environment magazine

Biomass heating – the UK’s hottest opportunity!

By Neil Turner RES Group

On 10 March 2011 the UK Government announced the biggest shake up of the heating industry in decades.  The Renewable Heat Incentive (RHI) has been designed by the Department of Energy & Climate Change (DECC) to revolutionise the way buildings are heated and will mean biomass heating is financially the preferred choice in all commercial and public buildings.  It is the first financial support scheme for renewable heat in the world!

The Triple Benefit

As well as the income from the RHI, heat users benefit from the carbon savings achieved as they offset the Carbon Reduction Commitment (CRC) levy and from reduced use of counterfactual fuel (this is usually the incumbent fossil fuel such as gas, oil or LPG).  This triple benefit (RHI, CRC and bill savings from displaced fossil fuel) makes biomass the UK’s most financially attractive fuel.

The tariffs have been set to achieve a 12% return on the additional cost of using biomass heating as an alternative to gas, therefore projects displacing oil or LPG can achieve even greater returns.  It is estimated within DECC’s RHI Impact Assessment that nearly 50% of the £860million of Treasury funding for the RHI will be spent on biomass heating, which is over double the share of any other renewable energy technology.  The funding is expected to stimulate £4.5 billion of capital investment up to 2020, which equates to an estimated 13,000 installations of renewable heating systems in the industrial sector as well as 110,000 installations in the commercial and public sector. 

It is estimated within a DECC press release (March 2011) that 25% of the heat demand in the public and commercial sector will come from renewable sources by 2020 and biomass heating is vital for the UK to stay on track to meet its EU obligations of 20% of total energy from renewable energy by 2020.  This means that biomass heat technologies and the RHI are set to transform the monitoring and delivery of heating, hot water and in some cases cooling within buildings. 

Intelligently designed government scheme

Set to begin on 30^th September 2011, the details of the RHI released so far indicate an intelligently designed tiered tariff mechanism.  The idea is that an income is guaranteed over a 20 year period as long as the equipment continues to work and deliver usable heat, but the tariff reduces significantly each and every year after 1314 hours of operation (this equates to a 15% load factor, but in a conventional UK space heating demand profile this typically equates to over 50% of the annual load).  This means there is a big incentive to deliver heat, but no incentive to over-consume fuel and waste heat.  Various further safe guards such as heat meters and spot checks are all going to be used to ensure the RHI is not abused and that the technology delivers on its promises.  This ‘policing’ of renewable heat is a massive wake up call for the heating industry and means there will be a new breed of renewable heat user focusing on whole life costs - selecting quality equipment that is well designed and capable of delivering heat for at least 20 years. 

Over the last decade building-integrated renewable energy has mainly been installed in new developments to meet planning requirements such as the ‘Merton Rule’ (a percentage renewable energy requirement for new developments.  For many Councils this has been a 10% target based on carbon or total onsite energy consumption.  A number of Council’s have increased this requirement to 20%, which is highly challenging to achieve without the use of biomass heating).   This policy and various grant programmes have enabled the biomass heating industry to flourish and quality fuel supply networks have developed.  Procurement decisions are often based on biomass heating being the most cost effective onsite renewable energy to deliver carbon savings (project analysis nearly always shows biomass heating saves the most carbon at the lowest cost – ‘the £ spent to carbon saved ratio’).  The ‘Merton Rule’ and grant programmes, although commendable for enabling the renewable energy market to develop, did not include any retribution if theoretical carbon savings were not achieved.  This meant the construction industry could continue to drive down capital costs and some never delivered the carbon savings promised.  The RHI completely changes this with payments made on a quarterly metered heat basis – the whole life cost is now critical to a projects success!

