Biomass Operating Lease for Bexley Business Academy
Bexley Business Academy, one of the first of the UK’s Academies, is rising to the twin challenges of energy cost and carbon reduction targets on its large site in south London, installing a range of sustainable energy solutions under operating lease from AFM Solutions. Amongst the projects is a biomass heating system, replacing troublesome gas boilers.
Heating for Bexley Academy has in the past been provided by nine natural gas boilers, installed when the school was originally built a decade ago. The Academy was having a number of problems with these boilers and prior to the commissioning of replacement biomass boilers, only two of the nine were working satisfactorily.
Early in 2012, the Academy tendered for the supply and installation of replacement boilers. Bexley Academy had been working with major consultancy firm Arup to investigate the most suitable replacement option, review the tenders and deliver a recommendation to the CEO. The outcome was 3 x 190kW (total 570kW) wood pellet Herz biomass boilers in a cascaded containerised solution financed by AFM under a UK GAAP operating lease. In order to improve cash flow at the school, the primary rentals of this lease were mapped into the quarterly RHI payments and fuel savings, making the transaction “cost neutral”.
Jane Stanley, FD at the Academy, is pleased with the finance solution arranged by AFM:
“By working with AFM, not only did we get the operating lease we needed but also benefitted from assistance throughout the EFA and auditor approval process. AFM were there from the start, advising on the project at meetings with Arup, working with Enevis our installer and supporting us with our auditor to get the correct accounting treatment on our lease”.
The biomass solution will offer a more reliable and low carbon heating system for the Academy. Specific benefits include:
- Fuel costs reduced by circa £10k per annum and stabilised with wood pellets.
- 20 year revenue from Renewable Heat Incentive (RHI)
- Reduction in boiler maintenance costs
- Project is cost neutral by the first year on gas replacement basis.
- 20 year cost: benefit surplus is expected to be circa £1.4m
- CO2 reductions