A Little Analysis of RHI Costs

One of the significant publications that has been analysed, since the RHI issues have come to light, is the NIAO report.  One of the outputs of this report is a comparison of incentive payments from NI and GB RHI schemes for boilers that are operating under the following scenarios:

  1. Based on a 99kw biomass boiler running for 12 hours a day, 5 days a week and achieving 93% efficiency.
  2. Based on 99kw biomass boiler running 24 hours/day, 7 days/week achieving 93% efficiency.
  3. Based on a 99kw biomass boiler running for 24 hours/day, 7 days/week and achieving 93% efficiency – but which is abusing the scheme by heating empty space and therefore not replacing a previous form of heating.

Calculations in this report show rates of return and payback time as well as annual and 20 year profits.  The problem is, some of these calculations contain numerous errors.  These are detailed below for scenario 1 but all scenarios have similar issues.

Copied exactly from NIAO Report:
12 hours x 99kw = 1,188kwh per day
1,188kwh x 5 days = 5,940 kwh per week
5,940 kwh x 52 weeks = 308,880 kwh per year
308,880 kwh x 93% efficiency = 287,258 kwh actual per year

This calculation is trying to establish the annual energy output of the boiler (line 3) and the annual wood energy input to achieve this (line 4). The first mistake is the application of boiler efficiency (93%) to achieve 287,258kWh. It should have been calculated as follows:

308,880 kWh / 93% efficiency = 332,129 kWh actual per year

You can’t get more energy out of a boiler than you put in!!

The report goes on to calculate the cost of wood for this system to be 287,258 kWh x £0.0401 = £11,519. Using the input from the corrected calculation above, it should have been 332,129 kWh x £0.0401 = £13,318.

However, when redoing all the calculations there is very little effect on paybacks etc. (a few months) as similar mistakes are present in the calculation of the subsidy payments.

NIAO Report:
RHI Annual subsidy in NI – 287,258 kWh x 6.4 pence per kWh = £18,385

As this is the subsidy being claimed, measured by a heat meter, it should be calculated on the output of the boiler and not the energy going into the boiler (which was calculated incorrectly as already shown).

Corrected RHI Annual subsidy in NI:
308,880 kWh x 6.4 pence per kWh = £19,768

Similar issues are present in the GB RHI Annual subsidy calculation.
Tier 1 hours: 1,314 hours x 99kw x 93% efficiency = 120,980 at 5.87 pence/kwh = £7,102
Tier 2 hours: 1,806 hours x 99kw x 93% efficiency = 166,278 at 1.56 pence/kwh = £2,594
Total RHI subsidy £9,696

As before it should be based on the output of the boiler (99kW) not the input (which was incorrectly calculated here again):
Tier 1 hours: 1,314 hours x 99kw = 130,086 at 5.87 pence/kwh = £7,636
Tier 2 hours: 1,806 hours x 99kw = 178,794 at 1.56 pence/kwh = £2,789
Total RHI subsidy £10,425

Apologies that this is not a political post but what I hope it shows is that the analysis of the figures surrounding the RHI scheme not simple and may go part of the way to explain the differing estimates in costs.  If names or business details are not published in the near future, as a minimum it would be good to see the kWh claimed by each boiler. If this was made available, simple analysis could be performed to show who is “abusing” the scheme as there should be a good correlation with weather for anyone heating a space!