DECC has now published its Quarterly Domestic RHI forecast (as at 30 April 2015). As a result, the degression ‘super trigger’ for biomass has been passed. This means the current biomass tariff of 8.93p per kilowatt hour will be reduced by 20 percent for all new applications made from 1 July 2015. Similarly, the small-scale biomass tariff in the non-domestic scheme will degress by 25 percent from the same date.
We have seen from previous degression announcements that the rather predictable market reaction is that forward demand is accelerated to ensure householders get the higher tariff and the month following the announcement sees a resultant dip in demand.
The news of degression is a double-edged sword. Of course, the risk to consumer confidence and demand is obvious. On the other hand, degression must mean demand has exceeded the original forecast which is good news.
Perhaps most encouragingly, the latest figures for uptake of solar PV have recently been published; a market which has seen the same roller coaster experience of regular degression. Overall, solar PV capacity at the end of 2014 stood at 5,095 MW – an increase of 79 percent compared to the end of 2013.
This rather shows there is life after degression, as long as degression is manageable. I know that direct comparisons between PV and renewable heat have to take into consideration the differences in complexity and competing technologies but nonetheless, I feel the PV experience is relevant.