Changes to the non-domestic Renewable Heat Incentive (RHI) that introduced tiered and capped payments to around 1,800 biomass boiler owners have taken effect earlier than most claimants expected.

Legislation for the changes came into effect on 1 April 2017, but the new rates apply from the date of the last anniversary of each biomass boiler’s installation.

For biomass boilers between 20kWth and 199kWth in size, the new rates involve a 6.7p/kWh tariff paid for the first 1,314 hours of heat produced each year with 1.5p/kWh paid thereafter up to an annual cap of 400,000kWh.

For example, if a boiler was installed on 1 July 2015, the clock started for the first 1,314 hours at the higher rate (as well as the 400,000kWh annual cap) on 1 July 2016 and not 1 April 2017.

“This has been poorly communicated to claimants by the Department for the Economy. Some boiler owners will get a surprise when they see their payments are a lot lower than expected as the new rates began earlier than thought,” one industry source commented.

Costs

For poultry farms, the annual cap means that heating requirements in houses are only covered for part of the year. After this, producers then have to decide to either run biomass boilers at a loss or else switch back to gas heating.

In January, former Economy Minister Simon Hamilton said that the new rates would allow a return on investment of 12% on biomass installations. However, RHI claimants have maintained that this is not correct, and that loans taken out for installations are not covered under the new rates.

A banking source indicated to the Irish Farmers Journal this week that banks were aware of this and will be willing to discuss options to help boiler owners make repayments, but added that they were not concerned about the long-term viability of businesses.

Court

Many RHI claimants are hopeful that the judicial review taken out by the Renewable Heat Association for NI, and scheduled for four days from 13 June in the High Court in Belfast, will see the introduction of tiered and capped tariffs reversed.

If that happens, it could allow time for more loans to be paid off under the original rates as putting new tariffs in place could be a slow process, requiring a public consultation.