Financially Compelling
The Renewable Heat Incentive has been formulated by DECC (the
Department for Energy & Climate
Change) to offer you an average of 12% rate of return on the
incremental cost of installing a biomass boiler compared with a gas
fired boiler. Whilst the payback periods can vary according to the
factors below, the Renewable Heat Incentive now makes low carbon
heat economic. Influencing factors include:
» Heat load and thus the capacity rating of the biomass
boiler
» The number of hours per annum that the biomass boiler runs
» Whether you are changing from gas or oil
Our analysis of typical Green Heat Module projects suggests that
payback periods of 4-5 years are
achievable where you are displacing gas and 2-3 years where you
are displacing oil. This is obviously
sensitive to the current price you are paying for gas or oil as
well future fuel prices and operating hours for heat generation. If
you contact us with more information we will work with you to
optimise the business case for you.
All the calculations above assume that the projects are funded with cash. However you can go cashflow positive even earlier if we introduce you to hire purchase & finance lease packages, thus reducing the impact of the capital expenditure. We can also offer you an Energy Services Company (ESCo) option so that you can buy units of heat rather than buying the boiler.
From a carbon reduction perspective, renewable heat is "zero rated" under the Carbon Reduction Commitment (CRC). You are saving 185kg of carbon dioxide for every MWhour of gas and 265kg for every MWhour of oil that you displace.
Source: The Carbon Trust.
For biomass boilers up to 199kW you will receive 7.9p for every
kWhour produced up to 1,314 kW
hours and 2.0p for every kWhour above this. So for example, the
199kW Green Heat Module that
runs for 2,400 hours per annum will provide you with:
» 199kW x 7.9p x 1,314 hours = £20,657
» 199kW x 2.0p x (2,400 - 1,314) hours = £4,322
» So £24,979 in total every year for 20 years (index-linked to
RPI)
For 200 - 999kW biomass boilers, you will receive 4.9p for every
kWhour produced up to 1,314 kW
hours and 2.0p for every kWhour above this. So for example, the
500kW Green Heat Module that
runs for 2,400 hours per annum will provide you with:
» 500kW x 4.9p x 1,314 hours = £32,193
» 500kW x 2.0p x (2,400 - 1,314) hours = £10,860
» So £43,053 in total every year for 20 years (index-linked to
RPI)
It also saves you the difference between the prices for pellet and
the price for the fuel that is displaced i.e. usually oil or
gas.
