Belfast Telegraph

Stormont officials confirm RHI to cost £240m as concern raised over unspent millions

Participants were urged to switch to a more sustainable fuel in return for government subsidies.
Participants were urged to switch to a more sustainable fuel in return for government subsidies.
Jonathan Bell

By Jonathan Bell

Stormont officials have confirmed they expect the Renewable Heat Incentive (RHI) scheme to cost around £240million - around £400m under its initial budget.

It comes after concerns were raised about the many unspent millions earmarked for the scheme being returned to London.

UUP MLA Robin Swann said the return of this year's £21million would "infuriate" those on the scheme who have seen their payments slashed.

Some are experiencing financial difficulty paying off loans they took out to install equipment and based on the projected income promised to them from government. Others have said they will ditch the equipment in favour of a return to fossil fuels.

The association which represents boiler owners says many of those on the scheme are facing financial ruin.

RHI was intended to incentivise farmers and other business owners to switch to eco-friendly wood pellet-burning boilers by offering them a subsidy to purchase the fuel. However, flaws in the regulations meant there was a "perverse incentive" of allowing scheme participants to profiteer from it.

A similar scheme in GB actually offered higher payments, but crucially had a tiering mechanism which prevented the ability to earn more money the more the boilers were used.

Originally the Treasury in London earmarked £660m for the scheme in Northern Ireland but projections estimated it could cost in excess of £1billion because of the absence of tiering, with the additional £400m coming directly out of the Northern Ireland budget.

The Department of Economy has confirmed £138m has been spent on the scheme since it was launched in 2012 with officials estimating it will cost another £100m for the life of the scheme. However, this could change depending on demand.

The Department of Economy is constantly reviewing use to ensure it adheres to strict state aid rules.

A public inquiry into how the scheme was set up is expected to publish its findings in the new year.

North Antrim MLA Robin Swann said many of those on the scheme only took part because of the "legally rock-solid" guarantees provided.

He said the reductions in the tariffs had left many genuine applicants on the scheme at a competitive disadvantage to business in other parts of the UK and in the Republic of Ireland and they would be shocked at the amount of unspent money returning to London.

"There can only now be one outcome – the changes made in April this year must be reversed," he said.

“Whilst I and party colleagues have met with dozens of the affected businesses right across the country, the Department for Economy here always maintained that the latest cuts were necessary.

"Civil servants here in the Department for Economy simply haven’t learned from previous mistakes made with the botched RHI scheme," he said.

A Department for Economy spokesman said the department had a duty to all taxpayers to ensure value for money.

It said the latest tariffs struck a "fair balance between the interests of scheme participants and the wider public interest by ensuring the Northern Ireland budget and public services are protected, taxpayer’s money is spent to achieve value for money and that state aid obligations are met".

A spokesman added: "The tariffs are based on expert, independent advice following a comprehensive review of all the main elements of the tariffs for small and medium sized biomass installations.  A full report, including the evidence base and methodology behind the revised tariff calculations, has been published as part of the public consultation exercise.”

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