Saturday, 22 September 2012

So What's it Worth? - Domestic RHI for Solar

It's speculative, but at least it's a stick in the ground.


This week, the UK government published its consultation on the domestic stream of the Renewable Heat Incentive (RHI), (read the solarblogger's summary here).

The proposed tariff figure for solar heating is 17.3pence per kWh for seven years - but what does this mean in terms of the potential value of the RHI to a household?  the solarblogger does the maths.

The energy saved by a solar water heating system is currently estimated for customers by their installer using a calculation published by the Microgeneration Certification Scheme.  There is also a consultation in progress for this standard, including updates to the solar energy calculation.  I have used the proposed new calculation method.

Occupancy
Area of Solar Collector
Energy Saving
Solar Energy Qs
(people)
(m2)
(kWh/year)
(kWh/year)
1
2.0
       769
        590
2
2.0
       979
        752
3
4.0
    1,431
     1,099
4
4.0
    1,665
     1,279
5
6.0
    2,092
     1,607
6
6.0
    2,312
     1,776
 
 
 
 
 
The main driver of hot water use in a home is the number of people resident there.  I have selected a typical solar panel area and hot water cylinder for the occupancy, and calculated the Solar Energy (input to the hot water cylinder), and the Energy Saving (gas saved at the boiler).  The Energy Saving is the higher of the two due to the (in)efficiency of the boiler.

Assuming that the RHI is paid on the renewable energy input to the hot water cylinder, the value of the RHI and fuel savings are shown below.

Potential RHI Solar Payments for Off-gas Property


Occupancy
Annual RHI Payment
Annual Own Use Saving
Total RHI Payments
Fuel Saving
Total
(people)
(oil)
(7 years)
(7 years)
(7 years)
1
 £  102.13
 £         61.49
 £     714.88
 £       430.44
 £    1145
2
 £  130.02
 £         78.29
 £     910.12
 £     548.00 
 £    1458
3
 £  190.16
 £       114.50
 £  1,331.14
 £       801.51
 £    2133
4
 £  221.18
 £       133.18
 £  1,548.28
 £    932.25
 £    2481
5
 £  277.96
 £       167.37
 £  1,945.72
 £  1171.56
 £    3117
6
 £  307.21
 £       184.97
 £  2,150.44
 £    1,294.82
 £    3445


For a property heating water with an oil-fired boiler, the value of the RHI plus fuel savings over the seven year period of the RHI would be around £2,500 for a 4-person household (expressed in 2012 prices).  Of course, the solar heating system would continue to deliver fuel energy savings after year 7.


 Potential RHI Solar Payments for Gas Heated Property

 


Occupancy
Annual RHI Payment
Annual Own Use Saving
Total RHI Payments
Fuel Saving
Total
(people)
(gas)
(7 years)
(7 years)
(7 years)
1
 £  102.13
 £         38.43
 £     714.88
 £     269.03
 £  984
2
 £  130.02
 £         48.93
 £     910.12
 £     342.50 
 £  1253
3
 £  190.16
 £       71.56
 £  1,331.14
 £     500.94
 £  1832
4
 £  221.18
 £       83.24
 £  1,548.28
 £     582.66
 £  2131
5
 £  277.96
 £       104.60
 £  1,945.72
   £      732.22 
 £   2678
6
 £  307.21
 £       115.61
 £  2,150.44
 £    809.26
 £  2,960


 For a property heated by gas, the incentive is slightly lower because the saving from fuel use avoided is lower- gas is a cheaper fuel than oil, but (again expressed in 2012 prices) the value of a solar heating system to a 4-person household would be around £2,150 over the first seven years, with energy savings for another 20 years after.

But is it enough?


Given that a solar heating system will cost between £4,000 and £5,000 installed, no-one is going to get rich on this scheme.  On the other hand, this level of financial assistance definitely represents a step-change in the level of government support for a very popular, well-understood and readily installed technology.

But is it enough?  What do you think?  Post a comment below.


