Is now the time to invest in renewable heat?

The biomass and renewable heat sector has been driven largely by rates associated with the Renewable Heating Incentive (RHI) over the last few years and many successful projects have emerged as a result. But with the scheme due to be phased out in two years time and no news on any credible alternative yet, there will inevitably be more changes on the horizon.

“There has been a definite slow-down in interest in terms of biomass boilers although the projects that are going ahead mean that growers are now getting a fair return for whatever size the boiler is,” says Jonathan Froggatt, at the Ebtech Group. “There are still good opportunities with biomass and with the potential end of the RHI, now is a good time to seriously consider these projects because we don’t know what will happen after that time,” he adds. Mr Froggatt says there has been a rise in interest from glasshouse growers to consider ground and air source heat pumps over the last year. “These type of projects are offering better returns for growers and in some cases will be the preferred option depending on the type of business. Many growers have been asking us about these this year. But they aren’t without their challenges. Planning permission is needed and it is also necessary to have a good connection to a power source and often growers will need these upgraded. With this in mind, if growers are going to plan these projects and take advantage of the RHI incentives then it would be advisable to start thinking about it soon.”

Ground Source Heat Pumps (GSHP) extracts heat from the ground by circulating a mixture of water and antifreeze around a ground loop. Heat from the ground is absorbed into the fluid and then passes through a heat exchanger into the heat pump. Trenches are usually between 1-2m deep and boreholes between 15-100m, depending on energy needs. The longer the coil, the more energy it produces.  Water Source pumps are an alternative.  The heat pump in a water source pump although the system receives water through pipes that absorb heat from contact with water. The water can either be from river, open water or the sea. The main advantage of a water source pump is that a constant temperature will be available to the WSHP even if a large amount of heat is required – provided the WSHP is heat exchanging with a large body of water.

Air Source Heat Pumps have also attracted interest also. These type of pumps absorb heat from the outside air, in the same way that a fridge extracts heat from its inside. There are two main types of pumps – an air-to-water system distributes heat via your wet heating distribution system, while an air-to-air system produces warm air which is circulated by fans to heat your building.

The rental income from commercial growers (renting individual tunnels) adds to this producing a return on investment of less than 5 years.

Mr Froggatt also says an emerging trend is for glasshouse growers to combine using a renewable heating source with pure C02. “If planned and executed properly then the benefits are enormous and I think this will be a continuing trend in the future. The payback on these projects is less than three years compared to longer for system that just burn gas,” he says.  “I think in the future there will be more of a move towards growers using a combination of technologies to prove the heat and energy they need efficiently,” he adds.

The Farm Energy Centre has been advising growers on renewable and other heating and energy systems and changes to the various support and incentive schemes for many years now. The organisation’s Technical Director, Tim Pratt, says despite a slow-down in biomass projects, there is still ‘life’ in the market. “There are still some fairly major projects going on and it has helped that there is a level playing field in terms of the RHI tariffs which means growers get offered the same rate no matter how big the boiler is. It is about economies of scale and the business cases for smaller boilers just does not stack up anymore,” he tells The Commercial Greenhouse Grower magazine. “This does now mean the right size boiler is being installed to fit the job and that wasn’t always happening in the past. But installing a biomass boiler isn’t just about the up-front cost, growers need to realise there are on-going management and maintenance and input costs as well,” he adds.

Heat pumps, he says, are ‘more simple and reliable machines’, which is why growers are paying more interest in these. “Operationally though, heat pumps are more akin to ‘on demand’ heat at between 50-60C but when the glasshouse is screaming out for more on a horrible day that sort of temperature might not be enough? There is also a small risk there won’t always be a water source or enough water,” says Mr Pratt. “But generally the RHI tariff recognise all this so that’s why these sort of projects compare favourably with others at the moment and the Government will want to continue to encourage uptake and adoption moving forward,” he adds.

But what will happen when the RHI scheme comes to an end in two years time? “I think if you look at what the Feed in Tariff (FIT) has done (closes March 2019) for the sector such as massively increase the uptake of solar panels which are, as a result, much cheaper than there were, then RHI has only just started scratching the surface on heat projects and there is a lot more opportunities out there so because of that I would suggest there will be something else after RHI,” says Mr Pratt. “Another thing which could spark some interest is more heating systems by electricity as the country looks at decarbonising the system in general.”

Mike Abraham, General Manager at Topling says it has been a ‘challenging’ year for the biomass sector but the company has still been involved with a number of projects for 1 and 2 MW boilers. “We have also recently quoted for a 4MW but a lot of growers are putting projects off because of uncertainty over Brexit,” says Mr Abraham. “It has been frustrating to see the increasingly controlled regulations tighten even further and incentive rates change so frequently but nevertheless be are positive about the sector and have seen a steady flow of business in the last year,” he adds. “There are still opportunities in the market while heat pumps and other technology that will help electricity recycling and use will progress in the future. But it won’t necessarily all be about changing the technology in the future it will be about changing our mindset in the future to help adapt to changes,” adds Mr Abraham.

David Summerfield of Bridge Greenhouses agrees that the future will be about using a combination of systems and technologies. “With Bridge being a greenhouse company we have a range of different systems we could offer and the focus this year has been on biomass boilers between 2 and 8MW where, with some careful planning, there are business cases that will stack up for growers. I agree heat pumps will continue to interest growers but they won’t be viable for every business.”

Renewable energy and biomass specialists Treco has seen more of a demand for replacement and second-hand boilers. “We are busy with new biomass projects as well through to the first half of next year but we are doing an increasing about of work replacing boilers as well as re-conditioning and re-commissioning old boilers to be used again. When a used boiler is moved or sold the tariff remains at the level of the original install, so many growers are enjoying years of RHI incentives still even with their second-hand boilers.” says Treco’s Managing Director, Gordon Traill. “The market is still fairly buoyant overall and there are still both challenges and opportunities out there,” he adds.

Myriad Products has almost completely pulled away from providing new biomass projects in what it describes as a ‘completely changed’ market. Instead, the company has re-focused it efforts on maintenance, servicing and repairs of boilers but still works with partners that includes Edge Renewables when new projects do come along.