Pixie Energy’s analysis on the RHI tariff degression for large biomass and biomethane

The Department for Business Energy and Industrial Strategy (BEIS) announced that it would reduce the tariff level for large biogas and biomethane installations through degression on its non-domestic Renewable Heat Incentive (RHI) scheme.

The graph below highlights the eight categories and the forecast expenditure in comparison to the budget cap in quarter four (October – December).

Ken McRae, General Manager at Pixie Energy said:

A graph showing foretasted expenditure threshold by technology

“The fourth quarter figures show the forecast expenditure for large biogas and biomethane exceeded its budget cap of £395mn by a substantial £31mn. This was partly due to the continued high installation of biomethane technology in this quarter.

“On top of this, there were four new biogas installations were also accredited for the first time since January 2018. This higher-than-anticipated accreditation contributed to an increase in BEIS’ forecast expenditure.

“As a result of this, these technologies will experience less favourable tariffs in the future because of degression. For ‘Tier 1’ pricing, biomethane fell from 5.60 p/kWh to 4.76 p/kWh while large biogas fell from 1.36 p/kWh to 1.16 p/kWh.

“Due to the nature of the scheme, it is likely that the demand for large biogas and biomethane technology will shift due to the less favourable tariff rates. As a result, the demand for other technologies is likely to see a boost including, the scheme’s most popular category biomass.”


About Pixie Energy

Pixie Energy was set up in 2015 to promote change in GB energy market, to the benefit of consumers and communities. It seeks to explore and support commercial innovation and new entry in local energy markets based around smart, flexible technologies.