With regard to return on investment, the capital cost of a biomass boiler system is higher than a conventional fossil fuel system, but this can be offset by the income from RHI. Non domestic schemes can deliver anything up to an 18% return on investment.
For example, a country house with mixed domestic and commercial outbuildings or activities, needing around 430,000kWh per annum, may require a biomass boiler system of 200-250kW at a cost of £130-150,000. The annual fuel-saving against an oil-fired boiler would amount to about £3,000 (or more if using wood chip).
In October 2015, the system would qualify for non-domestic RHI of around £14,500 per annum. At these rates, payback would be approximately seven years with an Internal Rate of Return (IRR) of around 15%. There are plenty of finance options for biomass heating installations, varying from standard loan and capital financing, through to Energy Service Contracts (ESCOs) which can provide a free boiler in return for retaining 100% of the RHI.
Subsidies are falling, so act now. The July 2015 quarterly review reduced the tariff by 25% for systems below 200kW. We expect tariffs to fall again from January, 2016. Biomass boiler installations are an attractive investment and protect against rising fossil fuel costs.
James Robinson, Senior Energy Specialist
T: 01423 707831