Do you think that you biomass boiler is costing too much to run? Are there other options available to you that are more cost effective? These are issues that potential clients frequently approach us with.

Recently a prospective client sent a message stating they were planning on stopping using their 70 kW second-tier Austrian Boiler as they thought is was providing too costly to run. Before we responded to the client we did a bit of an investigation to understand the the likely operating costs of the boiler and potential costs savings or replacements that would be more costs effective for them.

We have detailed below the process we went through below, this should provide you with some of the different factors you may wish to consider to find the best solution for your situation.

“We wish to sell our 70KW wood pellet biomass boiler because there isn’t enough value in it for us now due to the cost of wood pellets. The boiler was installed in November 2012. We understand there is a market in selling the boiler just for the RHI tariff.”

When we started looking at this enquiry we considered the following;
– current fuel costs, are they paying too much for their fuel?
– how much is their boiler costing them to run at the moment?
– could they replace the Austrian boiler with a more efficient one?
– could they sell on their RHI tariff?

Are they paying too much for fuel?
We supply, install and maintain biomass boilers across the UK. This means that we have a huge amount of industry knowledge and keep abreast of costs of biomass fuel costs at all times as well as how they compare to the costs of other fuels. The figures below are what we would expect to be paying for the different fuel types in March 2024.

Wood Pellets £350 /tonne, equivalent of £0.07 / kWh
Wood Chips £140 /tonne, equivalent of £0.04 / kWh
Oil £0.70 / litre, equivalent of £0.07 / kWh
LPG £0.45 / litre, equivalent of £0.069 / kWh
Gas equivalent of £0.06 / kWh

* Costings used are indicative of average costs across the country in March 2024. They are not necessarily what are available in all areas of the country.

The customer in this example was using wood pellets for their boiler. This is most frequently the case with commercial biomass boilers. Wood Chips may be cheaper / tonne, but for most large scale commercial boilers wood pellets are the preferred option. Wood Chips are physically larger so they require more storage space, this is further compounded by the fact that pellets have approximately 4 times the energy density.

If the customer is currently paying more than £350 / tonne for their pellets then the first thing they should be doing is trying to source cheaper pellets. The Biomass Suppliers List is a great resource to investigate suppliers in your area. We would expect that this customer would be using approximately 28 tonnes of pellets each year. If they are paying £0.08 / kWh for the140ir fuel instead of £0.07 their annual fuel bill would increase by £1400.

How much does their current boiler cost to run?
One of the factors that determines usage is the ‘load factor’, this is a value which indicates the daily average usage of the boiler. This particular client was a small hotel, so we have assumed a load factor of 2000. A larger building with higher potential use would have a higher load factor.

To calculate their total energy usage we simply multiply the load factor (2000) by the size of the boiler (70 kW), which in this case gives us an estimated annual usage of 140,000 kWh. Their annual energy cost is then calculated by multiplying the usage (140,000 kWh) by the fuel cost (£0.07 / kWh), giving a total of £9,800 / year.

We then look at the RHI payments they receive from this amount of usage. The RHI allows for a certain number of hours each year at Tier 1, with the rest of the usage being Tier 2, this is 1314hrs for RHI tariffs prior to September 2017. So for this client we multiply the tier 1 allowance (1314) by the boiler size (70 kW), giving a total of 91,980 kWh, we then subtract this from their total usage to give the total of Tier 2 usage (140,000 – 91,980 = 48,020 kWh). They will be receiving 12.51p / kWh for Tier 1 usage and 3.28p for Tier 2 usage, this means that they should be receiving £13,082 annually.

This left us scratching our heads a little bit as the boiler should be running at a surplus of £3228 / year. So why are they considering changing their boiler?

Could they get a more efficient boiler?

The figures calculated above have used a load factor of 2000, if the current boiler isn’t particularly efficient we would use a load factor of 2500. This would have resulted in the cost of their usage increasing to £12,250, meaning that they are breaking even, but not running a significant surplus.

One of the manufacturers we use the most is Hargassner, we have been installing their boilers for many years. Hargassner are a leading Austrian manufacturer who have built a reputation for high quality, reliable and efficient biomass boilers. We would recommend replacing the second tier boiler with a Hargassner ECO PK 70, this is a much more efficient boiler which demonstrates how much the technology has improved in the last 10 years. Because of the increase in efficiently of the Hargassner boiler we would assume a load factor of 1500 for the costing calculations, this would resulting in savings of approx £2,500 / year.

Selling their RHI tariff

We are increasingly becoming involved in the buying and selling of RHI tariffs. If you have a boiler that you are no longer using for any reason there is still value in the tariff that was assigned to the boiler when it was installed. The value of the tariff is determined by how long is left on the tariff each particular boiler has. In this case there would be approx 10 years RHI payments left in the tariff, so the value of the tariff is roughly one to one and a half times the Tier 1 RHI payments for 1 year, roughly £10,000 – £15,000.

What would we recommend?

It’s often quite obvious what the best course of action would be for each client, quite often this is to upgrade the boiler to a newer, more efficient model as long as the business can afford the capital outlay.

For this particular client it much more unclear. If they swap to oil or LPG their energy costs will be approx £9,800 year, for gas it will be £8,400, they could not receive any rebate for this energy usage meaning that their 10 year total energy costs would be £84 -£98,000. If they keep their existing boiler and it is really inefficient (load factor 2500) they would still be approx £8k in profit, that’s up to a £100,000 difference. They could sell their RHI tariff to offset this, but they’re still significantly worse off.