Changes to the Non – Domestic Renewable Heat Incentive

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Technology, Products & Services

Changes to the Non – Domestic Renewable Heat Incentive (RHI) Oct 2017

There’s still high returns for Biomass CHP projects but chose your CHP technology wisely

The recent changes to the RHI Biomass CHP Tariff have altered payment amounts awarded to owners of biomass CHP installations.

While subsidies have been reduced, they are still attractive and guaranteed for 20 years and so CHP biomass projects remain a great investment.

However, to improve margins and fully maximise financial returns on your project, the CHP technology that you select to integrate with your biomass boiler should:

  • Be simple to install and run for reduced build and maintenance costs
  • Be competitively priced with no need for expensive extras such as superheaters
  • Provide a supply of heat at a temperature suitable for your processes to comply with RHI rules

What do the RHI changes mean for biomass CHP projects?

There are still attractive incentives available for biomass CHP.

The electrical efficiency of CHP technology has been a key government concern for some time and they have now stipulated that 20% electrical efficiency is required to receive 100% of the CHP tariff.

Lower electrical efficiencies provide a lower tariff directly related to the efficiency.

Can you achieve 20% efficiency with small-scale CHP technology?

Most small scale (1 MWe or less) CHP technologies do not offer 20% efficiency.

Those technologies with higher efficiencies typically fall short in their output temperatures – meaning that the heat they provide isn’t suitable for heating and drying, which isn’t helpful to end users.

The purpose of CHP technology is to provide low carbon heat and power and so getting caught up in efficiencies and selecting technology with high electrical efficiency but low output temperature could undermine the whole purpose of these projects.

How is the new biomass CHP tariff calculated?

The biomass CHP tariff is in two parts and is based on the amount of usable heat produced by your biomass CHP plant.

Part one is calculated depending on the electrical efficiency of your electricity generating equipment, and part two is for the remainder.

Part 1 - CHP tariff:

£0.0429/kWh (thermal)

To get the full amount of your RHI incentive at this rate you need a CHP system with electrical efficiency of 20%.

If the electrical efficiency is lower, then the tariff is reduced proportionally to the 20% electrical efficiency.

Example:  A 9% efficient generator will receive 45% of the CHP tariff and the remainder from the heat tariff.

Part 2 - Heat tariff: For all usable heat from the biomass boiler

The heat tariff has now been split into two tiers, with a higher tier 1 tariff.

Tier 1 tariff of £0.0296/kWh (thermal) applies to the first 3066 operating hours in the year

Tier 2 tariff of £0.0208/kWh (thermal) applies to the remaining yearly operating hours

In the example above the heat tariff would apply to the 55% of energy not covered by the CHP tariff.

Attractive returns are still available for Biomass CHP projects

The example below highlights the RHI returns for a biomass boiler with Heliex GenSet, providing an additional annual income of £162,271 per year (electricity savings & RHI payments combined) than if a biomass boiler was installed alone.

 

*(using tariff levels from OFGEM, figures correct as of October 2017)

The Heliex Two-Stage Solution

To further enhance returns, we recently introduced the Heliex two-stage solution, which offers increased electrical efficiency of around 10%.

Perfect for applications where steam is used to heat water, required at temperatures of >80˚C for processes or space heating, this involves slightly more capital investment than with a standard Heliex GenSet but significantly boosts RHI incentives.

The below chart below shows in green the estimated yearly revenues for a CHP installation with Heliex two-stage solution to supply hot water at >80˚C after steam to water heat exchanger or vent steam, and in yellow for a heat only installation.

  

 Heliex Power Biomass CHP RHI Tarriff returns explained

 

  • For a 2000kW system incorporating Heliex two stage GenSet there’s an annual RHI income plus electricity savings totalling around £540,000 per year.
  • A heat only system incorporating a biomass boiler alone has an annual income of around £340,000 per year.
  • The £200,000 difference sees the Heliex two stage GenSet paid back in under two years, with the system generating an additional annual £200,000 income for the remaining 18 years of the RHI scheme, totalling £3,600,000.

Heliex for Biomass CHP

Integrating Heliex into your Biomass CHP projects will increase your RHI income, with quick payback on the additional expenditure for the GenSet and then long-term returns guaranteed.

Contact us with the details of your project and we’ll review the best Heliex solution for you.