Debate contribution: Non-Domestic Renewable Heat Incentive Scheme: Closure

Debate contribution by Dr Caoimhe Archibald on 22 September 2025.

MLA

Dr Caoimhe Archibald

Party at the time

Sinn Féin

Date

22 September 2025

Type

Debate contribution (made as a minister)

Business

Ministerial Statement

Heading

Non-Domestic Renewable Heat Incentive Scheme: Closure

Assembly identifier

Official Report component 5123389

Read the official Assembly record

Text

Go raibh maith agat, a Phríomh-Leas-Cheann Comhairle.

I will update the Assembly on the closure of the non-domestic renewable heat incentive (RHI) scheme. Members will recall that 'New Decade, New Approach' (NDNA), which formed the basis for restoring the Executive in 2020, included a commitment to close the RHI and replace it with a more effective decarbonisation support scheme. Its closure was not progressed in the previous mandate, however, and, in its absence, over £100 million of funding for renewable heat has gone unutilised since 2020. The issue has assumed even greater urgency, as Ofgem will stop administering the scheme from April 2026. In July of last year, the Executive affirmed their commitment to closure. Subsequently, my Department has been developing a business case that contains significant technical and legal detail. We also engaged constructively with stakeholders, including scheme participants, and I thank all who were involved. I can now confirm that the Department of Finance has approved the business case and that the Executive have agreed a way forward. My Department will now move to publish a public consultation on the closure arrangements. The consultation will run for eight weeks. At the earliest opportunity, my Department will introduce in the Assembly a Bill that will clarify the Department's powers to close the scheme. I then intend to bring a paper to the Executive in December 2025 to confirm the closure regulations. Subject to the Bill's passage through the Assembly, it is my intention that new regulations will take effect by April 2026. In securing closure, we must ensure that participants who have acted in good faith receive the payment to which they are legally entitled, while protecting the taxpayer. The closure payment aims to strike that balance. The tariff rate used to calculate closure payments has been independently verified by Professor David Rooney and approved by the Department of Finance. With the scheme's closure and with Ofgem no longer administering it, meters will no longer be monitored for usage. Payments will therefore be based on usage between 2017 and 2019, which is the period that best reflects the heat demand for which installations were designed. Instead of a single, one-off payment, compensation will be staggered over a period of 10 years for a typical participant. That approach will free up my Department to engage with Treasury on a scheme that could utilise approximately £10 million per annum of annually managed expenditure (AME) funding for an alternative use. After the scheme is closed, I will update the Assembly on the progress of engagement with Treasury. That approach also means that payments can be stopped, if an installation is no longer in use. There are, of course, pros and cons associated with all closure options, but the proposed approach is, I believe, the most reasonable in the circumstances. As we work towards closure, the Executive have also agreed to apply the tariff rate that will be used to calculate closure payments ahead of the coming winter period. If the Assembly agrees, that rate will come into effect in November 2025. It is long past time that the RHI scheme was closed and the available funding put to better use. With Ofgem stepping away from the scheme's administration by April next year, time is running out. The launch of the consultation will represent a significant step forward. The closure of the RHI scheme will allow my Department to focus its efforts on developing alternative support measures.

We now have a clear path to fulfilling the NDNA commitment and delivering a solution that is fair to participants and taxpayers alike. I commend the statement to the Assembly.

I thank the Member for her question. I do not think that anybody would argue that RHI has been a success, and, particularly for the participants who signed up in good faith and genuinely, it would be understatement to say that the scheme has fallen short of their expectations. I think that I have now circulated the proposed tariff rates. The best one to point to is the lower-medium biomass category, which is where most boiler installations are. The current tariff rate is 2·2p per kilowatt-hour, and it is supposed to be raised to 6·1p per kilowatt-hour. There are a number of different categories, and the Member can see those for herself. You asked about the timeline. As I indicated in my statement, I intend to introduce temporary regulations immediately so that we can get them set for participants for the coming winter period. That, of course, will require the Assembly's approval, and we will also be endeavouring to have the scheme closure arrangements in place by April next year, which is when Ofgem will cease to administer the scheme.

I thank the Member for his question. It is my intention that the tariff rates, once consulted on, will be brought back to the Executive for approval before being brought to the Assembly. We hope to have that completed by the end of November/early December, and, as I said to Sinéad, we hope to have the final closure arrangements in place by April next year.

I thank the Member for his question. There has been significant engagement between departmental officials and scheme participants, and others have been involved as well. As I said in my statement, I am grateful to all who are involved for their constructive engagement. We are in a better place than we have been previously with the arrangements that are proposed to be put in place. I am hopeful that the participants and those who represent them will welcome what is being proposed today. The consultation will take place over the next number of weeks, and that is an opportunity again for participants to share their views on what is being proposed on the way forward.

I thank the Member for his question. As I indicated to Sinéad, the proposed tariff rates have now been circulated to MLAs so that you can look at them and give them consideration. The proposed rates are higher than those proposed last year, and, as I indicated in my statement and other answers, there has been significant engagement with the participants. I believe that we are in a better place because of the constructive engagement that has taken place, and I am grateful that that is the case. For my part, I will endeavour to ensure that the Committee is furnished with what it requires and that we find a way forward on the closure of the scheme but also on all the important work that we have to do across the energy policy area. As the Member will be aware from his work on the Committee, a lot of things are happening in parallel, with energy being a priority area, and the engagement with the Committee is important.

I thank the Member for her question. The closure arrangements have been designed to stay within the AME budget, and the proposed tariff rates to be put in place and the payments to be made to participants will be roughly the same amount as in the current arrangements. Over the next 10 years, the scheme is expected to cost up to £196 million of AME, with up to £17 million in resource departmental expenditure limit for the Department to manage the scheme. The amounts have been approved by the Department of Finance as part of the business case, but all of that will be confirmed when the consultation is completed and the tariff rates come to the Assembly.

I thank the Member for his question. As I indicated in other answers, the engagement with participants has been positive and constructive. We are in a better place with our understanding of the dual aim of being fair to participants and taxpayers. The consultation is the opportunity for people to air their views, and we will fully take on board what is shared through that. It is about a balancing act of being fair to participants but also taking into account the demands of our taxpayers.

I thank the Member for his question. As we move through the closure arrangements, the requirement for metering to be in place will no longer be there. Participants will be required to provide evidence annually that the installation remains in use. The Department will also introduce an audit and review procedure, which will include on-site protections. That is an opportunity to ensure that the installations continue to be used and that the payments are, therefore, being made genuinely.

As I indicated, the Department has engaged with all key stakeholders, including the Renewable Heat Association and the Ulster Farmers' Union, which represents a fair number of installation owners. Obviously, the consultation is the opportunity for everybody to have their say on the proposals. We are in a much better place than previously because of the constructive engagement. Therefore, I encourage everybody to participate in the consultation once it is launched in the near future.

I thank the Member for his question. As I indicated, it is my intention that the regulations to put in place the uplift for this winter will be approved by the Assembly by the end of November. Obviously, that depends on the Assembly's approving the regulations, which means that it is partly in Members' hands. It is important that, when we develop not just renewable energy projects but any projects, we work in partnership with those who will use them and deliver them. We very much ensure that the principle of partnership and co-design is in place for anything that we bring through the Department, including all the energy policy that I referred to when responding to Mr Honeyford. I am certainly happy to give that commitment.

1,617 words. Text as published by the Northern Ireland Assembly.

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Assessed 21 October 2026 at 13:11 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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