The government has proposed a compromise deal to soften changes introduced to tariffs for certain biomass combined heat and power (CHP) plants.
In July, the government announced changes to the Renewable Heat Incentive (RHI) tariffs for biomass CHP projects with under 20% power efficiency.
According to the Renewable Energy Association (REA), they were announced with no formal consultation with industry and with only 21 days of notification. It had warned £140 million of low carbon investment would be at risk as a result of the measures.
The government has therefore proposed a transitional period as the industry moves to a lower tariff.
The amendment will see the power efficiency threshold reduced to 10% until 31st March 2017 and will apply to all plants that have qualified for the scheme since the beginning of August 2016.
Speaking in the House of Commons last week, Energy and Industry Minister Jesse Norman said: “We recognise that this revised approach will not remove all the impacts of the change from all projects but we feel it achieves the right balance between delivering value for money and ensuring the efficiency benefits that CHP is supposed to deliver and making sure that those benefits are indeed delivered while also reducing the impact on projects that are under way.
“In particular, it reduced the impact on those projects that aim to deliver higher power efficiencies rather than lower ones.”
He added the changes would be introduced “as soon as is practicable”.
Frank Aaskov, Renewable Heat Analyst at the REA said the proposal is a “constructive step towards restoring the previously damaged confidence of investors” in the sector.
He added: “Transparency in government decision-making is key to maintaining the confidence of investors developing the UK’s much-needed low carbon infrastructure.
“We welcome the proposed compromise announced by Mr. Norman. Critically, the transition period should create a runway in which projects that have been under development or construction, some for as much as two years, can be completed.”
Earlier this month, Mr Norman said he doesn’t share the “very gloomy” or “disastrous” outlook on energy.