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.
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;
Renewable Energy 33%
*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:
- Increasingefficiency with the implementation of the Green Deal,
- Savingenergy by using smart meters
- Investingin low-carbon technologies
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.