The Great 'Get Paid To Generate Energy' Hunt

noncom_2

I think (for Solar PV at least, which is the only option I've done any sums for) that 15 years "payback" time without FITs is highly optimistic.

Of course, it all depends what you mean by payback. If you mean the time it takes for the system income to add up to the amount you paid for it, then it's one thing (ie back to square one as if you kept the money under the mattress all that time).

If you mean the time it takes the system income to add up to the amount you paid for it, plus the amount of income you would have had by instead investing it in something else sensible (eg reducing your mortgage, or in high interest rate savings, or low risk bonds etc), then it's a much longer timeframe.

For 15k you can buy a 4kW Solar PV system. Let's suppose that if there were no FITs you could then get it for 12k (because there would be no "cartel" pushing prices up).

In a good location in middle England, you may generate 3500 units of electricity per year, and let's suppose that this costs 10p per unit (many people pay less than this, many pay more).

£350pa "income" from the system (in terms of electricity savings, assuming you can use all of it, or export what you don't use at the same rate that you buy electricity in) means that it will take 34 years to pay back even what the system cost you, even ignoring the fact that you could have put that £12k in an ISA at 3% and got the same income in interest without losing your capital.

So the short answer I think is "no", with current system costs, current panel yields, and current energy prices, this will not be cost effective to do on a small scale without FITs. The hope is that increasing the market will drive down costs, and spur on development of more efficient technologies.

Cardew

mg2008 wrote: »

May have been asked before, but... What happens if/when the government cuts or reduces the FITS subsidy... Will the systems ever pay for themselves?

Agree with the above post by Noncom - no way will Solar PV ever pay back without subsidies. Don't forget that prior to FITs being introduced there was a grant of £,2,500(sometimes more) for installation and still subsidies for electricity generated; albeit less generous than FITs.

Actually the FITs do reduce year on year from 2011 for new installations.

I also cannot see the Government reneging for current(sorry!) customers.

However the two easy options, for a Government strapped for cash, would be to remove the link to inflation and remove or restrict the tax free status of any income.

There is a valid argument that the subsidies(FIT) for solar PV are restricted to the better off in society. To be able to pay £15,000 for installation is not something a lot of people can afford, and to get an income without it being taxed at 40% or 50% is an added bonus.

zeupater

mg2008 wrote: »

.... What happens if/when the government cuts or reduces the FITS subsidy... Will the systems ever pay for themselves?

Hi

Agree with noncom's post, without FiT's at the current combination of energy prices and pv system prices there would never, repeat for clarity, NEVER be a payback in pure financial terms ..... it would be down to your personal preference on whether to proceed and effectively 'write off' the investment but feel that the world would possibly be a better place, but if that's what you're doing it for, use the £15k to buy a chunk of land and plant a hundred trees on it yourself, you'll get far more 'green' satisfaction from watching the trees grow over the years and eventually have a source of coppiced wood for a logburner.

Z

poohbear59

Cardew wrote: »

Not understood!

The whole purpose of a GSHP is to heat water for the radiators and usually hot water for taps. Surely all of the GSHP systems have a back up Immersion heater for any time when the GSHP cannot cope in very cold conditions and to bring the Hot water up to 65C once a week or so to prevent bacteria forming.

Hi, I misunderstood your previous comment:

'The one thing I would insist on is that the MCS installer gives you some 'cast iron' guarantees e.g. with ambient temperature @ -5C, the system will be capable of heating living rooms to 21C and bedrooms to 18C. There is evidence that the specifications on some new installations in UK simply do not cope with a normal winter.'

AS we live at 1200 feet above sea level and can have some very severe Winters I presumed you meant we would need additional heating as well as the GSHP:o

zeupater

poohbear59 wrote: »

...... AS we live at 1200 feet above sea level and can have some very severe Winters I presumed you meant we would need additional heating as well as the GSHP:o

Hi poohbear

Have you calculated the heating requirement for the property at various temperature differentials ? ..... this might provide a basis for thinking through a multi-source heating strategy ....

Z

Cardew

poohbear59 wrote: »

Hi, I misunderstood your previous comment:

'The one thing I would insist on is that the MCS installer gives you some 'cast iron' guarantees e.g. with ambient temperature @ -5C, the system will be capable of heating living rooms to 21C and bedrooms to 18C. There is evidence that the specifications on some new installations in UK simply do not cope with a normal winter.'

