Energy blog

Goodbye oil, Hello wood - part 2

Published by NickSted on 27 February 2012

Part 2  The Decision

Why wood?

I am currently on oil which has just reached its highest price (about 6p per kWh).  There is certainly instability in the Middle East but, notwithstanding this, the Chinese and Indian economies are continuing to grow at 8% pa and the price of oil is likely to double in the next 10 years as they will increasingly outbid us for the remaining supplies.

There is plenty of gas but we are not on the gas main (a mere 3.5p per kWh), and never likely to be (planning for the decommissioning of the national gas grid commences soon after 2020 according to the Government’s latest Carbon Plan - http://www.decc.gov.uk/en/content/cms/tackling/carbon_plan/carbon_plan.aspx ).   Calor gas is related to oil prices and is currently about 8p per kWh.

Heating by electricity is too expensive at 14p per kWh.  An air source heat pump with a COP of 2 would bring this down to 7p per kWh.  Still too expensive particularly as I would have to convert the house to underfloor heating.  A ground source heat pump should manage a COP of 3 or higher which would be better but they are even more expensive.  In any event electricity is still mostly produced by fossil fuel and will be for the remainder of my life.

This narrows the field down to wood, as coal is out of the question.  Wood chip is currently 2p per kWh but very bulky and would need a lot of mechanical handling equipment.  High grade wood pellets are between 4p per kWh and 5p per kWh depending on the delivery system.  Wood prices have lagged behind inflation in the last 10 years. 

The Renewable Heat Incentive for biomass is expected to be announced soon for domestic installations.  The commercial one is already in place and pays a tariff of 7.9p per kWh for 20 years.  If the domestic RHI is the same this will mean my heating bill will go negative!

Is there enough wood?

The area of woodland in the UK reached a low point of 5% at the end of the nineteenth century since when it has increased to 12% (25% for Scotland).  The majority of woodland is in private hands and is not managed.  According to the Forestry Commission (http://www.forestry.gov.uk/forestry/INFD-839EC6 ) just managing this properly would yield 2 million tons pa of fuel grade wood.  This compares with 0.5 million tons pa current consumption of wood pellets.  There are numerous other sources of wood from the timber industry which currently are discarded.  The more that wood is used, the more will be planted.  Foresters have a saying “the woodland that pays, is the woodland that stays”.

West Woods, Lockeridge - a working wood

Aren’t you still emitting Carbon Dioxide?

Well actually a bit more for the same amount of heat that would have been produced by oil.  Over time though the trees that are planted to replace the wood burned, will absorb more carbon dioxide.  This is because most of a tree is underground, and the carbon in the roots remains behind when the tree is felled and the ‘superstructure’ is burned.   The Government regard wood fuel as carbon neutral as the carbon is merely recycled.  It is not counted as part of the UK’s carbon footprint.

What is it going to cost?

Wood pellet boilers are larger and more expensive than fossil fuel boilers.  They need to be installed in an outhouse or lean-to as you need easy access to feed them and a dry area to store the pellets.  As a rule of thumb the cost is something like £5000 + £250 per kW depending on what type of fuel storage and delivery system you use.  I would need a 25kW boiler and a part automated fuel storage and delivery system which would give 2 weeks unattended operation in the coldest weather.  A manually fed boiler would give about 3 – 4 days unattended operation and would cost a little over £2000 less.  A fully automatic feed system with pellets in bulk delivered by tanker would work pretty well unattended for two months but would cost about £2500 more.

So what is my payback time?

The Renewable Heat Premium Payment is applicable for all wood pellet systems installed and commissioned between 1st Aug 2011 and 31st March 2012.  It may be extended but as of writing nothing has been announced.  The RHPP is a straight grant of £950.

The Renewable Heat Incentive is a tariff payment which is expected to be paid to all people who install biomass sytems from 15th July 2009.  The commercial RHI was started at the end of November 2011 and the domestic one is expected to be something similar.  The commercial tariff for small systems is 7.9p per kWh for 20 years.  On this basis the payback time is between 7 and 8 years.  Taking into account the cost of borrowing money, the payback time extends to about 10 years.


Living in a detached house in rural Wiltshire will become something of a luxury if oil prices double.  A biomass boiler will essentially remove part of this risk.  As the payback time is reasonable and we have the space, the decision to install a wood pellet boiler seems to be pretty sound.  A small district heating system based on wood chip and the existing RHI would be ideal, but local political problems would take some time to solve so I will have to 'go solo'.