‘What’s Hot about Modern Wood Heating?’

Stewart Boyle, Senior Associate South East Wood Fuels (SEWF) and Author

Headlines • £860 million available from Renewable Heat Incentive (RHI) • 2500 RHI certified projects to date and uptake accelerating • Biomass 94% of the RE Heat projects • Projects happening in all sectors • IRR very good for RHI projects - SEWF project assessments since late 2011 range from 8% to 30% IRR

Where else in today’s economy can you get 8-30% IRR on investments?

What’s Hot? Climate Change Hasn’t Gone Away!

750,000 tonnes per annum capacity

Bio-Energy - what’s hot? • Bio-energy can be used to provide heat, power and transport fuels. Our focus today is heat • Modern wood heating is the true description of efficient, modern, clean and controllable systems • It can offer everything that conventional boilers can – 100% space and water heating • Wide variety of boiler technology options suitable for DH, schools and colleges, industry, leisure, and domestic • The technology is mature and flexible and attracts the Renewable Heat Incentive (RHI)

The Renewable Heat Incentive (RHI) – stimulating market take off • RED 15% target leads to target of 11-12% of heat market from biomass, solar, GSHP-ASHP • £860 million budget till 2015 – significantly under-spent so far • Biomass heating the big one – possibly 6080,000 commercial boilers and many thousand of domestic boilers • Varying tariffs (see next slide) offering good rate of return

RHI Tariffs Table 1 - RHI Tariffs (2013-14) Technology Description

Scale (kW)

1. Small biomass

Less than 200 kWth

Solid biomass including solid biomass contained 2. Medium biomass in municipal solid waste (incl. CHP)

3. Large biomass 4. Small heat pumps 5. Heat pumps

Ground-source heat pumps; water source heat pumps; deep geothermal 100 kWth and above

200 kWth and above; less than 1,000 kWth 1,000 kWth and above

Tariffs (p/kWh) (Tier 1) 8.6 (Tier 2) 2.2 (Tier 1) 5.0 (Tier 2) 2.1

2

Less than 100 kWth

8.2

100 kWth and above

7.2

6. All solar thermal collectors

Solar thermal collectors

Less than 200 kWth

10-11.3

7. Biomethane and biogas combustion

Biomethane injection and biogas combustion, except from landfill gas

Biomethane all scales, biogas combustion, except from landfill gas

7.3

Example Project

Summary of Project • • • • • • •

Capital Costs – £250,000 Annual RHI Income – £26,863 Annual Fuel Savings – £26,000 Total Annual Benefits - £53,000 20-year total benefits - £1,057,000 Annual servicing costs - £1100 12-year spares and replacement costs - £60£75,000

The Green Economy in action – Stansted Park • 300kW district heating system using self-supply chestnut and slabwood • Second 345kW project just installed • 1200 acre woodland with 300 acres chestnut coppice • project has helped safeguard and expand sawmill and woodland jobs “the boiler seems to be more popular than the stately house at times!” (James Cooper)

RHI Progress - OFGEM DATA (as of 07.10.13) TOTAL UK Of which Biomass % Biomass

Cash Paid Out to date Total Original Budget

RHI Projects

MW

2386 2242 94%

531 525 99%

c.200kW heat load can be split into two heating loops and twin boilers – each is a separate RHI application at the higher tariff rate 6. District heating can really work under RHI BUT - OFGEM won’t pay for pipework heat losses so take care on design for avoiding losses in Spring-Autumn are key. Can you switch off the boiler to avoid inefficiencies?

10 Key Tips on RHI – 2 of 2 7. Off gas grid Residential care homes offer great paybacks BUT you need to make a special case to OFGEM due to council tax issue 8. Domestic RHI economics are emerging – don’t assume you will get high rates of return, BUT 9. To de-risk the decision and to make domestic biomass RHI really pay you need to be very costeffective on installation, grab the RHPP (will be taken back on tariff), and make sure you can access good pellet prices 10. Right now pellet and chip prices are ‘keen’ and you can negotiate longer-term deals

5 Key Tips on Wood Heating Design 1. Boiler sizing – do it differently than oil-gas – 6080% of peak load, with accumulator tank 2. Start with the fuel not the boiler – can you get chip or pellet in to the silo or space you have? 3. Bigger is better as far as fuel stores go - >6 tonnes for pellets and >10 tonnes for chip 4. Lower capital costs for pure pellet boilers but 20 years of higher running costs – do the maths! 5. Do your homework on heat meters – it is key for getting the RHI Get independent advice!