RHI tariff structure does not encourage optimal sizing of boilers

This was one of the points raised at a conference conducted as part of this year’s Nextgen exhibition, held at Stoneleigh Park over the 9th and 10th October.

In a session themed ‘The business case for biomass’, speakers highlighted how big users of heat energy can dramatically cut their energy costs and carbon footprint as well as earn a tidy income from the Government’s Renewable Heat Incentive by taking advantage of biomass technology. A number of case studies were examined, including successful installations at poultry farms, breweries, diaries and wholesale nurseries.

However, one speaker pointed out that the structure of the tariff scheme was encouraging specifiers to design towards generating the maximum tariff, not creating the most efficient system.

“Specifiers are designing biomass systems around the benefits available through the RHI rather than what’s good for site,” said Chris Hughes, Sales Director at Imperative Energy.

Hughes pointed to the example of a poultry farm where 16 boilers under 199kW each were used instead of a single 1MW boiler on the basis that the first option fetched a significantly higher tariff rate.

“What they should be doing is designing around the tariff scheme appropriately, specifying the right equipment for the right application,” said Hughes.

Stewart Boyle, who chaired the conference and is also author of the book The Sleeping Giant Awakes: Bio-energy in the UK, echoed Chris Hughes’ thoughts. Speaking to Energyzine, Boyle said: “What you find in the sales of biomass boilers is a clustering around the 199kW mark. Tariffs are driving the market and that’s why you see a huge dead spot above 200kW. Once you get above 200kW, you jump to the large scale tarrif rate and it drops off by 3.3p/kWh, which can make a big difference in a the annual RHI income. Sub-optimal boilers are being installed as a result of this tariff structure.”

Boyle added that a similar problem could be seen in large scale biomass installations, where businesses were opting for boilers that did not exceed 1MW capacity, even when they would be more efficient, since going above that level would see a huge drop in tariff rates.

Former REA Chief Executive Gaynor Hartnell added that the stepped approach to the tariff structure did not encourage best practice. “The way it works gives us ‘cliff edges’, which is a disincentive to size the boiler right. To get the best tariff, some people are putting in under-sized equipment.”

Currently under the non-domestic RHI, small biomass installations (up to 200kW) fetch 8.6p/kWh, medium installations (200kW-1MW) earn 5.3p/kWh, and large (1MW above) receive 1p/kWh. DECC says it is planning to double the tariff for large installations to 2p/kWh.