Biomass RHI degression

I've just had a notice from the MCS people alerting that the RHI may be subject to degression in January 2015.

Though a degression was anticipated, this early timing was not and will be a shame, as the RHI only goes some of the way to pay for a decent Biomass system at the moment and only if using cheaper low end biomass boilers such as MCZ or Red.

As most interested parties have now found, the RHI is not anywhere near the incentive that was promised. Once the cost of a Green Deal Assessment and loss of earnings in taking time off work for contractors is taken into account, the payout will not get anywhere near paying for a boiler change in 7 years.

The RHI promise will only work out if oil prices rapidly rise, over the last year though oil prices have fallen around 20%.. Though strangely (and predictably) this lower cost has not been passed onto the consumer… So that RHI plus oil price financial model is not working out, thus slowly killing off any domestic biomass installation and supply companies.

Transcript of the MCS notice today:

Dear MCS Biomass Installer,

We would like to make you aware of the latest announcement from DECC concerning a potential degression in the biomass Domestic RHI tariff, which, if triggered, would come into effect on 1st January 2015.

The statement from DECC in the most recent review said, “For biomass, forecast expenditure increased by £1.0m in September, and as at 30 September 2014 is £4.0m. This is £0.2m below its 31 October 2014 degression trigger of £4.2m. If this trigger is surpassed, then a 10 per cent reduction to the domestic biomass tariff will be announced in next month’s quarterly forecast (to be published by 1 December 2014), to come into effect on 1 January 2015.”  Please go to https://www.gov.uk/government/statistics/domestic-rhi-mechanism-for-budget-management-estimated-commitments#history for the full degression report.

This potential degression would only apply to applications submitted from 1st January 2015 by new applicants. Those already receiving payments will not be affected, neither will legacy applicants (those who installed before  9 April 2014). We would remind those with consumers in the legacy group, that they have until 8 April 2015 in which to apply to Ofgem; after which the window for legacy applicants will close.

MCS would like to remind all installers:

·         To register all certificates within 10 working days of the commissioning date.

• That MCS certificates must only be issued once the system is fully commissioned. Installers should not be tempted to issue them in advance to help a client ‘beat’ degression.

·         The timescales around processing Extended Access requests will not change. All these requests should be received well in advance of the degression date.

·         That the applicable domestic RHI tariff rate will be based on the date that an eligible and complete application is submitted to Ofgem, not the commissioning date of the MCS installation certificate. A complete application submitted to Ofgem must include valid MCS , EPC and GDAR certificates and applicant bank details.  Please ensure your customer is aware of this and that you have provided all paperwork to them in advance of the deadline. 

·         To please advise consumers to speak with the Energy Saving Advice Service on 0300 123 1234 (pre application enquiries) or the domestic RHI line at Ofgem on 0300 003 0744 (post application enquiries) to discuss any concerns or queries they may have about RHI payments. MCS cannot answer these questions.

·         That MCS will likely see an increase in enquiries during this period so please be aware that you may experience longer queuing times on the phones. If your enquiry is not urgent, we would strongly recommend emailing the helpdesk (mcs@gemserv.com) for a response and we will process enquiries as soon as possible.