Plans are being finalised for increased tariffs to be paid under the Renewable Heat Incentive (RHI) in NI next year, a senior civil servant has said.
“We are seeking approval from the Department of Finance for the solution we propose. We are very much focussed on trying to deliver this for 1 April 2024,” said Richard Rodgers from the Department for the Economy (DfE).
Speaking to MPs on Wednesday, Rodgers cited a court ruling from February 2023, which stated that “compensation or provision of a revised tariff” should be offered to RHI participants who have faced drastic payment cuts.
He said the revised tariffs would be calculated to bring boiler owners “back on track” to receive a rate of return on their investment of 12%, which was the target at the start of scheme.
Changes to the RHI scheme initially happened in 2017, when tiered tariffs and a payment cap were introduced to avoid a projected scheme overspend. A second set of cuts happened in 2019, which saw annual payments for a standard 99kW biomass boiler reduced from around £12,000 to £2,200.
On Wednesday, MPs were told that RHI tariffs were now so low that biomass boiler owners have reverted back to using fossil fuels for heating.
“It has been brought to our attention that 30% of boilers are turned off and between a third and half of those are poultry,” said Chris Osborne from the Ulster Farmers’ Union.
Officials from DfE previously argued that current RHI tariffs were low because most participants had already been fully compensated for their initial investment before the first tariff cuts were introduced in 2017.
However, in his evidence to MPs, DfE permanent secretary Mike Brennan signalled a different approach was now being taken to setting revised RHI tariffs.
“We have parked that behind us. Where we are now is looking at what we do going forward in terms of tariffs, so participants can achieve the rate of return they expected to achieve,” he said.
Officials from DfE rejected calls for tariffs under the NI scheme to be based on the RHI scheme in Britain, where much more generous payments are available.
MPs were told there were differences between NI and Britain in the costs associated with biomass heating, such as fuel running costs and the initial capital cost of boilers.
“There will have to be differences in the tariffs between Larne and Stranraer to reflect those differences,” Brennan said.