Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, on what basis levels of biomass subsidies have been set under the (a) Renewables Obligation Certificate, (b) Contracts for Difference, (c) Feed in Tariff and (d) Domestic and Non-Domestic Renewable Heat Incentive; and if he will make a statement.

The basis on which levels of support provided to biomass technologies is calculated varies according to each scheme.

(a) Legislation[1] requires a series of factors to be taken into account when setting Renewables Obligation (RO) support levels, including the generation costs and revenues for each technology; the desirability of securing long-term growth and industry viability as well as costs to consumers and impacts on the market for Renewable Obligation Certificates. The most recent comprehensive review of RO support levels was completed in 2012[2].

(b) Strike prices awarded to successful projects in Contracts for Difference (CfD) allocation rounds are determined through a competitive bidding process[3]. Strike prices for biomass projects that were awarded contracts under the Financial Investment Decision Enabling for Renewables programme, an early form of CfDs, were set out in the Electricity Market Reform Delivery Plan and Annex B: Strike Price Methodology [4].

(c) In the last review of Feed-in Tariff levels for Anaerobic Digestion projects undertaken in 2016[5], a return on investment of 9.1% was assumed.

(d) Renewable Heat Incentive (RHI) tariffs are set to compensate generators for the added cost of renewable heating, over and above what would have been paid otherwise. For a given installation, the lifetime cost of the renewable technology and the alternative system (e.g. oil boiler) are considered. The RHI tariff is then set using an economic model so that the rate of return targeted for the applicant population is achieved over the full lifetime of the heating system.

[1] Section 32D(4) of the Electricity Act 1989, as amended by the Energy Act 2008.

[2] Renewables Obligation consultation at: https://www.gov.uk/government/consultations/renewables-obligation-banding-review

[3] https://www.gov.uk/government/publications/contracts-for-difference/contract-for-difference

[4] Electricity Market Reform Delivery Plan and Strike Price Methodology Annex: https://www.gov.uk/government/publications/electricity-market-reform-delivery-plan

[5] https://www.gov.uk/government/consultations/review-of-support-for-anaerobic-digestion-and-micro-combined-heat-and-power-under-the-feed-in-tariffs-scheme