When it launched, the Renewable Heat Incentive (RHI) was described as “clean energy cash back”.
But how will it affect the woodworking industry? The proposal, in a nutshell, is to pay companies per kW hour of heat they generate for heating premises using biomass. For our industry this means our wood waste. Process loads can also go on the scheme, including paint drying lines, heated spray rooms and kilns.
Three sizes of installation have been categorised, small, medium and large and small and medium have two tariffs, tiers 1 and 2. The tariffs are set as follows:
• small commercial biomass (up to 199kW): tier 1, 7.9p/kW hour; tier 2, 2p/kW hour;
• medium commercial biomass (200-999kW): tier 1, 4.9p/kW hour; tier 2, 2p/kW hour;
• large biomass 1,000kW and over 1p/kW hour.
Tier 1 units are the multiple of the boiler output multiplied by a factor of 1,314, so for a 300kW boiler this would be 300 x 1,314 = 394,200 tier 1 units.
So if a company has a gas bill of £18,000 per year and pays 4p per kW hour, it has a usage of 450,000kW hours. If this is replaced with wood energy, it saves the £18,000 in gas costs and receives payments under the RHI of 394,200 x 4.9p = £19,315.80. The balance of kW hours will be at 2p, giving a total RHI annual payment of £20,431.80. Without rises in tariff due to inflation, this amounts to income of £400,000 over the 20 years of the RHI contract.
Add £30,000 annual savings on landfill into the equation, assuming the company is dumping six tonnes of wood a week, and the company is better off to the tune of £68,431 a year, or £1.35m over 20. And this doesn’t take into account rising energy and landfill costs and inflation.
Given all of the above, do we still want to call it woodwaste? Think of it as wood resources. Embrace the RHI to start using it and saving and making money!
