Businesses could be missing out on thousands of pounds in savings by delaying switching to green energy for heating.
According to Michael Wright, of leading renewable energy installer Yorkshire Heat Pumps, firms who make the changeover currently stand to benefit from 20 years of government incentive payments, as well as being assured of lower, long-term, sustainable energy costs.
And with the incentive payments, businesses could recoup the cost of the switch in as little as four years.
Said Michael: “Our non-domestic installations have been quite diverse in the last year and have included a golf club, clothing factory, retail showroom and a growing number of district heating schemes – both clusters of rental properties and houses with standalone annexes and workshops.
“Thanks to Ofgem’s non-domestic Renewable Heat Incentive (RHI) payments, some of these customers are looking at recouping the cost of the installation in as little as four years. Combine that with the long-term reduction in operating costs and this represents a very sound investment.”
Launched in November 2011, the non-domestic RHI scheme pays a subsidy over 20 years to eligible, non-domestic renewable heat generators and producers of biomethane.
By providing a long-term financial incentive, its aim is to significantly increase the proportion of heat generated from renewable sources, thereby helping the UK meet EU targets to reduce carbon emissions and improve energy security. If the UK misses its carbon targets of 15% of energy consumption coming from renewable sources by 2020, the government will face a hefty fine.
The scheme has a built-in degression mechanism whereby significant uptake of a particular technology automatically triggers a drop in the tariff for new scheme applicants. This will lengthen the payback period, so it makes sense to act early.
By June this year, 10,882 non-domestic RHI applications had been approved, with 1993 accreditations added to the scheme in the first quarter of this year alone. This represents an 89% increase compared with the same quarter in 2014.
Michael said: “The non-domestic RHI scheme is applicable to organisations of all sizes, from small businesses to hospitals and schools and not-for-profit bodies, as well as district heating schemes where one boiler serves multiple dwellings. The government is committed to RHI until 2016 and we wait to see what will happen after that.”
Michael said: “Don’t think “it’s not for me”. Businesses and organisations large and small are benefitting and even with the tariff drops, installing renewables still makes sense for most – especially if you’re off the gas grid – because of the operating cost savings. Our factory customer, for example, who installed a 199kW biomass boiler is saving £19,000 a year on fuel on top of receiving the quarterly RHI payments. I’d urge anyone thinking about switching to get their skates on to avoid missing out on the still healthy RHI returns and cheaper fuel bills for the long term.”
There is also a domestic RHI scheme aimed at homeowners and self-builders which is designed to neutralise the cost of installing a ground or air source heat pump, biomass boiler or solar thermal panels. Domestic RHI tariffs are higher than non-domestic, but are paid over seven years rather than 20.
Yorkshire Heat Pumps, a leading regional installer of renewable heating technologies, is based at Blubberhouses, just outside Harrogate. Run by Michael and Kate Wright, the business specialises in biomass and ground and air source heat pumps.