Scheme budget management

The Domestic RHI tariffs are set by the Department for Business, Energy & Industrial Strategy (BEIS), formerly known as the Department of Energy & Climate Change (DECC). The mechanism that controls these tariffs is known as degression. BEIS have to keep the Domestic RHI within budget and they do this by lowering the tariff rates for new applicants if uptake of the scheme is higher than the approved budget, by either 10% or 20% according to rules set out in the Regulations.

We report to BEIS on the uptake of the scheme on a regular basis. BEIS publish how much committed spend this equates to and how close to degression triggers each of the technologies are, on a monthly basis, and review whether a trigger has been passed on a quarterly basis. BEIS publish a degression announcement at least a month before any change in tariff is due to take place. Domestic RHI tariff degression can only occur on 1 January, 1 April, 1 July or 1 October of each year; so if there is due to be a degression on 1 January, BEIS must make an announcement by 1 December at the latest. The announcement includes which technologies are affected, and what the new tariff rates for those technologies will be.

If uptake of a technology in a quarter hits a degression trigger, then the tariff for that technology is reduced by 10%. If the uptake in a quarter is much greater than predictions, then a ‘super trigger’ may be hit. If the super trigger is hit, the tariff rate for that technology is reduced by 20%. If neither trigger is hit, the tariff rate remains the same.

Triggers are set individually for each technology type (biomass, air source heat pump, ground source heat pump, and solar thermal) – see Figure 1 for the specific triggers for each technology. If a tariff is reduced because a trigger is hit, a notice is published at least a month before the tariff is due to reduce. We publish all tariff tables on our website.

A tariff reduction only affects people who are applying after the degression date. Once you have joined the Domestic RHI, your accreditation stays on the same tariff rate for the full 7 years of membership (subject to the Retail Prices Index or Consumer Prices Index). If you have more than one accreditation, for example landlords, the tariff for each application is based on when each one was made.

Applications that are being processed when degression occurs and which meet the scheme eligibility criteria are not subject to future tariff changes caused by degression.

If you submit an application but it does not meet the eligibility criteria, or you fail to submit requested information in the time period specified by us, you may have to start again with a new application. The clock would re-set at the date of the new application and therefore the tariff at that date would apply if degression had occurred in the meantime.

Figure 1: Quarterly technology triggers are set at the following levels

  Assessment date (last day of month)
  Jul 14 Oct 14 Jan 15 Apr 15 Jul 15

Oct 15

Jan 16

Apr 16 Jul 16 Oct 16 Jan 17
Biomass boilers and stoves
Trigger (£m) 2.4 4.2 6.0 8.4 11.9 15.5 19.1 22.7 26.3 29.9 33.5
Super trigger (£m) 4.8 8.4 12.0 16.8 23.9 31.1 38.2 45.4 52.6 59.8 67.0
Air source heat pumps
Trigger (£m) 2.4 4.2 6.0 8.4 11.9 15.5 19.1 22.7 26.3 29.9 33.5
Super trigger (£m) 4.8 8.4 12.0 16.8 23.9 31.1 38.2 45.4 52.6 59.8 67.0
Ground source heat pumps
Trigger (£m) 2.4 4.2 6.0 8.4 11.9 15.5 19.1 22.7 26.3 29.9 33.5
Super trigger (£m) 4.8 8.4 12.0 16.8 23.9 31.1 38.2 45.4 52.6 59.8 67
Solar thermal collectors
Trigger (£m) 1.2 2.1 2.9 3.9 5.0 6.1 7.2 8.3 9.4 10.5 11.6
Super trigger (£m) 2.3 4.1 5.9 7.8 10.0 12.2 14.4 16.6 18.8 21.0 23.2

The rules are different for a quarter that has followed a tariff reduction. It will also be necessary to consider whether a ‘growth trigger’, or ‘super growth trigger’ has been met. This is designed to help prevent unnecessary tariff reductions when the market has already responded to a tariff reduction.

Full details of the technology specific tariff triggers and growth triggers are included in the Domestic RHI Regulations.