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RENEWABLE ENERGY SECOND ONLY TO PROPERTY AS THE PUBLIC’S INVESTMENT CHOICE

By Woodpecker Energy Ltd  |  Posted: February 05, 2014

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An

investment generally applies to injecting a sum of money into a project with a

view of making a profit. Investing your money comes with risks and there have

been multiple times when investments have gone terribly wrong, where the

capital investment has been lost and all hope of profit gone.

Property Investment

Traditionally

one of the most favoured forms of investment is in property. Typically, when

property prices are at a low they can be expected to increase in value.  During the 'property boom' between 1997 and

2006 many people saw a significant increase on the value of their properties;

some making over 100% in as little as 5 years. However, when the UK went into

recession in 2008 property prices fell drastically and this caused many people

to lose their investment and some properties to fall into negative equity.

While

property prices have reportedly begun to increase once more, people have become

wary about property investment. In November 2011 the government created a new

opportunity for financial investment, Renewable Energy. In the two years since,

the British public have been investing. When questioned about their preferred

investment areas, the British public chose;

Property                                            43%

Renewable Energy                       33%

Conventional

Energy                    23%

Manufacturing                                19%

Consumer

Goods                           15%

*The Great British Money Survey, OnePoll 2013

 UK Government Carbon

targets

As

part of the Climate Change Act the UK government are the only country in the EU

to enter a legally binding contract which targets an 80% reduction in

greenhouse gas emissions by 2050. In order to achieve these targets the

government have introduced a number of policies aimed at:

While

the Green Deal and the introduction of smart meters have made people more

efficient in the way they use energy, low-carbon technologies are where the

significant carbon savings are made. By using renewable fuels such as wood

biomass the aged carbon found in fossil fuels remains locked away while the

carbon released in the combustion of renewable fuels such as wood biomass is

re-absorbed by existing trees and seedlings, thus making it a low-carbon technology.

Government incentives

The

government has made renewable energy an attractive investment opportunity with

the introduction of significant financial incentives such as the Renewable Heat

Incentive (RHI).

The

introduction of the Non-Domestic Renewable Heat Incentive in November 2011 enabled

commercial, agricultural and industrial business to be paid for the energy they

use (if generated by a renewable source). These payments are greater than the

cost of the fuel required for the heat generation, thus after the initial

payback period, will generate an income. With biomass systems we have seen

estimated payback periods as low as 4 years and a return on investment as high

as 25%; much higher than any savings account.

View a typical

Illustration based on a 199kW wood pellet biomass boiler here.

The RHI is a 20 year scheme and in the first two years Ofgem have accredited in excess of 1,200 RHI applications. 92% of these have been biomass due to the nature of the technology being easier to integrate into existing heating systems. Such a large uptake in the RHI shows a shift in perceptions of renewable energy as a source of investment. Further to this, the Government is set to release a domestic scheme in spring of this year, opening up investment opportunities to the British homeowner.

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