Two-tier tariffs

How the two-tier tariff approach specified for biomass boilers works

The two-tier tariff approach is only used for small and medium sized biomass boilers.

Objective

The objective is to provide an adequate level of support across the board without over-supporting systems which have a relatively high load factor.

How the tiers work

In each year the Tier 1 tariff is paid until the system has operated up to 15% of the annual rated output (i.e. the equivalent of 1,314 hours at the rated capacity of the installation)

For the rest of the output in the year, the Tier 2 tariff will apply.

This is how the government explained it. It is not clear how this approach will be averaged over the quarterly RHI payments, but the administrator‘s guidance notes will presumably cover this.

An example

A biomass boiler rated at 250kWth operates for 7 hours/day in winter and 3 hours/day in summer, i.e. 1,825 hours in total over the year.

This size of boiler is classified as ‘Medium Biomass’.

It therefore receives the Tier 1 tariff of 4.7p per kWh for the first 1,314 hours

and the Tier 2 tariff of 1.9p per kWh for the other 511 hours

• 1314 x 250 x £0.047 = £15,439.50
• + 511 x 250 x £0.019 = £ 2,427.25

Making a total of £17,866.75 per annum (plus inflation adjustment)