Whilst the price of traditional fossil fuels such as gas and oil continue to go through the roof, the cost of wood pellets looks set to take a more stable path over the next few years. A combination of the current pricing structure, the predicted costs over the next decade and the introduction of the Renewable Heat Incentive (RHI) has highlighted the financial benefits of switching to wood pellets and biomass energy.
The table below indicates the price gap between wood pellets and heating oil. These figures are based on heating a large office building but it shows that it costs over 2p more per kWh when heating oil compared with biomass.
|Product||Amount Required||Unit Cost||Annual Cost Incl. VAT||Cost per kWh|
|Wood Pellets||137 Tonnes||£180||£24,660||4.11p|
|Heating Oil||60,000 Litres||65p||£39,000||6.50p|
Switching into wood pellets from certain types of fossil fuels could dramatically lower your heating bill each year, and the gulf in price between the different fuels looks set to increase over the next few years.
Oil and gas prices have been rapidly rising for years and the effect has been felt by UK homeowners and businesses. Although it is impossible to predict exact cost fluctuations in the future we expect wood pellets to offer more stability than the volatile nature of oil and gas pricing. As it currently stands wood pellets represent great value renewable fuel and the introduction of the RHI has further reinforced this.
The Renewable Heat Incentive
The RHI provides a financial incentive for the installation and use of renewable energy. Participants in the scheme will receive a regular payment over a 20 year period for the amount of energy they produce from renewable means, like wood pellets.
Currently the scheme is only open for non-domestic users but homeowners can apply for a £950 premium payment grant towards the cost of the wood pellet boiler.
Wood pellets look set to play an increasingly important role in the future of the UK energy industry and the combination of value pricing, stable future costs and the RHI underlines the financial benefits of this renewable fuel.