Biomass cost and funding

As stated previously, costs vary for biomass according to the technology used, the scale of the installation, the amount of pipework needed and any thermal storage required.

Unlike other renewable technologies it is necessary to budget for fuel over the lifetime of the project. However, biomass (wood chip in particular) is very competitive and is currently cheaper than fossil fuels as shown in the graph below.

Payback periods and savings

When considering payback for domestic installations, savings are best made in areas that are not connected to the gas network. This is because the cost of the biomass fuels is more competitive than oil and coal yet less so than that of natural gas as shown in the diagram below.

Savings are also high for properties with high heat loads. For instance, a large farmhouse that uses oil heating with a requirement of 75,000 kWh a year might pay back the cost of conversion to a wood chip or pellet boiler in four to eight years, based on current prices and getting a grant.

For smaller three bedroom properties with an annual demand of 25,000 kWh, the best current paybacks (five to nine years) are for log boilers when replacing electrical heating systems.

The graph below shows a comparison of fuel types. It starts with the lowest to the highest in the following order: wood chips, wood pellets, natural gas, heating oil, LPG (Bulk) and electricity.

Graph comparing fuel types

Funding schemes

There is a range of funding sources for developing biomass power generation. This PDF sets out the available funding schemes and links to the organisations that provide the funding.

Carbon Trust Biomass Heat AcceleratorCarbon Trust Technology Accelerator project now in its second phase.

Carbon Trust Technology Accelerator project now in its second phase.

Biomass heat accelerator - on the Carbon Trust website


Public sector
Carbon Trust Energy Efficiency Loans SchemeInterest-free loans for £3,000 to £100,000 are available from the Carbon Trust to help organisations finance and invest in energy saving projects.

0% business loans - on the Carbon Trust website
E.ON Sustainable Energy FundA grant from E.ON for community groups and not for profit organizations planning to install sustainable energy projects.

Access to funding - on the E.ON website
Charities and not for profit (local community) groups
Enhanced Capital AllowanceEnhanced Capital Allowances (ECAs) enable a business to claim 100 per cent first-year capital allowances on their spending on qualifying plant and machinery.

ECA Energy Scheme
Feed-in TarriffsA mechanism to support small-scale generators of renewable electricity, up to 5 MWe to complement the Renewables Obligation for large-scale generators. Only anaerobic digestion is eligible.

Feed-in Tariffs - on the Department of Energy and Climate Change (DECC) website
Renewable Heat IncentiveThe Renewable Heat Incentive (RHI) is due to launch in June 2011 to support increased generation of renewable heat, and producers of renewable biogas and biomethane.

Renewable Heat Incentive (RHI) - on the DECC website
Wood Energy Business SchemeA Forestry Commission Wales initiative which aims to establish a network of wood-fuelled installations across Wales and strengthening the timber supply chain. Available until 2013.

Wood Energy Business Scheme - on the Forestry Commission website
Woodfuel East Boiler Installation Grant SchemeFunding of up to 40 per cent for installations of modern, automated, woodchip-fired combustion systems. Available to farms, small energy supply companies, micro-enterprise projects, tourism projects and community buildings.

Boilers domestic and commercial - on the Woodfuel East website

Charities and not for profit groups

17 December 2010

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