Future cost of Biomass Fuel

[The Solar King]

We are looking at the possibility of adding heat technologies to our accreditation. One we are examining is biomass.

Here's the rub. Whilst the renewable Heat Incentive should cover the additional cost of installation, and initially the running cost should be roughly equivalent to mains gas if using pellets, what does the future hold on this? Whilst pellets currently hold this price differential advantage, who is to say it will remain? A customer would be pretty sore in five years time if they find the price has increased faster and now has parity with oil. They would be no better off.

Supply is currently pretty good, but if there is a huge increase in demand, price will be the controlling factor.

Any thoughts?

 

[TedM]

When I put my GSHP in back in 2006 I considered a pellet boiler as the only practical alternative. The unpredictability of future pellet prices put me off it completely. And with the RHI now requiring certified fuel supplies this gives the supplier an excuse to jack the price up too. The only approach I would consider for pellets would be to negotiate a long-term contract with some sort of sensible price structure built-in, but even that is no good if the supplier goes bust.

 

[The Solar King]

The issue of certified fuel supplies is one many will not have picked up on. It is there in the small print of the RHI. The detail is still being finalised and should all be up and running by the autumn. It has implications for all fuel types but may be more difficult for wood chips and logs. If you are currently scavenging/foraging your biomass supply or getting from a very local source, there may be no way of certifying it. For many rural dwellers, this is their main or only source.

For biomass to be counted as carbon neutral, replanting and certification is essential. What though happens if you are supplied wood chips by an arborialist?

We could end up with a two tier supply and a two tier price - RHI and non RHI. I am sure gaming will be rife.

This is another area of doubt for me on biomass.

The carbon trust did publish an interesting document on biomass prices which can be found here: https://www.carbontrust.com/media/88607/ctg074-biomass-fuel-procurement-guide.pdf
another one for DECC here: http://www.rhincentive.co.uk/library/regulation/100201Biomass_prices.pdf

Both seem optimistic, but do not take account of certification as will be required for the RHI.

 

[John Allen]

Solar King wasn't there something in the details for fuel certification to cover those who supply their own fuel via self coppicing or foraging?

 

[The Solar King]

Here is the detail from the Domestic RHI Consultation outcome policy document. I have removed all the links:

"88.
To be eligible for and continue to receive RHI support for a biomass system, fuel needs to be sourced from a supplier registered on an approved supplier list. Such a list will be set up ahead of the launch of the scheme and will be the same one that is being established for the non-domestic RHI scheme.

89.
RHI recipients will have to make an annual declaration that they are using only approved fuel from an approved supplier, and keep receipts as evidence for future audits.

90.
To be included on the list, we intend that fuel suppliers will have to meet two criteria from April 2014:

i. Supply fuel which complies with the greenhouse gas (GHG) lifecycle emissions target of achieving 60% GHG savings against the EU fossil fuel heat average, assuming a boiler efficiency of 70%

ii. Report their performance against the relevant land criteria from the following list (although compliance with the criteria will not initially be required):

a. For wood - fuel: the UK public procurement policy on wood and wood products, or its equivalent.

b. For perennial energy crops planted under the Energy Crops Scheme for England, or its equivalent: the sustainability requirements set by that scheme or its equivalent. This scheme may be coming to a close, so we may need to revisit this area to ensure there is no gap in sustainability requirements. In doing so, we will seek to take an approach that is consistent with the non-domestic RHI scheme.

c. For other types of solid biomass: the sustainability criteria set under the Renewable Energy Directive.

In line with the non-domestic RHI scheme, our intention is to make compliance with the land criteria mandatory from April 2015, subject to EU and international legislation.

91.
Further information about the criteria can be found in the Government Response to the July 2012 non-domestic RHI scheme consultation entitled ‘Providing Certainty, improving performance’.

92.
Work is ongoing to develop an approved supplier list and we expect it to be in place before the launch of the domestic RHI scheme. Further details will be published closer to the launch of the scheme. With a view to minimising administrative burdens, we intend that woody biomass feedstocks (which includes perennial energy crops as well as wood) grown on the same estate as an eligible biomass system will be automatically treated as meeting the sustainability criteria provided they do not also supply to other biomass heat installations. Our aim is that people in this situation register their details as a self-supplier and provide accompanying evidence. We will also look at introducing a proportionate approach for suppliers who only supply to their local area (local suppliers)."

