Lower fuel costs

Biomass fuel is significantly cheaper than oil, electricity or LPG and is comparable in price to natural gas.

Biomass boilers are ideal for most buildings with year round heating and hot water requirements. They are especially suitable for buildings that are not connected to the national gas grid and that are currently using bulk fossil fuels such as oil or LPG. Replacement with a biomass boiler is therefore especially beneficial because its fuel is significantly cheaper.

For heating, there is now the Renewable Heat Incentive (RHI). This 20 year, index-linked grant is so generous its return will not only cover the cost of the installation but is expected to cover the total cost of fuel as well. More information about the non-domestic RHI can be found at www.ofgem.gov.uk.

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In 2011 the government launched the Renewable Heat Incentive (RHI) to encourage people to switch to renewable forms of heating such as biomass. RHI provides a 20-year index-linked grant, payable on the heat produced from a system.

This incentive is currently so generous that in most cases it will cover the cost of both the fuel and the boiler and will even provide a surplus as well.

However, it is expected that the current very generous levels will reduce for those joining the scheme later, so those taking up biomass earliest are likely to gain the most.

RHI Explained

It is because a biomass system is more expensive than conventional systems that the government has been so generous with the Renewable Heat Incentive (RHI). This grant scheme will more than cover the cost of the initial investment and on a wider scale create demand and thereby decrease equipment costs.

An average non-domestic system will bring in as much as £13,000 in annual grants for 20 years, index linked. This level of funding will not only cover the cost of the installation and servicing, it will even cover the cost of fuel and still create a surplus income. In order to reap maximum benefit of getting in early you will need to invest a significant sum on your new installation.

The RHI scheme is only expected to last in its generous early stage for about 2-3 years, so those who install a biomass boiler system now are likely to gain the most benefit.

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Application for RHI grant

Our administration team submitted an application to OFGEM on behalf of Withington Golf Club. The index-linked income will, over the 20 years of the grant scheme, provide the golf club with sufficient funds to more than cover the fuel used, servicing and capital cost of the system.

Example of expected savings:

    1. The installation of a 100kw biomass boiler will generate around £11,500 RHI in the first year, rising to approximately £20,000 in the twentieth through index linked payments. This would provide a total income of around £310,000.
    2. The fuel required would be about 37 tonnes of biomass pellets each year.
    3. Currently, the cost of biomass is similar to gas, though this is predicted to change as gas bills are expected to continue to increase above and beyond the rate of inflation.
    4. This technology will save 29.47 tonnes of CO2 per year compared to a fossil fuel fed system.
    5. Based on both capital installation costs and fuel costs, this biomass boiler should start to save them money immediately.

OFGEM & the Renewable Heat Incentive

OFGEM are administering the Renewable Heat Incentive (RHI)
for the Government, click to find out more.

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