If you are currently off-gas grid and are heating your home by either oil, LPG or electricity or if you have a really inefficient heating system, then knowing that a technology like biomass can help cut energy costs must be comforting. However the only issue is that until quite recently the costs of the installation has been quite prohibitive, with many customers deciding to keep their existing system in place as a result, despite the cost of fuel going up considerably over this time.
Although the cost of a new biomass boiler is still pretty high, with the domestic Renewable Heat Incentive (RHI), the customer in theory should get a good return on their investment over a short period of time.
In addition, with the RHI it has actually opened up the market to private investment initiatives where if the property is suitable, the customer can get the biomass plus installation absolutely FREE. So in the rest of the article we are going examine this initiative and answer the question a lot of callers have been ringing about – is this too good to be true?
How do I qualify for the free biomass boiler through my property?
These free biomass boiler schemes can only work if the cost of the installation is paid for by the RHI payments over the 7 years they are paid. For this to work, the property itself has to be of a certain size for it to generate the payments big enough for this to be viable. This can be best illustrated with an example.
The way the RHI is worked out is based on the heating and hot water demand on the EPC, which is presented at the end of the report. If a particular property has a heat / hot water demand of 30,000kWs; then at the current 12.2p per kWh paid via the Biomass boiler RHI, this is equivalent to £3,660pa or £25,600 over 7 years.
Provided the installer was going to make a profit – i.e. the install cost was less than £25k (although in real terms it will need to make them a significant profit otherwise they could simply invest their money in the bank) then they can offer the biomass boiler free to the customer – since they will receive the payments.
Companies offering FREE biomass boilers
First of all – the companies that are installing this service have to be MCS approved. Only an MCS approved company will be able to install the biomass boiler and be eligible for the domestic RHI.
The company that is setting up the actual offer doesn’t have to be MCS accredited but it is worth asking them for the proof demonstrating, which approved installer they work with.
You may have had door-to-door salesmen offering this service or have had calls over this on the phone, and our assessment is that you shouldn’t do anything before you have read the fine print and have gone through all the terms & conditions.
The structure of these offers will tend to involve the company offering the free biomass boiler, asking you to sign a zero rate loan agreement, which will then sit on the property rather than yourself. The loan payments are then matched against the RHI payments that are coming from OFGEM. Since the boiler is owned by the company in the first 7 years, they will get this investment back via these RHI payments.
Biomass boilers – things to be aware of
Since the free biomass boiler suppliers are looking to maximise profits, these companies will normally look to install the the most basic models on the market, and if you want extras like automatic fuel feeders, i.e. when the fuel is automatically fed into the furnace – this will come at a premium. Companies may quote you £1000’s to have these higher spec models installed.
With biomass boilers you will have to source the right type of pellets to feed the system to avoid unnecessary blockages and then having to pay out expensive call out charges just to fix the system. When you sign up for one of these free deals the company that is offering this to you will also offer you a fuel supply for a certain amount of money. You may choose to do your own due diligence on the pellets that they are recommending and may well want to source these separately yourself to minimise costs.
At the start of the process the company will want to carry out an EPC assessment to work out the heat demand of the property, and if you don’t have a recent one at hand then they will probably ask you to pay £50-£60 to cover themselves for the cost of doing one in the first place.
As mentioned the property cannot have loft and/or cavity wall insulation as recommended measures on the EPC report, because if they have these recommendations you will have to have these measures installed to carry on with the process. The RHI has been set-up so that customers install these new systems in relatively well insulated homes – to protect the RHI funding and also to be fair to the taxpayer.
Bearing this in mind, then free biomass boilers aren’t really a bad idea – for the installer to claim the RHI, they need to be MCS certified so you can be sure that your boiler will be installed by a competent person – they need to have the necessary qualifications to install the boiler! In our opinion, it is not a bad way to go, especially if you are living off mains gas, since the biomass fuel will be cheaper than heating oil and other fuel equivalents.