The heating industry collectively groaned at the news that the EU was delaying the commercial Renewable Heat Incentive over reservations about the tariff levels for large biomass boilers of over 1 MW.
The RHI was recently launched having overcome this setback, with the industry having been poised for months to serve demand from an increasingly confused market.
However, the EU did have a good point in questioning the generous 2p/kWh large biomass tariff level for two reasons.
Firstly, those for whom it makes sense to operate a 1 MW-plus biomass boiler probably already have one. Secondly, the tariff unnecessarily rewards operations which already have a negative cost of fuel.
There are only certain sites where a large biomass boiler makes sense. These are generally farming, woodworking industries or where the operation needs to dispose of large amounts of pallets and combustible material.
These businesses already have a negative cost of fuel and have every reason to use biomass without a cash boost from the government. It costs the woodworking industry around £150 per tonne to dispose of waste due to landfill tax, vehicle hire costs, gate fees and fuel.
The calorific value of combustible ‘waste’ is a negative cost of -£1.50 per kg or -28.33p/kWh of useful heat. So add another 2p to this and it would make very little difference to the viability of the project.
For those operations for which a 2p/kWh would incentivise purchase of a large biomass boiler, we should ask if the RHI should be encouraging the transportation of vast amounts of material for burning around the country.
Carbon savings through renewable heat generation would surely be considerably negated by fuel emissions from trucks.
The RHI will have most environmental impact by converting the sub-1 MW mass commercial market to renewable heating technologies and this is where incentives can make a real difference.
Even the RHI’s two tariff levels for the most popular small and medium-sized boilers could result in a counter-productive effect on emissions levels and a fine balancing act for end-users.
It is currently proposed that boilers of less than 200 kW will attract a 7.9p/kWh ‘small’ tariff and boilers over 199 kW but below 1,000 kW (‘medium’) will get 4.9p/kWh.
Customers with a biomass requirement of between 200 kW and 400 kW are therefore opting for the smaller, cheaper units, which contribute below the often accepted rate of 60 per cent peak load, resulting in the consumption of increased levels of oil and gas.
It would therefore often only make financial sense for customers needing a 400 kW-plus system to opt for larger boilers.
This is splitting the market in two. While the RHI is undoubtedly going to increase the uptake of renewable heating systems, a sliding scale structure may have been a wiser choice in the case of biomass.
George Fletcher is technical sales manager for Viessmann