How can the renewable heat incentive & biomass help my business?
Posted on Feb 2, 2016
Hi we have put some useful information together to help our prospective customers on the Renewable Heat Incentive also known has (RHI).
Who is it for?
This RHI is ideally suited for any business which is a considerable user of oil or mains gas.
What are the benefits?
First of all you will save money by eliminating or reducing your need for gas or oil, both of which are becoming increasingly expensive year-on-year
Secondly, you will be paid up to 8.5p/kWth for the hot water and heat you generate and use yourself. It depends on exactly what systems you use and how large they are as to what
D-ENERGi can offer biomass solutions for the following eligble sizes.
Tariff name Eligible technology Eligible sizes Tariff rate (p/kWh)
Small biomass Solid biomass;
Municipal Solid Waste (incl. CHP) Less then 200 kWth Tier 1: 7.9
Tier 2: 2.0
Medium biomass 200 kWth and above; less than 1000 kWth Tier 1: 4.9
Tier 2: 2.0
Large biomass 1000 kWth and above 1.0
How the tiers work
In each year the Tier 1 tariff is paid until the system has operated up to 15% of the annual rated output (i.e. the equivalent of 1,314 hours at the rated capacity of the installation)
For the rest of the output in the year, the Tier 2 tariff will apply.
This is how the government explained it. It is not clear how this approach will be averaged over the quarterly RHI payments, but the administrator’s guidance notes will presumably cover this.
A biomass boiler rated at 250kWth operates for 7 hours/day in winter and 3 hours/day in summer, i.e. 1,825 hours in total over the year.
This size of boiler is classified as ‘Medium Biomass’.
It therefore receives the Tier 1 tariff of 4.7p per kWh for the first 1,314 hours
and the Tier 2 tariff of 1.9p per kWh for the other 511 hours
• 1314 x 250 x £0.047 = £15,439.50
• + 511 x 250 x £0.019 = £ 2,427.25
Making a total of £17,866.75 per annum (plus inflation adjustment)
How long do the tariffs last?
They are paid for 20 years from the registration date and index-linked for inflation.
Is that long enough to cover the installation costs?
In most cases the simple answer is yes. We estimate that many participants will earn enough money from the tariffs to pay off their installation costs in about seven to nine years. According to the Government, which has set the tariff levels, the average for most systems be a return of around 12% per annum.
Where the money comes from?
It was announced on October 20th 2010, within the Spending Review, that the RHI will be paid for directly by the Treasury.
The Government had originally planned in the initial consultation to levy the money on resellers of heating fuels.
How much is available?
A total of £860m will be available for the period until fiscal year 2014/15. The government is developing cost control mechanisms to ensure that the budget is not overspent.
Please call us to find out more on biomass and the RHI and how it can benefit your business. Please call us on 0800 781 7626.
D-ENERGi have started to roll out smart meters to its valuable portfolio of customers. By the end of 2020, around 50 million smart meters will be fitted in over 26 million households across Wales, Scotland and England. This is the biggest national infrastructure project of our lifetimes. D-ENERGi are planning to switch all of its customers to smart metering by end of September 2015. This is a whopping 5 years ahead of any of the big six are expected to complete their national rollout of smart meters.
Fossil fuels as we most commonly know them are coal, oil and natural gas. Oil and natural gas are namely known for being located in underground reservoirs but they can also be found in other locations such as shale gas and tar sands. Previously these were considered to be too costly to excavate and make them commercially viable, it is only thanks to the advancements made over the last ten years in drilling technology that these can now be accessed and sold at a profit.
As with many countries Britain is a source of shale gas but this is an as yet untapped resource and yet one that is understandably becoming more and more appealing to businesses and the government. The North Sea oil rig is one of the main contributors to the British Economy and quite often the economy rises and falls with the output of these oil fields; the economy shrank by 0.3% in the final quarter of 2012 because of declining gas and oil output.
“Shale gas could be a new North Sea for Britain, creating tens of thousands of jobs, supporting our manufacturers and reducing gas imports.”
The above statement was made by Corin Taylor, Senior Economic Adviser and author of a new report from the IoD regarding the potential impact of frakking for shale gas on the British economy. Such statements will undoubtedly incite excitement in a government that is looking for an immediate solution to their fiscal woes.
The report cited government figures that estimate 76% of the UK’s gas would be imported by 2030 the cost of which would be around £15.6bn. per year. However, according to this report, if shale gas were to be aggressively pursued gas imports would be reduced to around 37% by 2030 at a total cost of around £7.5bn. per year.
The above figures are clearly an encouraging incentive and shale gas has been somewhat of a revolutionary natural resource in countries that have found themselves with an abundance of it. The two most hotly discussed examples can be found in Northern America. The USA is hoping to be nearly entirely self sufficient regarding energy thanks to their vast reserves of shale gas and Canada is looking for a major boom to it’s economy thanks to their recently discovered tar sands, also known as oil sands. However, what on the surface appears to be the answer to all our looming fears over the future of global energy production could potentially force climate change into an irreversible state.
The process by which shale gas is extracted is called ‘frakking’ and involves drilling a well to the depth at which the shale rock sits and then blasting the rock with water and chemicals. As the water and chemicals produce fissures in the rock natural gas is released and can subsequently be siphoned off and used as energy. One of the most commonly cited issues with frakking is that the chemicals used in the process can contaminate local water suppliers as only 50-70% of surplus water is recovered. However, these figures are regularly disputed and though there are examples of this, such as in Pennsylvania as outlined in this study, they appear to be isolated incidents and are yet to be corroborated by other communities located near frakking sites.
There are obvious benefits to excavating the shale gas resources, the economic boost alone is incredibly appealing, but surely this can only be seen as a desperate attempt to hold onto a system that will ultimately fail us. These resources can only ever be finite, and whilst they are available to be used their use will ultimately push climate change to such a degree that there is no stopping it and certainly no returning from it. We should see the dwindling supply of fossil fuels as a reason to pursue something new, to invest in renewable energy solutions that could potentially reverse the devastating impact that carbon emissions have had.