So you can see foraging etc appears not to be covered. If you are coppicing your own land, you should be OK. The word estate jars a bit. Sounds as if you get your wife or servant to do all this.......

For most it will be a registered supplier. Hopefully the proportionate approach will be proportionate (but in whose eyes?) If there is too much paperwork or cost, small guys won't bother. We will have to await the detail in the autumn.

 

[Worcester]

Simples, one of the reason Biomass stacks up is the price difference between it and oil (forget mains gas comparisons) based on teh information we have to date it will main that price difference, i.e track oil at a a discount, from a fuel supplier that makes a lot of sense as well as a lot of money and still stacks up for the consumer.

Pellet prices in the EU have been pretty much flat for the last 10 years, our (the UK's) small demand is unlikely to have a significant impact.

 

[Mattty]

When I put my GSHP in back in 2006 I considered a pellet boiler as the only practical alternative. The unpredictability of future pellet prices put me off it completely. And with the RHI now requiring certified fuel supplies this gives the supplier an excuse to jack the price up too. The only approach I would consider for pellets would be to negotiate a long-term contract with some sort of sensible price structure built-in, but even that is no good if the supplier goes bust.

Could I ask how much your electricity rate has gone up since 2006?

 

[shanky887614]

a lot of joinery companies are investing in a pellet machine so buy direct off them and not through a scheme and it will be a lot cheaper

 

[Worcester]

a lot of joinery companies are investing in a pellet machine so buy direct off them and not through a scheme and it will be a lot cheaper

They will have to register on the sustainability scheme and also go through the quality control hoops, else there is a danger of not getting the energy output per kg to meet the spec, and won't end up with any customers.

https://www.gov.uk/register-biomass-supplier

 

[SPARTYKUS]

Whats the idea with pellets.....? Surely if you're handed a tonne bag of wood offcuts, its better just to burn them as is than spend time and money turning them into pellets.....?

 

[LeeH]

I guess you'll get more heat per Kilo. Probably twice as much being pressed and compact.

 

[Gavin A]

a lot of the costs of pellets is the delivery, more customers in the same area will result in lower delivery costs. I don't see an issue until we get to the stage of actually hitting the limit globally on sustainable biomass sources in the catchment area of pellet plants and container ports. But that could happen rapidly if the price of coal increased and / or more coal power plants convert to biomass pellets.

 

[shanky887614]

Whats the idea with pellets.....? Surely if you're handed a tonne bag of wood offcuts, its better just to burn them as is than spend time and money turning them into pellets.....?

all the sawdust from joiners etc gets conpressed.

quite clever really, the dust extractors put it into a holding tank and then its compressed etc

 

[abbdoc]

We are as a company heavily involved in the Biomass Industry both in Commercial and Domestic and our advice is:
Unless the client has access to a forest and/or lots of wood and a wood chipper wood drier and lots of labour go for a pellet boiler its less expensive more reliable (in terms of fuel supply being EN rated A1+) Insurable and the fuel takes up under a third of the cubic capacity of wood chip.
Wood pellet supply/demand quality equation has been ongoing for a while but facts are there has been no significant rise in pellet prices (RPI Inflation apart) in 5 years, however it is also known that pellet prices have been held down.
If you can, try and get a deal with a pellet (EN Rated A1+) manufacturer who will guarantee your prices for at least 3 years and do not buy from NON EN A1+ pellet manufacturers as you run the risk of clinker/silicate build up in your boiler and ultimately warrantly and/or reliability problems.
Also IMHO stay well clear of anything Boiler wise NOT German Austrian or Scandanavian and even some of the Scandanavian boilers are suspect-do your research.
Last but not least a domestic biomass boiler fitted in place of a £2K existing oil spend will return at about 20-25% ROI.
And Very last Biomass irrespective as to whether Domestic or Commercial is Construction/Engineering this caveat emptor is given to the myriad of companies who think they can make the transition from "putting solar panels on a roof" to installing Biomass.