Carter Jonas
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World first for Renewable Heating Sector

We have seen the impact that 2010’s FiTs have had on renewable electricity generation.

These tariffs are in place in around 40 other countries and have had a positive effect on the growth of renewable energy generating capacity in Europe.However, the UK is poised to enjoy a world first, when a unique system for renewable heat is launched in 2011. In June, the Renewable Heat Incentive (RHI) will arrive in the UK, enabling everyone, including residential and commercial developers, farmers, landlords, schools, hospitals, care homes among others, to be rewarded for deploying qualifying technologies and producing heat from renewable sources.

Biomass district heating can be the perfect solution for rural sites, offering a robust and successful heating system that ticks many business and environmental boxes and will soon be financially supported by the RHI. Sites in the rural environment usually offer ideal clusters of buildings, space for housing the boiler plant, fuel storage and delivery, and often with their own readily available source of wood fuel.

Wood fuel costs can compare well if your site has no mains gas supply and you are currently heating with oil/kerosene, LPG or electricity. However, the capital cost of biomass boiler systems is significantly higher than, for example, oil fired boilers. In the past, this had led to unattractive payback periods, with only the very determined committing to biomass technologies. Despite this, there are still many successful operational biomass installations across the UK, on farms, rural estates and business parks, and this will spread further into residential and commercial schemes. This has, in turn, led to a rapidly expanding infrastructure of UK wood fuel suppliers. Concerns over wood fuel supply are becoming a thing of the past. These exciting developments mean there has never been a better time for property portfolio owners, developers, farmers, landlords and businesses to give serious consideration to heating their premises with a wood fired distributed heat system.

Unlike the recent FiTs, there will be no upper ceiling to the size of project eligible for the RHI. However, the main tariff band is likely to cover boilers in the 45kW to 500kW range. This banding would cover the majority of farm complexes and rural estate projects. Due to the Government’s spending review announced in October 2010, the exact details of the RHI are not yet known. However, the spending review did confirm that the RHI would go ahead, commencing in June 2011, albeit with a probable reduction in payment level of 20% compared to the figures circulated for consultation. Heat production makes up 49% of the UK energy demand and the Government remains committed to moving the UK from 1% to 12% of all heat generated by a renewable source by 2020.

Even with a reduction in the tariff, the income created by the RHI should bring about a significant reduction in payback periods for biomass district heating projects and we expect that the improved financial viability will lead to a surge of development opportunities being progressed in the sector. If any of the above strikes a chord with you, we would be delighted to help you explore biomass opportunities at your site.

Please do not hesitate to contact a member of the Energy Team if you need any further advice.

Amy Souter

Environmental Planning Specialist

Amy is a Senior Environmental Planning Specialist in the Energy team, based in Harrogate. She is responsible for undertaking and project managing planning applications for a range of renewable en...

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