Assumptions:

Gas 5p/kWh, Oil 8p/kWh
All prices are 2012 values, no fuel price inflation added.

Solar panel - high performance flat plate
Orientation - South at 30 degrees pitch, no shading

Assumed that RHI is paid on Qs - solar energy input to hot water cylinder
Own use savings based on a modern condensing boiler, but using a "summer-biased" efficiency of 77%, according to draft MIS3001 v3.0.









5 comments:

  1. Any idea how the RHI arrives at it's "deemed" figure for hot water consumption Stuart?

    Their consultation spreadsheet assumes 2.52 MWh/yr with 1.26 MWh/yr contribution by the solar panel (about par for a 3m^2 panel) and cites an opaque "AEA Technology" reference for the calculation. A response from AEA has not been forthcoming.

    I'm guessing AEA have stuck some representative numbers into SAP2005 (3m^2 panel, average UK house occupancy) and been lazy with their reference, but I'm very interested in the calcs used for deeming.

    In particular, how would they handle a partial conversion of a property to solar thermal?

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    Replies
    1. Markocosic,

      No, I'm not sure quite how DECC got to their energy estimate for ST in the impact assessment, but it looks like they've calculated an average hot water useage figure and taken 50% of it. They've then segmented the market by property type rather than occupancy, and found that everyone needs the same Tariff to go for solar thermal.

      In fact, (and obviously, really) the hot water demand is driven by the occupancy of the house rather than whether or not it has solid wall insulation. Taking a look at things this way changes the outcome considerably!

      Delete
    2. Markocosic

      It very much looks like they've worked out an average hot water demand and assumed a solar fraction of 50%. In the impact assessment, they've segmented the market by how well insulated the house is (ie space heating demand), and unsuprisingly found that all houses need pretty much the same (very high) tariff to be incentivised to use solar thermal.

      In fact, of course, hot water use is driven by the occupancy rather than the house itself. Using the new MIS 3001 energy estimate rather than SAP2009 gives much more attractive outcomes.

      Delete
  2. In answer to "Is it enough?"

    They've certainly set a price target: £2,500 and you're laughing. New-builds, if they are eligible under the RHI, ought to lap it up as the delta cost is less than this.

    Retrofit applications are tricky. Mr & Mrs so trendy that it hurts were buying wood burning stoves and solar thermal panels before the RHI. Their numbers probably won't change - they were never in it for the economics.

    Where the government is missing a trick is DIY/non-specialist installation followed by specialist certification. (most of the £4-5k is on-site labour, not manufacturer cost)

    Basing the RHI on panels alone is daft - it ought to be based on complete integrated systems, ideally those with weather compensation and interlocked with the backup heat source at that, as a panel is absolutely no indicator of system performance. (even if the MCS installers could be relied upon to specify, install, and setup the non-panel components properly there's no guarantee that the bloke replacing the boiler or a meddling householder won't kill the solar fraction at some point over the next 20 years)

    Where you base the RHI on certified systems, you open the doors the arrange it yourself market. Nail this in place in accordance with the manufacturers instructions and it'll work. Take your time and use inexpensive labour, though you'd need a G3 plumber for design/commissioning if the cylinder were unvented. Quick visit by an inspector to verify and it'd be as reasonable to "deem output for the next 20 years" for this system as any current MCS system.

    The difficulty is Europe. Bureaucracy is mandated by the Renewable Energy Directive - there has to be an approval scheme, regardless of how technically necessary or effective it actually is for the particular technology. DECC set up the MCS to meet the Brussels regs, hoping that competing schemes would emerge, but none have to date.

    Were the STA were to set up a certification scheme of their own - which could be limited to STA tested integrated systems installed in accordance with the manufacturer's instructions - then I think you could ship an awful lot of £1999.99 systems. A half-day visit would certify that it's been installed in accordance with your instructions and wouldn't cost the earth.

    It is worth the faff though, when the new-build market is so lucrative?

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  3. That's the savings after 7 years and you continue to save. It's a worthwhile investment for families.

    ReplyDelete