RHI subsidy cuts could have state aid implications for GB and RoI schemes

Although the cut announced yesterday is only to the Northern Ireland scheme, it could have implications for the far larger GB scheme – and for other green energy schemes across the EU.
By The Newsroom
Published 27th Feb 2019, 07:07 BST
There are just over 2,000 RHI biomass boilers, but they have not been inspected for cases of potential fraudThere are just over 2,000 RHI biomass boilers, but they have not been inspected for cases of potential fraud
There are just over 2,000 RHI biomass boilers, but they have not been inspected for cases of potential fraud

That is because Stormont has justified the scale of the reduction on advice which civil servants say was given to them by the European Commission saying that anything beyond the payments now proposed would be unlawful state aid.

Payments on the GB scheme – which unlike the Stormont scheme always had cost controls – are vastly higher than what Stormont now proposes, raising questions about whether it will face similar scrutiny for constituting illegal state aid to companies.

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Even if there is a no-deal Brexit, EU state aid law will continue to apply, with responsibility for policing the rules passing to the Competition and Markets Authority.

The Department for the Economy said that there had been extensive engagement with the European Commission as it developed the proposals which were published yesterday.

The department has engaged with the European Commission in developing the long-term tariff. The commission has made clear that state aid approval for the scheme “is based on a 12% rate of return rather than the associated tariff levels”.

Civil servants yesterday said that £120 million has already been spent on RHI and that it expects the far lower subsidy payments to only amount to a further £65 million over the remainder of the 20-year scheme.

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All of that money will now come from the Treasury via Annually Managed Expenditure, rather than out of Stormont’s block grant which pays for services such as hospitals, schools and road maintenance.

However, by cutting spending so drastically the money available from Treasury will now be underspent by about £300 million.

Some civil servants believe that a second version of the scheme could be reopened in the future to spend that money. However, RHI claimants have questioned why anyone would trust Stormont promises and avail of any such scheme, given how the firm guarantees given to them have been shredded.

There is also a warning for some of those on the RHI scheme who thought that they were safe from subsidy cuts. The Department for the Economy said that the small number of people who claim RHI for non-biomass technologies such as heat pumps and solar will find their subsidies now being analysed by officials.

Related topics:Northern IrelandBrexit