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Breaking down the RHI

Since the launch of the Renewable Heat Incentive (RHI) non-domestic energy users can receive a guaranteed income for 20 years by producing energy through a wood pellet boiler. It's not just the payments that make this a financially attractive option, as users will also save through the cost of the fuel.

Although the cost of the boiler may look like a financial hurdle, we've broken down the payments available and it shows that you can pay off the cost of the appliance in under 4 years - depending on certain criteria.

The table below shows the amount of time it takes to pay off the cost of a boiler, for oil and gas users, and also the amount of money you can save in fuel costs:

Floor Area (m2)

800

2500

5000

Boiler Size

70kW

200kW

400kW

Capital Cost

£50,000

£120,00

£200,000

Oil Cost

£9,204

£26,296

£52,593

Pellet Cost

£5,250

£15,000

£30,000

RHI Per Annum

£8,227

£23,505

£31,242

Payback Years vs Oil

4.10

3.45

3.72

Payback Years vs Gas

7.25

6.09

8.46

Pellets are around 40% cheaper than burning oil and the savings made through switching to wood pellets are attractive without taking into account the regular RHI payments.

For the average wood pellet burner, it takes about 3-4 years to recoup the money spent on the installation (if switching from oil) and around 6-8 years (if switching from gas). The user will then have the remainder of the 20 year RHI period to receive an income from the energy produced.

RHI Breakdown Case Study

Size

500 Pupil School

Boiler size

500kW

Capital Cost

£230,000

Oil Cost

£65,741

Pellet Cost

£37,500

RHI Per Annum

£39,053

Payback Years vs Oil

3.42

Payback Years vs Gas

7.78

For this school, it would take them just 3.42 years to pay off boiler costs, if switching from oil, and 7.78 if switching from gas. They will then have over 10 years worth of the RHI payments, which are just under £40,000. On top of this, they will also save £28,241 each year in fuels costs, taking the total money saved/gained over the course of a year to £76,553.

For anyone that is currently eligible to apply for the RHI, there has never been a better time to do so as it is expected that the currently generous tariffs will be reduced. The good news is that once you have been accepted your tariff will be fixed for the 20 year agreement, meaning that your business or organisation will receive fantastic income for the energy produced through a wood pellet boiler.

A combination of cheaper fuel and the RHI payments makes wood pellet boilers an extremely attractive financial package to any commercial organisation or business.

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