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How much will it cost to install a biomass system?

You need to look at three main factors when working out the cost of installing biomass because, if you qualify for the 20-year non-domestic Renewable Heat Incentive payments (RHIs), you will receive income to offset some, or all of, your cost.

It’s also important to compare the cost of biomass against your other options, both in terms of installation and running costs.

The three main factors are:

  1. What is the cost of the installation?
  2. How much income will your biomass installation earn?
  3. What are the fuel and other running costs?

 

Case-study

Here are some example figures from an installation we carried out in 2017 for a business customer.

 £ 
Monthly loan payment1,920(5 year loan)
Monthly RHI income1,799(20 year income)
Monthly cash outflow121

In this case, the business was able to obtain a loan to pay for the installation. By spreading out their cost over 60 months, their monthly cash outflow was very low. Note that the RHI income will continue for 15 years after the loan has been repaid, provided the biomass system continues to churn out heat.

 

Cost of installation

Each installation is different, because of your heat requirement and layout of your property. You’ll need a tailored design and quotation to get an accurate figure. However, an experienced biomass installer can give you a rough idea of your likely investment, after visiting your site but before producing a detailed specification.

There’s no point going for a cheap boiler, because your biomass system needs to keep on producing heat for 20 years – the duration of your RHI income. That’s why we only install kit, which is top of the range in terms of quality. We can supply ETA, Gilles, and other premium Austrian boilers.

Regardless of the cost of your installation, you will probably want to obtain loan finance, as that’s the way to minimise your immediate cash spend.

 

Income

Many people only look at the RHIs, but it’s also worthwhile considering whether you will receive other income benefits.

For example, we have installed biomass systems at small and large tourism venues. With the growing interest in the green agenda, biomass heating can be useful for your marketing.

RHI tariffs have gradually reduced but, at the time of writing (July 2018), they can produce significant cashflow for the right project. The UK government tightened the rules for RHI accreditation earlier this year. So, it’s important to get advice as to whether your project will qualify.

For example, the 20-year payment is not available to domestic households. You need to show a qualifying business element. For specific advice on this, please give us a call.

Once your RHI application has been approved, your tariff will be locked in for 20 years, and it will be index linked. Therefore, even if the tariff reduces or ceases after the date of your RHI accreditation, your payments will not be affected.

 

Running costs

As a rough guide, a biomass system running on wood chip will cost around 3 pence per kilowatt hour for fuel, compared to about 5 pence for a wood pellets system. The exact cost will vary, depending on the efficiency of your boiler.

Note, these figures are before offsetting any RHI income. Once you take RHIs into account, biomass fuel can be cheaper than mains gas, and very much less expensive than electric or oil.

In the case study we quoted above, it will take five years to pay off the loan. After that first five years, the RHI income should cover most of the cost of biomass fuel.

In addition to fuel costs, you will also need to get your biomass system serviced by a trained biomass engineer at least once per year.

 

What we do

We’ve been designing and installing biomass systems since 2008 and our team has been involved in more than 1,000 biomass projects.

We also provide wood pellet and wood chip fuel to hundreds of customers in England and Wales.

Finally, we own several biomass boilers ourselves, which we use in our own business.

Would you like advice on the cost of biomass? — How to get in touch

If you would like to talk to us about the cost of a new biomass installation, or repairs and maintenance issues, or if you are interested in purchasing wood chip or wood pellets, please give us a call or complete the enquiry form below.