Biomass Heating Systems
Biomass Boilers that run on woodchip or wood pellet are currently being heavily pushed by Ofgem as part of the Kyoto Agreement to industry (to help meet Carbon Reduction targets) and there are huge, guaranteed incentives being offered that run into millions of pounds income for our customers.
Simplistically it’s one or two boilers that replace multiple smaller standalone boilers that connect to the existing pipework infrastructure to all relevant buildings.
How Biomass works
- Biomass boilers burn wood fuel in the form of pellets or chips to heat up the water in a connected buffer tank
- Hot water from the buffer tank can then be fed, via highly insulated pipes to as many different locations as required
- The heat is then transferred via heat exchangers connected into new or existing hot water and heating systems
Biomass boilers are an environmentally friendly, safe and convenient way of heating the building, using wood in one form or another as fuel. However, they do differ from traditional solid fuel boilers. Apart from the green aspect, the units are fully automatic and behave more like an oil or gas boiler, using advanced controls which cleverly regulate the amount of fuel being delivered to the burner to match the heat demand on the boiler. The fuel is fed to the burner via an auger feeder connected to the adjacent pellet store/hopper. This can, in turn, be automatically supplied from a bulk pellet/ wood chip store which can vary in size
|These are generally compact in design – they can be housed in existing buildings or positioned almost anywhere on site in a new building which can be clad, painted or finished to any specification to match its surroundings and satisfy any Planning requirements|
How it makes money for you
Biomass heating is heavily incentivised by the government’s Renewable Heat Incentive scheme which is a subsidy designed to support organisations looking to find low carbon heating alternatives. A key point is that the RHI is paid for every kWh produced – there is no requirement for the customer to over-produce then sell the excess back to the grid as with the old Feed In Tariff scheme.
Which Biomass solution is right for you?
There are four kinds of Biomass solution for our clients and each has benefits relative to a customer’s own needs:
- Wood chip boilers
- Wood pellet boilers
- Log Boilers
- Combination Pellet and Log Boilers
The key benefits that biomass brings:
- Cheaper fuel (wood will always be a lower unit cost than the existing heat source is)
- Lower maintenance and servicing costs
- RHI income – Many charities and commercial property owners see this as an opportunity for diversification income on top of their yields from their core business
- CO2 savings vs fossil fuels, giving the business tangible green credentials
- Boiler lifespan – high-end Austrian manufactured boilers we’ve overseen have a life of minimum 20 years to be in line with the RHI payment scheme. Domestic ‘conventional’ boilers will have an expectancy of around 8-9 years before they need replacing
Wood will always be a lower cost fuel for a Heating System than whichever fossil-fuel is currently being used so there will be direct savings on fuel – on top of the RHI income stream
RHI BENEFITS – how do they work for the client?
The Renewable Heat Incentive (RHI) was introduced in 2012 to encourage the use of renewable energy sources such as biomass in place of gas, oil, LPG and electricity. The incentive offers a guaranteed income in the form of payments for kWh of heat provided by the biomass system which gives an excellent return on the investment.
|Tariff Name||Eligible Size||Tariff|
|Small commercial biomass||Less than 200 kWth Tier 1
Less than 200 kWth Tier 2
|Medium commercial biomass||200 kWth and above & less than 1MWth Tier 1
200 kWth and above & less than 1MWth Tier 2
|Large commercial biomass||1MWth and above 2
Sign-up to the RHI scheme is likely to be time-limited – once Govt reach targets they will reduce or remove the scheme entirely, but once the user is registered on the scheme it’s fixed and guaranteed for 20 years. RHI payments will never be reduced but will go up annually with inflation, and wood will always be cheaper than any existing fossil fuel heat source. Realistically the cost-saving benefit between woodchip/wood pellet and any existing fuel will grow with supply and demand as renewable fuels become the norm.
- A residential charity client based in Herts has had a single boiler installed that will heat the entire site. They’ll return a guaranteed profit of just under £1M – again that’s based on today’s RHI Rate but this rate will only increase with inflation.
The schematic above shows the simplicity of the layout – the boiler can be situated anywhere in the grounds as preferred and pipework laid to connect up all the buildings. Ref: Robin Kingham, on-site FM supervisor, Delrow House, Hilfield Lane, Aldenham, Watford WD25 8DJ, Mob 07973 338025
- A residential charity for adults with learning difficulties based in Gloucestershire has also had a single boiler installed that will heat their entire site; they will see a guaranteed profit of just under £0.5M – again based on today’s RHI Rate which will increase with inflation.
Again the schematic shows the flexibility in where the boiler itself needs to be sited. (Ref: Geoff Morris, Maintenance and Estates Manager, Camphill Village Trust, Oaklands Park, Newnham on Severn, Glos. GL14 1EF, Mob 07899 863733
- Avon & Somerset Police Constabulary HQ in Portishead have installed 4 Boilers to cover their entire site and will return an overall profit of around £3M. Ref: Stephen Hodgson, Head of Procurement, Avon & Somerset Police Constabulary HQ, Valley Road, Portishead, Bristol BS20 8QJ, Mob 07887 572099
- As an example of a smaller scale user still creating a significant income stream – a day Hospice near Stroud Trust in N Wales is on the point of having a smaller system installed – they only have a demand of £3.5K for heat currently but will still return a guaranteed clear profit of £152K.
These are high spec, sophisticated and relatively compact pieces of kit that have a life of 20+ years (to meet the 20-year RHI payment programme) and have a lower servicing and maintenance cost than ‘conventional’ boilers. To cover CQC requirements for our Care clients we also install LPG or gas back-up boilers so there could never be a loss of heat for the patients. The cost of these is already factored in to the figures in this document.
They’ve been installed in thousands of farms, schools, stately homes, sports stadia, residential homes, sports centres, swimming pools etc – they are just a different heat source and as such about as applicable as a gas/oil/LPG/electric boiler would be.
For anyone not wanting the capital investment, there are also funding options available by which they can have the system installed for free and maintained and serviced for free for the full 20 years.
The supplier then keeps the RHI themselves but this means the user benefits from immediate new heating systems, no servicing or maintenance costs for the full period, savings on fuel from day one and no upfront investment.
Our supplier also works this model on a sliding scale with the percentage of Capex and RHI shared accordingly if preferred.
Most customer requirements would fall into the ‘Medium Commercial Biomass’ bracket as tabled above which happens to be the highest rate of RHI on offer. The probability is that once Government targets are met, registration to the Scheme will close – or the RHI be reduced so much it becomes much less lucrative. However all users already on the scheme will remain on it for the full 20 year period with RHI being uplifted annually in line with inflation – the rates can never go down.