was soon a potential bill of as much as £490m facing taxpayers in Northern Ireland.

The scheme was intended to offer business and commercial users an incentive to move away from burning fossil fuels in their heating systems, opting instead for renewable energy choices such as solar panels or burning sustainable wood pellets. The scheme was designed to offer financial support over the long term to fund the installation of these new systems and was expected to last for many years.

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Public consultation

Following a public consultation, it seemed that there was little option other than to comply with EU rules about state aid for private companies; however, the proposal was rejected by the European Commission. The tariff was instead limited to a lower rate of 12 percent rather than the proposed 19 percent return on boiler investment.

Scheme differences between Britain and Northern Ireland

There are claims that the scheme is more lucrative in Britain than it has been in Northern Ireland, with companies that offer Gloucester boiler installation, such as, happy to offer advice. Biomass boilers continue to offer cheaper fuel than other options. Ofgem also has more information on the RHI scheme.

Customers who feel that they have been hard done by can appeal the decision to an independent chairperson, with a ‘hardship unit’ being considered for cases that are brought to the chairperson’s attention.

There are claims that wood pellets are more expensive than some of the more ‘mainstream’ alternative choices of fuel, so it is not always cost-effective for businesses to choose them. Firms are now waiting for the Westminster committee to publish its report.