Hoteliers getting cosy with biomass offers could be leaving themselves in the cold

Could biomass deals leave you feeling the chill?

Could biomass deals leave you feeling the chill?

Green Hotelier Talking Point: Guest Blog

Biomass boilers are the current hot topic for hoteliers looking for greener energy, but today’s Talking Point blog from Adrian Wright CEO of Happy Energy asks, are the free boiler offers too good to be true?

We’re all looking for greater energy efficiency and more sustainable fuel options, but today I’m warning hoteliers and leisure business operators across the UK to look before they leap when it comes to the growing numbers of free biomass boiler offers appearing in the market.

As an energy specialist, I’ve realised that investors have spotted an opportunity to benefit from generous payback rates offered through the commercial Renewable Heat Incentive (RHI), and are increasingly targeting the hotel and leisure sector with offers of free fully installed and maintained biomass boilers.

The highly energy efficient units – which burn wood or wood pellets to create heat and hot water - qualify for payments under the Government’s RHI and are particularly suited to large energy users such as hotels and leisure business operators.

But I want to warn businesses in the sector to ‘Look before you Leap’ when it comes to the range of benefits offered by biomass. It could literally pay to ask questions before taking up any offer.

Whilst on the surface, the offer of a free biomass boiler installed and maintained looks really appealing, hotels and leisure businesses are being targeted by these investors because of the generous returns offered by the RHI and could miss out on receiving these payments themselves.

As an example, a 200 Kw wood chip boiler, fully installed including ground works and dedicated cabin will cost around £150,000. If used for around 3,000 hours a year, it would generate a RHI income of just under £30,000 in year 1, with the potential to generate over £700,000 over 20 years with a likely profit of around £500,000 in that time.

Whilst a free biomass boiler will reduce energy bills for those not on mains gas, businesses would miss out on receiving the RHI payments themselves. From a business perspective why would you want to miss out on these financial and environmental benefits – especially as there is funding and off-balance sheet loans available to fund Biomass investment.

My advice is think about asking these questions if faced with a biomass offer:

1.    Will the wood pellet or wood chip fuel be cheaper or more expensive than my current fuel supply? 
Mains gas is usually cheaper than biomass fuel so your energy bills could actually increase.  The biomass supplier may use a bit of smoke and mirrors to make it look as though the biomass is cheaper by quoting improved boiler efficiencies.

2.    Can I afford to install the boiler myself?
Investors are not offering you a free boiler out of the goodness of their hearts, they are looking for safe returns of 15% and higher. If you can afford to buy the boiler, do, it’s a great investment.

3.    What minimum use will be required on the free boiler and what happens if I don’t achieve this?
Most contracts linked to a free biomass installation will require you to generate a minimum amount of heat a year. There is likely to be a penalty attached if you don’t use the boiler or don’t achieve the minimum usage.

4.    Are there other ways that I should be looking to cut my energy bills?
Typically someone providing you with a free biomass boiler will not want you to save energy, in fact, they want you to burn as much as possible so consider other ways of cutting energy usage such as insulation and Solar PV.

Biomass boilers provide a wide range of benefits for those in the hotel and leisure sectors but caution and research is advised before taking up one of the growing free offers.

To find out more about the benefits of biomass, contact Happy Energy on 0800 0246 234 or visit www.happyenergy.co.uk

One Response to Hoteliers getting cosy with biomass offers could be leaving themselves in the cold

  1. I previously oversaw installation of Biomass units at two hotels for a company I used to work for. Both hotels were off-grid in terms of their gas supply so both benefited from good savings compared to the previous LPG supply. If you have the capital available it is definitely worth aiming to buy the unit outright and take the RHI payments too. In total for one of the hotels there was a net saving of around 60k per year when accounting for fuel saving and RHI, so it had quite a big effect on the overall value. Ultimately it depends on the hotel as to whether its worth doing, but its worth getting a survey done to find out.
    Anthony- http://www.switchenergysupplier.co.uk/

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