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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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Aninvestment generally applies to injecting a sum of money into a project with aview of making a profit. Investing your money comes with risks and there havebeen multiple times when investments have gone terribly wrong, where thecapital investment has been lost and all hope of profit gone.

Property Investment

Traditionallyone of the most favoured forms of investment is in property. Typically, whenproperty prices are at a low they can be expected to increase in value.  During the 'property boom' between 1997 and2006 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 intorecession in 2008 property prices fell drastically and this caused many peopleto lose their investment and some properties to fall into negative equity.

Whileproperty prices have reportedly begun to increase once more, people have becomewary about property investment. In November 2011 the government created a newopportunity for financial investment, Renewable Energy. In the two years since,the British public have been investing. When questioned about their preferredinvestment areas, the British public chose;

Property                                            43%

Renewable Energy                       33%

ConventionalEnergy                    23%

Manufacturing                                19%

ConsumerGoods                           15%

*The Great British Money Survey, OnePoll 2013

 UK Government Carbontargets

Aspart of the Climate Change Act the UK government are the only country in the EUto enter a legally binding contract which targets an 80% reduction ingreenhouse gas emissions by 2050. In order to achieve these targets thegovernment have introduced a number of policies aimed at:

Whilethe Green Deal and the introduction of smart meters have made people moreefficient in the way they use energy, low-carbon technologies are where thesignificant carbon savings are made. By using renewable fuels such as woodbiomass the aged carbon found in fossil fuels remains locked away while thecarbon released in the combustion of renewable fuels such as wood biomass isre-absorbed by existing trees and seedlings, thus making it a low-carbon technology.

Government incentives

Thegovernment has made renewable energy an attractive investment opportunity withthe introduction of significant financial incentives such as the Renewable HeatIncentive (RHI).

Theintroduction of the Non-Domestic Renewable Heat Incentive in November 2011 enabledcommercial, agricultural and industrial business to be paid for the energy theyuse (if generated by a renewable source). These payments are greater than thecost of the fuel required for the heat generation, thus after the initialpayback period, will generate an income. With biomass systems we have seenestimated payback periods as low as 4 years and a return on investment as highas 25%; much higher than any savings account.

View a typicalIllustration 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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