20th September 2022
With the continuing energy crisis, many businesses are left wondering what their options are for lowering costs and becoming more resilient to ever changing market conditions.
Whilst the Chamber continues to lobby and campaign for government support for businesses, we wanted to know how renewable heating options stack up in this current economic climate. So, we asked our member Ryan Pollard, at RDI Renewables to share his thoughts on the options available for businesses in way that was easy to understand and clearly set out the cost benefits.
Here’s Ryan’s thoughts……….
With the current energy crisis setting in, many businesses will be struggling to avoid the rising costs for fuel, in particular electric. There seems to be little we can do about it with some companies reporting as much as a 500% increase in their costs.
One option worth considering would be to check the feasibility of solar panels, in the past solar panels have been propped up by government incentives such as the feed in tariff scheme. In more recent years this technology has reached a point where it has been able to stand on its own two feet as far as financial returns are concerned. The standard domestic array from RDI Renewables today will cost around £5,500, this would be for a 5.3kW array which will produce around 4,000kWh per year of electricity. Based on recent costs of electricity of 17p/kWh this would have a value of £680 meaning the investment would pay for itself in just over 8 years, which is not bad.
It can be difficult to come up with a sensible estimate on what today’s electric tariff is as many businesses are being quoted as much as 63p/kWh. However let’s play it safe and go with 40p/kWh, on this basis on the same size of array you would yield 4,000kWh x £0.40 = £1,600. This is a staggering amount of money and would bring an annual return on investment of 29% paying for itself in just over 3 years.
The good thing about PVs is that they are very scalable and this example will be very similar on a larger scale. For example, a 38.5kW array was recently looked at for a local business on a building with very high electric use. This array will cost £27,086.67 plus VAT to install and will generate around 23,000kWh of electricity, based on 40p/kWh this will save this local business £9,200 per year.
Not all businesses are suitable as some will have much higher electric costs in the winter, for example if electric heating is used. In these cases solar PV may not be worth doing or at least not on a large scale. Many businesses however have consistent electric consumption throughout the year where manufacturing is carried out. Others may have much higher electric usage in the summer if the business has chillers/freezers which work much harder in the summer or perhaps the business is involved with the tourism industry which is seasonal and well suited for solar PV.
One final note to consider on solar PV is that the equipment is very reliable, this technology is solid state and therefore has no moving parts and no annual service requirements. The inverter is the only part of the system which is likely to break at some point and this comes with a 10 year warranty, aside from this the whole system is expected to last over 20 years.
For businesses which are expecting high costs for heating throughout this winter another option which may be worth looking into would be a biomass boiler. Let’s take a snapshot of some local prices for fuel and compare from most expensive to cheapest what options local businesses have.
Electric or storage heaters are by far the most expensive way of heating your business, with current electric prices in excess of 40p/kWh. Electric heating is only able to provide 1kWh of heat for every 1kWh of electricity consumed and therefore the cost of this form of heating is 40p/kWh or higher.
Air source heat pumps are a great way for many businesses to reduce costs as they use a refrigeration circuit to move heat energy around as opposed to converting it. As a result this technology can produce 3kWh of heat out for every 1 used, meaning the cost is only 13.5p/kWh. This technology is a great option for anyone who currently uses electric heaters for their business.
Kerosene or oil is another very popular form of heating within the North Highlands. Recent changes to the use of red diesel means that most businesses are now using this for their heating. Kerosene did shoot up to around £1.15/Litre recently but has settled back down to around £0.95 per Litre. 1 Litre of kerosene contains approximately 10kWh of heat meaning the cost is around 9.5p/kWh of heat, which is not bad.
Biomass takes many different forms however the 3 most common are log, chip and pellet. Logs are the cheapest form of heating. However, there are no automated feed systems for log boilers which means you have to load a boiler as well as clean it out and remove ash etc. Some businesses will have the manpower to accommodate this however many will not.
Wood pellets can be blown in via a lorry and the boilers are fully automated making this technology as easy to run as oil. However pellets are a manufactured fuel and are therefore sensitive to international oil and gas prices. This means that they have also seen a significant increase in cost over the past few months and are showing no signs of reducing.
Wood chip comes with the advantages of both of the above fuel types, it’s as cheap and available as logs due to the fact that local timber can be sourced from local forests and turned into chip by local contractors. The boilers are also automated so there is no need to light the boiler or refuel for example. If you have the space to accommodate the plant required to run such a system then you could consider the possibility of having a wood chip boiler installed. Many local businesses in the region have found great success in doing so and are continuing to reap the benefits. Wood chip costs around £120 a tonne and 1 tonne of chip (4m3) contains around 3,000kWh of heat, meaning the cost of heating your business with wood chip today is around 4p/kWh.
To summarise, many local businesses within the North Highlands are going to be struggling over the coming winter and beyond. Not all will be suitable for the above technologies however some will be. If you feel that you could benefit and would like to know more about how feasible renewables are for your business then please reach out to RDI Renewables and we will try our best to help. We have been established in the county for over 10 years now and have a wealth of experience as well as a long list of clients who can speak to our services and continued support long after the installation is complete.
Contact Ryan at email@example.com or 01847 890012