RHI scheme will see boilers installed at no upfront cost
First free biomass offer from energy firm
An energy savings company is introducing the first ‘free’ biomass boiler offer for social landlords in order to take advantage of government subsidy payments for renewable heat.
Strategic Energy, which has already installed around 2,000 free solar photovoltaic panels on landlords’ roofs in return for the feed-in tariff, is now looking to take advantage of the government’s £860 million renewable heat incentive.
The company will install biomass boilers at no upfront cost so landlords can cut carbon emissions and reduce fuel bills. In return, Strategic will keep the RHI to repay investors for the cost of the technology.
The company is using an all-equity model, meaning its capital costs are covered without having to pay interest on loans that would otherwise make providing free biomass unviable.
Comparatively few landlords have taken up similar offers for PV technology due to unwillingness to sacrifice the tariff, wrangles with their banks and government cuts to the FIT.
However, Strategic has been one of the few companies to make its offer work financially under the new subsidy regime which has a lower FIT. The company this week agreed a deal with south Wales-based Hafod Housing Association to install PV on 1,000 homes for free at the 21p/kilowatt hour rate before it gets cut to 16p/kWh in August. As with its biomass model, the company will keep the tariff. It hopes to be able to reach similar deals with the RHI.
Rudie Humphrey, UK biomass operations manager at Strategic Energy, said he expected every housing association in the UK to have installed a biomass boiler in the next five years. He added: ‘We can cut the capital cost significantly and with improved efficiency we can even compete with gas as prices rise.’
In March, the government delayed the domestic RHI, which was supposed to be introduced in October, until 2013. Last month it also capped the RHI budget for this year at £70 million in an effort to ensure the scheme does not exceed its budget like the FIT scheme did.