Highland Energy Supply Co

The Business Case

There are a number of factors that need to be considered when establishing whether a biomass heating network will be economically viable. In many instances, the business case can be compelling, with projects achieving payback within timescales that meet with the investment objectives of our funding partners.

It is essential when bringing a biomass project to market that there is a robust, detailed business case which accurately takes into account the whole-life costs associated with the project.

Financial considerations fall into 3 main categories:

  • Capital Expenditure – This covers the cost of building the biomass plant and all associated costs of infrastructure, civils, construction, and underground pipe runs and full commissioning of the biomass plant. This can range from several hundred thousand pounds up to tens of millions, depending on the size of the scheme.
  • Operating Expenditure – This includes biomass fuel, handling the fuel and delivery costs, operational costs, staff training and ongoing service and maintenance costs.
  • Revenue Generation – Non Domestic Renewable Heat Incentives (RHI) are still available in the UK (with the exception of Northern Ireland) until 31 March 2021, (or as extended) which pay the scheme’s owners a subsidy for the amount of renewable heat they generate when taking heat users off their fossil fuel systems. This can generate significant income for the owners and is designed to assist with the capital expenditure on the projects.

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