FAQs
What do the ‘tiered’ tariffs mean?
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Chapter 6 of the government's RHI announcement says
Tariff boundaries
A further, different type of tariff boundary applies within the small and medium-scale biomass tariffs. We are providing "tiered" tariffs in these two segments. This means that biomass installations covered by these tariffs will, each year, receive a higher tier 1 tariff for the initial proportion of their generation, followed by a lower tier 2 tariff for any generation exceeding the amount of heat covered by tier 1. We are adopting this approach to avoid any incentive to generators to generate excess or wasteful heat purely to maximise RHI payments.
The "Tier Break" – i.e. the point at which the tariff switches from tier 1 to tier 2 - is set at the amount of heat corresponding with a 15 per cent load factor of the installation. This means that if an installation generates over the year a quantity of heat equal to running the installation at full capacity for 15 per cent of the year, it receives the tier 1 tariff for this quantity of heat; any additional heat would be compensated by the tier 2 tariff. A 15 per cent load factor corresponds with 1,314 peak load hours (i.e. running the installation at full, or peak capacity for 1,314 hours over the year), and represents our estimate of a reasonable minimum level of usage that we would expect from a renewable heat installation used for space heating.
