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Cost & returns

Financed or capital purchase

Arbor Heat and Power offer several options for the financing of the ArborElectroGen® to best suit your personal requirements. The three basic routes for financing are:

  • Capital purchase
  • RESCo
  • Shared ownership

Capital purchase

This option presents the best route for clients who wish to take full advantage of the benefits offered by the ArborElectroGen®. Purchasing outright will allow you to claim the full benefit from the offset heat and power (which would otherwise come from fossil fuel sources), and similarly the full benefit that is available from the Government incentive schemes such as Renewable Obligation Certificates (ROCs) and Renewable Heat Incentive (RHI).

This option is extremely advantageous for those with access to their own wood supply as there is no need to outsource wood supply. If you do not have access to a wood supply then this option allows you to source the best deal from local suppliers.  

The capital purchase route would be supported by an Arbor Heat and Power maintenance contract to ensure the system is operating as intended and efficiently as possible.

RESCo

Installing and operating an ArborElectroGen® CHP system is available as a fully-financed, turnkey installation - with Arbor Heat and Power taking the long-term responsibility for the ownership, operation and maintenance. Quite simply you agree to contract to purchase low-carbon energy over a given period – typically between 15 and 25 years – which provides long-term security against both fossil-based energy costs and their availability. The energy price payable by the customer is guaranteed to be at a rate which is lower than the best traditional grid rates currently available – giving you long-term security of costs.

Similarly these systems can provide estate owners with a solid financial revenue for felled timber utilised onsite.

Shared ownership

This option presents a middle ground between capital purchase and RESCo. Essentially the purchase of the plant is shared between the client and Arbor Heat and Power (generally 50/50) and both the annual benefits and costs are shared likewise. For example the annual benefits claimed through the government incentives would be split 50/50 and similarly the cost of the fuel to run the system would be split 50/50 also. An added benefit to the client is clearly the heat and power generated by the Arbor ElectroGen® that will be offsetting their traditional fuel sources is a 100% benefit to the client.

Renewable obligation certificates

The Renewables Obligation (RO) is designed to encourage generation of electricity from eligible renewable sources in the United Kingdom. Renewable Obligation Certificates are awarded for the generation of renewable electricity from eligible sources and depending on the technology different levels of certificates are awarded. The ArborElectroGen® qualifies for 2 ROCs for every MWh of electricity it produces under the Advanced Gasification tariff. These ROCs can then be market traded to convert the certificates into a revenue stream for the plant owner.

Renewable heat incentives

The RHI is a scheme introduced by the Government to promote the use and generation of heat from renewable sources within the UK. Quite simply the Government pay a tariff for every kWh of renewable heat generated by an eligible technology and used for an eligible purpose. The tariff paid depends on the technology from which the heat is generated. The ArborElectroGen® is eligible for the biogas combustion tariff, which is a flat rate tariff for all heat generated by the system*.

* Only systems with a thermal output of under 200kW are eligible but it is currently in consultation to remove this cap and provide a tariff for larger systems.

Enhanced capital allowances

It is worth highlighting that the ArborElectroGen® system is eligible under the Enhanced Capital Allowances (ECA) scheme. ECAs are one of the fiscal benefits available to Good Quality CHP certified under the CHPQA programme. This allows businesses investing designated technologies to write off 100% of the cost against the taxable profits of the period during which the investment is made.

The ArborElectroGen® qualifies for 100% First Year Allowance and the Annual Investment Allowance increased to £250,000 from £25,000 on the 1st Jan 2013. The ECA for CHP will be withdrawn in April 2014.

Many grants have now been ceased in favour of new government initiatives such as the ROCs, Feed In Tariff and the Renewable Heat Incentive schemes. Grants may be available but they will likely come with ineligibility to on-going incentives which will provide a much better return over the life of the plant.

For expert advice

Contact Arbor Heat and Power

T: 01778 590 074

E: info@arborhp.com

Complete our enquiry form

Available finance routes

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