The government-backed domestic Renewable Heat Incentive (RHI) – which comes into force later this month – is set to spark a higher demand for wood pellets in the UK as homeowners are paid for the renewable heat that they generate for the very first time.
Individuals will receive 12.2p for each kWh of heat produced, and for an average off-grid property in a rural location consuming 15,000 kWh of energy every year, this equates to an annual tax free income of more than £1,800.
Over the duration of the RHI programme, consumers will be able to repay the expense of a wood pellet boiler, and enjoy significant fuel savings.
In addition to large savings on the boiler itself, wood pellets are one of the most cost effective forms of sustainable and renewable energy available today, equating to around 4.6p per kWh.
Furthermore, pellets are an increasingly accessible fuel source and customers often have a choice of more than three suppliers in their local area thanks to an established supply chain across the UK.
The non-domestic RHI, which was introduced in 2011, has seen businesses up and down the country benefit from significantly reduced heating bills and carbon emissions.
The UK Pellet Council estimates that consumption for wood pellets will quickly surpass the current level of 150,000 tonnes per annum as householders with an approved biomass-fuelled installation, such as a wood pellet boiler, capitalise on the reward payments under the RHI.
Richard Smith, Chairman of the UK Pellet Council, explained: “Wood pellets have become increasingly popular, predominantly in rural areas, thanks to their widespread availability for homeowners coupled with their low cost of purchase and high efficiency.
“For those who have typically used conventional fossil fuel sources up and until now, we expect the introduction of the RHI to result in a positive shift in the number of consumers turning to wood pellets to heat their homes as they embrace this new financial incentive.
“With an estimated 30 to 40,000 installations expected in just the first year of the RHI, we expect wood pellets to make up a significant proportion of this.”
The Renewable Heat Incentive is a government financial incentive to encourage a switch to renewable heating systems. It’s a way to help the UK reduce carbon emissions. At the moment, it only has a Commercial (Non- Domestic) Scheme, which broadly speaking is for industry and organisations.
The Domestic RHI will cover homes in England, Scotland and Wales. It’s for people who live in homes they own, private landlords, social landlords and people that build their own homes.
The UK Pellet Council was founded in November 2011 and is hosted by the Renewable Energy Association (REA) in London. It is currently chaired by Richard Smith, Managing Director of Verdo Renewables.