Understanding the costs and benefits

The RHI encourages the long-term delivery of renewable heating in existing buildings, so to fully realise the financial value of your asset you need to analyse the impact it is having on the reduction in consumption of your counterfactual fuel (fossil fuel boilers already onsite may continue to provide back up to the biomass boiler or be used in conjunction with the biomass boiler to meet a peak heat demand on the coldest days).   To do this calculation it is essential to understand the difference between fuel going into a fossil fuel boiler and the actual heat delivered.  For example, gas is bought and sold based on its Gross Calorific Value (GCV), not Net Calorific Value (NCV).  In this case GCV is about 10% higher than its NCV (i.e. when gas is burnt, about 10% of the total energy it contains just goes into evaporating the water that is a product of its combustion).  You also need to consider the efficiency of the gas boiler and only then can heat tariffs in terms of pence per kilowatt hour (p/kWh) be compared on a like for like basis.  

Biomass tariffs and the RHI are quoted in terms of delivered heat, already taking into account calorific value and boiler efficiency.  This key difference between the tariffs quoted on fuel bills and actual delivered heat is often misinterpreted in favour of fossil fuels.  ­

Practicalities – Space and design requirements for biomass heating

The next vital step is knowing if you have space for all the equipment.  Biomass heating systems are bigger than their fossil fuel equivalents and the footprint depends on the size of the heating demand, the type of biomass fuel and several other site specifics described below. 

Biomass boilers can be fuelled by either wood pellets or wood chip.  Wood chips are lower cost per kWh of heat delivered than wood pellets, but require greater volumes due to its lower calorific value.  Wood chip also has a tendency to form ‘chip bridges’ over equipment and require cajoling and agitating into the boiler through the use of rotary agitators, walking floor mechanisms or hydraulic rams.  Chip designs also need an underground fuel store or even a transportable fuel store called a hook bin, otherwise it can become difficult and expensive to re-fuel.  Pellets are more expensive per kWh of heat delivered, but have flowing properties and a higher energy density.  This means the fuel handling equipment is simpler and has a smaller footprint than the chip equivalent.  The fuel store can also be refilled by blowing pellets from a specialised, but widely available, vehicle.  In general, we favour wood chip for new developments when we can more easily influence the design of the building to favour wood chip and we encourage pellet for retrofit to existing buildings (where there are usually greater space and design constraints and to minimise significant building modifications).

As well as the large boiler and associated fuel store, some sites may also need an accumulator tank.  This technology can give many benefits including stopping the boiler inefficiently low load cycling (boiler turning on and off rapidly when there is small heat load).  An accumulator tank can also meet a site peak heating demand at a particular time of day and ensure a constant supply of instantaneous hot water.  The size and need for an accumulator tank is defined during the project scoping period and can sometimes be an essential part of good design.

Furthermore, depending on the emission requirements defined by the local authority, systems will need to suitably disperse and control emissions.  This means particulate cyclones, ceramic filters and flue height options being considered as part of the design. 

Finally, all of the equipment described above can be installed within your building or sit externally in a prefabricated plant room such as the ‘Green Heat Module’.  If you believe you have the space and the heat demand then this technology is definitely the one for you!  

Procurement

We believe the RHI is going to drive procurement decisions in favour of ‘best value’ to the end user rather than ‘lowest cost’ meaning quality, efficient biomass heating systems.  The track record and expertise of the designer and installer are critical to success.   This contract can then be implemented as part of an energy service contract (heat sold on a p/kWh basis), a lease or a direct purchase.  Under all scenarios planning permission will need to be sought and Ofgem will need to accredit the installation for RHI eligibility.

Once your RHI project is installed and running efficiently, output needs to be maintained for 20 years.  Biomass boilers need regular operation & maintenance, available & responsive biomass engineering expertise and a continuous supply of fuel of the right quality, price and calorific value.  An operative will also need to be trained onsite to empty the ash bin, order fuel, submit quarterly meter readings to Ofgem and receive regular fuel deliveries. 

This may all seem overwhelmingly complicated, but thankfully there are companies out there that have been planning for the RHI for many years and are now ready to deliver your installation, look after it and fuel it for the next 20 years.

By Neil Turner Wood Energy Ltd www.woodenergy.com