It’s been three years since the launch of the non-domestic renewable heat incentive (RHI) scheme, and for some it has been a success, especially if you’re buying, installing or selling biomass equipment.
There are eight main technology types: biomass, solar thermal, ground/water source heat pumps, air source heat pumps, bio-methane, biogas, CHP and deep geothermal. Each technology type gets a different tariff paid, with some technologies split into separate groups depending on their capacity.
If anyone was predicting an even spread of installations in each technology type, they will be sadly disappointed. Biomass is the clear winner of this technology take-up with 94 per cent of accredited installations.
Biomass is split into three sizing groups, <200kw, 200-1000kw and >1000kw, and again there is a clear favourite.
The tariff on this class was reduced by 10 per cent in October this year as it is eating through its budget with a new rate of 7.6p/kwh for the first 1,314 hours of use per year, dropping to 2p/kwh after. So what does that look like in real money terms?
Let’s assume a 199kw boiler works at full capacity for 1,314 hours a year and no more. This would generate a RHI income of £19,872 per year, increasing with inflation each year. Furthermore, if you are installing a biomass boiler in place of oil – or even worse electric –
your annual heating fuel savings are going to reduce between 30-50 per cent which could net you a saving of well over £10,000 per year. Payback is often within five years, and with a 20-year tariff in place, it’s a great source of fixed income for any business.
Scotland and the north of England, along with the south west are the strongest areas for renewable technology, with over half of uptake, while our mighty capital is lagging behind with less than 0.5 per cent – although this is hardly surprising as rural locations are much better placed and often have off gas-grid fuel prices worth reducing.
Business types, according to the standard industrial classification (SIC) code tells us that farming and accommodation (often using district heating systems) account for over 60 per cent of total installations, with schools, offices and sport/recreational centres taking a further 10 per cent The rest is fairly evenly split between the 90+ other types of industry.
So is this scheme working? In a word, yes. The objective is to reduce CO2. The RHI is just one piece of the strategy, and with a current capacity of over 1,000 megawatts of renewable energy, it is playing its part, but there is still more to do. Much, much more. With the introduction of the domestic RHI launched earlier this year, some of the technologies that haven’t succeeded commercially are now coming of age, with ASHP’s and solar thermal playing a major role. But the firm favourite of the non-domestic scheme is also set to dominate the domestic RHI as biomass is looking like a firm favourite of the home owner as well as the business owner.
Richard Hiblen is managing director of Green Square W: www.greensquare.co.uk