Notice

17 August 2020: Changes to RHI support and COVID-19 response: further government response

Updated 3 April 2022

Applies to England, Scotland and Wales

Background

This page sets out the government’s intention to enact further changes to the Non-Domestic Renewable Heat Incentive (NDRHI), to aid installations impacted by COVID-19 related delays. It requests industry views on the evidence that applicants may be able to provide, to demonstrate they have invested capital in either construction or pre-build development, as well as the time needed to complete and commission projects.

On 30 June 2020, the Department for Business, Energy and Industrial Strategy (BEIS) published a response to the notice changes to the Renewable Heat Incentive Schemes and COVID-19. This response outlined changes to the Renewable Heat Incentive (RHI) schemes, following announcements made by the Chancellor of the Exchequer as part of the budget. Additionally, proposals were outlined that were designed in response to the impact that COVID-19 is having on NDRHI projects’ ability to meet predetermined commissioning deadlines as set out by the current Tariff Guarantee (TG) scheme.

A number of respondents to the initial notice highlighted that there were existing non-TG eligible projects that would likely struggle to apply for accreditation before the NDRHI closure deadline of 31 March 2021, as a result of COVID-19 related delays.

In response to this, BEIS now intend to make further changes to the NDRHI, in order to aid those non-TG eligible projects that have invested capital into project development that will not be able to accredit to the scheme prior to its closure. These projects will be afforded an additional 6 months after scheme closure (on or before 30 September 2021) to submit a properly made full application for accreditation, providing that they submit to the scheme during a window opening March 2021 an ‘extension application’. This will be a new form of application for accreditation with evidence requirements, to be specified in the regulations, to show that the project was under development prior to the publication of this notice. It is expected that the evidence requirements will be similar to those of a full application for accreditation with some key exceptions, such as removing the requirement for evidence that a plant has been commissioned.

As part of the extension application, there will be an additional requirement for evidence that the applicant had invested capital in the project prior to the publication of this notice, in order to ensure that this measure is targeted at those most in need of aid as a result of COVID-19 related delays.

This notice outlines the specifics of how this mechanism is intended to work, highlighting both the evidence usually required for a full application which applicants will not be required to submit as part of an extension application and that evidence which will still be required when submitting an extension application. It then outlines the intended pieces of evidence that will be accepted by Ofgem, the scheme administrator, as demonstrating that a project was under development prior to the publication of this notice. Additionally, it requests views from industry on what evidence could be provided by projects which are under development and which will not be able to demonstrate one or more of the outlined evidence requirements.

This mechanism will not be available to TG eligible installations as changes to TG deadlines and the introduction of the 3rd allocation of TGs (TG3) already afford eligible installations significant additional time in which to commission after the closure of the NDRHI. Those that are eligible to apply for TGs may apply for TG3 and benefit from the extended commissioning deadline that it offers and as such are outside the intended objectives of this policy.

The mechanism

This route is intended to be available to non-TG eligible NDRHI installations. As such it will exclude:

• solid biomass combined heat and power (CHP)
• geothermal and biomethane applications of all sizes
• biomass greater than or equal to 1MWth
• biogas greater than or equal to 600kWth
• ground source and water source heat pumps (including shared ground loops) greater than or equal to 100kWth

It is intended that in the final month of the scheme (March 2021) applicants will have the opportunity to apply for the proposed 6 month extension by submitting a properly made ‘extension application’. It will be noted that at the time of application, there will be the usual accreditation evidence requirements that will not be able to be provided, such as the following:

• installation commissioning evidence
• finalised schematic diagram
• finalised heat loss assessment
• finalised heat use information

Evidence to support an extension application must be provided no later than 31 March 2021 and should be as complete as possible. Provisional schematics, provisional heat loss assessments and evidence of intended heat use will be expected to be provided to secure the extension being proposed.

The government intend to set out in the regulations the exact evidence requirements for an ‘extension application’ based on feedback to this notice. This will be announced via the government response to this notice.

If a properly made extension application is submitted in this window, applicants will then have an additional 6 months after scheme closure (on or before 30 September 2021) in which to commission their plant and submit a full application for accreditation. 6 months is a period deemed to correlate to the length of the full Great British-wide lockdown, plus some additional time to account for delays to project timelines caused by other factors, such as potential supply shortages and reduced productivity as a result of social distancing measures.

It is intended that tariff rates will be set as of the date of application for an extension application. As with TG3, it is intended that payment windows will open at the point of scheme closure, but payments will only begin once a properly made full application for accreditation is submitted. Payments will end on 31 March 2041. This means that applicants that accredit via this mechanism will receive 20 years of payments minus the length of time it takes to submit a properly made application for accreditation.

Question 1

Is 6 months enough additional time for projects to be able to commission and submit a full application for accreditation after scheme closure?

Question 2

Are there any other pieces of evidence, in addition to those listed, that applicants will not be able to provide that are normally required as part of an application for full accreditation?

Intended evidence requirements

As part of their extension application, applicants will be expected to provide evidence that they had incurred costs associated with project development prior to the publication of this notice. This is to ensure that this measure is directly targeted at those projects most in need of aid as a result of COVID-19 related delays.

BEIS understands that there are significant variations between projects and across technologies as to what investment of capital in development may look like. As such we are seeking information from industry on what evidence they would be able to provide if they are not able to demonstrate one or more of the below pieces of information. It is the intention of the department to develop evidence requirements to cover the fullest range of development scenarios, whilst still maintaining a sufficiently high bar to entry to ensure that extension applications are only granted to projects that are indeed under development at this time.

Evidence that it is intended will sufficiently show that a project has already invested capital in development, prior to the publication of this notice, are:

• a dated invoice for construction works relating to the installation
• a dated invoice for the commissioning of pre-build development work relating to the installation
• a dated application for planning permission
• a dated email/letter evidencing that a project falls under permitted development and does not require planning permission
• a dated invoice(s) for the purchase and installation of equipment relating to the installation

Question 3

Should an applicant not be able to demonstrate one of the above pieces of information, what other forms of evidence might be appropriate to demonstrate that an installation was under development prior to the publication of this notice?

Budget

It is intended that there will be a separate allocation of funding within the NDRHI funding envelope to specifically cover this measure. The size of this budget will be based on the recent pre-COVID deployment trends.

It is intended that, as with TG3, technology specific budget headrooms will be set and published by BEIS. These will be distinct from the TG budget headrooms. These will be set in line with the technology profile of recent deployment. This is in order to ensure that no one individual technology is able to utilise an oversized portion of the total budget for this measure and block other technologies from having fair access to this funding. Budget headrooms will reflect the estimated number of projects of each technology affected by COVID-19 related delays.

Further details on budget for this measure will be published in the government response to this notice.

Please send any responses to RHI[email protected] by 7 September 2020.