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I have been offered a free biomass boiler by a company who wants my RHI payments. Should I accept?

Posted by Tasha Kosviner on 18 July 2014 at 8:18 am

Q. I can’t afford to install a biomass boiler myself. However, I have approached by a company who have offered me a free biomass boiler so long as I assign the domestic renewable heat incentive payments to them. Should I accept?

A. One of the features of the early days of the feed-in tariffs was the so-called rent-a-roof scheme, where companies installed solar panels onto domestic roofs free of charge.  The company continued to own and maintain the panels whilst also claiming the feed-in tariff. The resident then got the benefit of the free solar electricity when the panels were generating.

At its best, the rent a roof scheme afforded free electricity to those who could not afford to install the panels themselves. At its worst it lead to a flood of dodgy installers making poor quality installations and creating more problems than they solved.

Now that the domestic renewable heat incentive (RHI) has launched, it appears that there is a market emerging in companies who are offering biomass boilers on similar terms. They do the installation, they own and maintain the system and they claim the RHI. The householder has to pay for the fuel to run the boiler but they benefit from the renewable heat.

There are some key problems with this though.

Third party ownership, as it is called, is not currently expressly allowed under the RHI rules. Whilst the department of energy and climate change (DECC) did make a commitment to this option in the policy paper issued in July last year, it became apparent that it wasn’t included in EU state aid rules for the scheme. Therefore when the final RHI regulations when through parliament in April, specific provision for third party ownership was excluded. Under the regulations then, you have to own both the property and the boiler in order to claim the incentive. Therefore homeowners, registered social landlords and private landlords are included – third party owners are not.

However, this hasn’t stopped some companies from working with their lawyers to try to and find a way around the rules in order to claim the cash. One company is considering a shared ownership scheme where the homeowner owns part of the boiler for a nominal fee and another is apparently considering a scheme where you get a free boiler so long as you put the name of the company onto your lease.

Here at YouGen this rings major alarm bells. The pitfalls are countless: What happens after seven years when the RHI scheme is up? How do you know that you’re getting the best installation for your property – not just the best one for the company who own the boiler? Do you really trust a commercial organisation enough to allow them onto the lease on your home?

DECC are currently examining this issue in great detail and it’s proving extremely complex. It doesn’t sound as if there will be any additional guidance on how they plan to address the problem, for some months.

In the meantime, we reckon we’d look at getting a commercial loan, saving up ourselves if possible, or even sticking with fossil fuels until further progress has been made. 

More information

YouGen guide to biomass 

YouGen guide to renewable heat incentive

Photo Credit: Kuzeytac via Compfight cc

If you have a question about anything in the above blog, please ask it in the comments section below.

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Comments

2 comments - read them below or add one

Jeff B

Jeff BComment left on: 23 July 2014 at 10:43 pm

Agree with ReEnergise's comments. I got a loan from Sainsburys Bank at a reasonable 4.6% APR to buy a new biomass boiler. The RHI payments will cover the repayments (just).

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ReEnergise Ltd

ReEnergise LtdComment left on: 21 July 2014 at 11:28 am

We would agree with the comments posted by YouGen. This is a VERY different market to solar PV but none the less a tempting proposition to speculators.  Our view is that the more complicated the scheme you are being asked to consider, the more likley it has been drawn up by lawyers and not engineers.

The RHI offers a great deal to both commercial and domestic installations. As YouGen say, the best way of getting the most out of the scheme is to own the kit and if necessary, take a loan out.  There are specialists in the market now (including our company ReEnergise Finance ) who can advise on the best way to do this.  In some cases, the loan repayment will be covered by the savings you are making and the RHI contribution.

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