AS we live at 1200 feet above sea level and can have some very severe Winters I presumed you meant we would need additional heating as well as the GSHP:o

The last sentence of that quote really summed up my reservations.

Essentially any installer needs to calculate the heating required for the property in question. His quote for the GSHP element of the system should guarantee that the heating in each of the rooms should be capable of raising the temperature to xC or yC with the outside temperature at zC.

There is no point in having a system that requires it to be boosted by a 6kW or 9kW electrical heater most of the winter, because the heat pump element is inadequate to cope for much of the time.

Someone on this website a couple of years ago had just this situation, his electricty bills were huge because the heat pump system couldn't cope and the large immersion heaters were providing much of the heat.

Now it may well be that the extra cost to specify a system that can cope with, say, -5C instead of -3C cannot be justified. However that is your decision.

I think with heat pumps you need to be pragmatic and accept that additional heating may be required some of the time for an extreme cold snap. However the heat pump element should cope for most winter conditions.

clc5

poohbear59 wrote: »

We are bust looking at costings for ground source heat pumps and just wondered if anyone here has had one installed? Is payback going to work in the same way as pv etc? .

Proposed tariffs payable for heat pumps under the RHI scheme have been calculated on the basis of a rate of return of 12% of the average cost of installing an eligible heating system (only 6% for solar thermal). The proposed RHI tariff for GSHPs is 7 pence per kwh, payable for 23 years, tax free and index linked. A ‘deemed’ annual heat demand figure will be used to calculate the annual RHI payment. Payments for a 3 bed house for example could be £800-£1200 per annum depending on size and age of house.

Cardew

clc5 wrote: »

Proposed tariffs payable for heat pumps under the RHI scheme have been calculated on the basis of a rate of return of 12% of the average cost of installing an eligible heating system (only 6% for solar thermal). The proposed RHI tariff for GSHPs is 7 pence per kwh, payable for 23 years, tax free and index linked. A ‘deemed’ annual heat demand figure will be used to calculate the annual RHI payment. Payments for a 3 bed house for example could be £800-£1200 per annum depending on size and age of house.

Given a GSHP costs considerably more to install than an ASHP I wonder why the latter has a higher proposed RHI of 7.5p.

The proposals give an example of a 3 bed semi that needs 10,000kWh pa for space heating and 3,700kWh for water heating.

That would mean a RHI of £1027 pa.

If the claims for ASHP systems of a COP of 3.0 or higher are realistic, that 13,700kWh would be achieved by using 4,566kWh. That would cost £320 - £420. leaving an 'income' (after paying for heating and hot water) of £600 to £700 on your investment.

As an aside, has anyone seen information on RHI for air to air ASHPs(warm air blowers/aircon) these are much cheaper to install and if the space heating aspect is covered might be a better bet???

Perhaps they might even give an allowance for air conditioning;)

clc5

Cardew wrote: »

Given a GSHP costs considerably more to install than an ASHP I wonder why the latter has a higher proposed RHI of 7.5p.

Did some research and found a report called RHI Impact Assessment - see link below. Have a look at Page 10 which gives an example of how tariff levels are calculated (example relates to biomass but same principles will apply re heat pumps). The tariff is compensation for the additional costs of an eligible technology as compared with an off grid fossil fuel system. However, the Tariff has several components not just additional capital cost. Annual operating and other costs are also factored in. The reason GSHPs have lower tariff than ASHPs must be their lower operating costs?

http://www.decc.gov.uk/assets/decc/Consultations/RHI/1_20100201105915_e_@@_ImpactAssessmentforRHIConsultation.pdf;

Jon_Tiffany

Cardew wrote: »

There is a valid argument that the subsidies(FIT) for solar PV are restricted to the better off in society. To be able to pay £15,000 for installation is not something a lot of people can afford, and to get an income without it being taxed at 40% or 50% is an added bonus.

But with companies like ASG, you dont have to have the money, so this is a weak arguement. My understanding of the FIT is that it is intended to encourage companies like ASG as well as individual homeowners.