Biomass is one of the rising stars of renewable energy. As a carbon-neutral energy source, biomass technology is helping organizations generate electricity and heat while reducing their carbon footprint and greenhouse gas emissions. In 2014, bioenergy contributed to the largest absolute increase in total electricity generation from renewables in the U.K., from 4,543 GWh in 2013 to 22,792 GWh, largely due to an increase in biomass generation. Additionally, bioenergy use for renewable heat generation overall in the U.K. increased by four and a half times between 2005 and 2014.
In order to encourage biomass take-up, alongside the aim for 12 percent of heating to come from renewable sources by the year 2020, in November 2011 the U.K. government introduced the Renewable Heat Incentive (RHI). The RHI scheme, which supports large- and small-scale generation of biomass heat through financial incentives, has greatly encouraged the shift towards biomass energy sources — as evidenced by the 11,487 full applications to join the scheme since its initiation.
The majority of applications (95 percent) were made for small and medium biomass boilers, highlighting the important role every project plays in the U.K.’s efforts to reduce emissions. Since the introduction of the RHI scheme however, the government has implemented seven tariff degressions, in part due to the unexpected mass popularity of biomass. The term degression refers to the process used by the Department of Energy and Climate Change to control RHI expenditure; it works by gradually lowering the tariffs that are paid to new applicants as more renewable heating systems are installed. The latest degression incurred on Oct. 1, 2015, and resulted in a 5 percent reduction in the small biomass tariff to 4.18p.
For many businesses, access to energy-efficient technologies may seem unattainable given the initial capital investment required. An increasing number of biomass technology suppliers, however, are helping to overcome this barrier by incorporating financing in their offerings with the help of specialist financing schemes in the market.
The Energy Efficiency Financing (EEF) scheme is one such specialist facility. A joint initiative between the Carbon Trust and Siemens Financial Services Ltd. (SFS), the EEF scheme is designed to provide finance for energy-efficient equipment and renewable technologies for organizations, where the expected savings in energy costs and/or income from energy generation offset the monthly equipment finance costs, effectively making the investment zero net cost or even cash positive. Prior to finance being approved, the Carbon Trust conducts an independent energy savings assessment to verify that the expected energy savings/income generation will match or exceed the equipment finance payments, assuring organizations that the projected figures provided by their suppliers are achievable.
Equipment suppliers can apply to become a recognized supplier of the scheme, which allows them to integrate the financing offer into their overall sales proposition. In other words, their customers no longer have to seek external funding sources for equipment acquisition and can instead enjoy the convenience of an integrated solution, incorporating the finance. Since the scheme has the flexibility to customize payments to suit each client’s requirements and budgets, customers do not have to make do with what they can afford according to capital budgets — instead suppliers and customers can explore the optimal technological solution suitable for their individual circumstances.
By helping customers remove the financial obstacle to acquisition, equipment suppliers secure a unique competitive advantage to close deals faster. They can also benefit from improved cash flow, as payments are typically made direct to suppliers by SFS within 24 hours of receiving correct documentation. Furthermore, suppliers who wish to manage the sales and the financing process for themselves will be provided with additional training and support to help them get the most out of the scheme.
One example of how suppliers can make use of the EEF scheme to help organizations go green is Highland Wood Energy (HWEnergy). As one of the earliest recognized suppliers to join the EEF scheme, an incorporated financing package has allowed HWEnergy to better match technology to the customers’ needs and budgets, enabling them to close more sales.
With capital budget limitations dealt with, the supplier can focus on providing the best solution for the customer. HWEnergy has found projects will sometimes require a significant amount of capital investment, generally in excess of 100,000 pounds ($145,000), and some customers may find it difficult to raise, or justify, this upfront outlay. Its partnership with the EEF scheme, however, has meant HWEnergy customers can focus on the long-term financial and environmental benefits of investing in green technology.
While businesses wishing to embark on green investments might lack the financial means required to implement an active energy management policy, forward-thinking suppliers can take policy changes in their stride and enhance their customer sales proposition with the help of specialist financing schemes. By offering innovative financing schemes at point-of-sale, suppliers can deliver value-added services to end customers and further differentiate themselves in an increasingly competitive market.
Lead image: Pellets. Credit: Shutterstock.