Biomass update – DECC launches consultation on the RHI
Have you made the switch to a renewable heat supply? If not, then you will need to act quickly.
Renewables subsidies provide generous financial incentives to encourage investment and help to grow the market but sadly they won’t be around forever. At the start of the year the focus was on solar and the Feed in Tariff but now DECC have just launched a consultation on the RHI for renewable heat technologies that will result in reduced tariff rates from April 2017.
Of course, we believe that the renewables industry is more than capable of standing on its own two feet (50% cheaper fuel costs from biomass should be enough of an incentive on its own!) but we also wouldn’t want anyone to miss out on the opportunity to earn some extra revenue whilst it is still available.
How soon do you need to act?
Unfortunately there is now a long standing pattern in the renewables industry of spikes in demand as everyone rushes to beat the next tariff cut. This time we expect it to be no different. In order to prevent all the money disappearing in the rush, the consultation is introducing a cap on spending at £640 million. Once this cap is reached then the scheme will be paused until the new scheme can be put in place. This means if you want to invest then you need to act quickly.
What is included in the RHI?
The Renewable Heat Incentive (RHI) covers a range of renewable energy technologies that produce heat. Of these, biomass boilers have proved to be the most popular, particularly for those who are currently dependent on expensive oil or LPG.
There are also a number of other interesting solutions offered from biomass technologies. A biomass gasification boiler can be used in conjunction with a combined heat and power (CHP) engine to provide both heat and electricity.
This type of system is eligible for a Biogas RHI and ROC (Renewables Obligation Certificate) tariff – incentives that have not yet been reduced by the government and still offer generous payment that again are guaranteed for 20 years.
Wet fuel is cheaper to buy but burns less efficiently. The CHP system can also be used to dry the biomass wood, leading to further savings. If your business has a constant demand for heat and electricity, we would expect to see a return on investment of up to 35%.
Furthermore, a CHP system will drastically reduce carbon emissions, ensuring your compliance and reducing the costly risk of future carbon taxes.
What about fuel costs and storage?
We have already mentioned that biomass fuels can be up to 50% cheaper than fossil fuels but that’s not all. The historic market prices for biomass fuels shows that they are fairly constant and predictable. Quite unlike the volatile fossil fuel market, which is subject to sudden spikes in pricing. At a time when even fossil fuel companies themselves are divesting, it is highly likely that fossil fuel prices will continue to rise at an astronomical rate.
Delivery and storage of biomass fuel is not much different to oil or LPG. The delivery vehicle can blow the wood chip or pellets into your storage area from a distance of up to 20 metres away through a hose. Wood chip and wetter fuel is cheaper but requires more storage space, whilst pellets are more costly but take up less room and burn more efficiently.
Of course, if you produce your own biomass waste then you could purchase a multi-fuel boiler that means you can save even more on fuel!
Contact GMI Energy to find out if biomass is right for you