Solar Panels and The Renewable Heat Incentive

As part of the Feed in Tariffs (FiTs), the Government has announced in the Comprehensive Spending Review £850 million funding for the Renewable Heat Incentive (RHI) which will be introduced in 2011. This scheme is the replacement of the Low Carbon Buildings Program grant funding that was withdrawn earlier this year.

The Government wishes to expand 10 fold the amount of heat from renewable resources over the coming decade, shifting renewable heat from the fringe into the mainstream.

The RHI is designed to pay customers who generate heat using a number of renewable energy technologies. These payments are in addition to the gas or oil savings that will be achieved. For example Solar Thermal panels, which are installed to generate hot water. Whilst the tariffs are yet to be confirmed, it was originally proposed that the RHI will pay 18 pence per KWh of energy produced. The amount of annual energy produced is worked out based on a SAP calculation of the installation and the particular property. For the majority of domestic installations, this would result in an annual payment of between £200 and £400. It is expected that these payments will be made for about 20 years and will be index linked.

How much hot water can a system provide?

A typical system can provide up to 70% of a domestic property’s annual hot water requirements. The hot water element is typically around a third of the overall heating bill.

What does a typical installation involve?

The obvious requirement is for solar thermal panels to be installed, preferably on a roof that faces anywhere between South East and South West. Roofs facing either East or West are not ideal, but that doesn’t mean that a well designed system won’t be effective. A new hot water cylinder with 2 heat exchangers will almost always be required. A solar controller will be installed to control a pump. The pump will be activated when the panels are warmer than the bottom of the cylinder, so that the heat can be transferred. The pump will be switched off when the panels are the same temperature as the cylinder, to ensure that heat isn’t pumped out of the cylinder. All pipework is also then insulated to minimise any heat loss. An installation should normally be completed within 2 days.

How efficient are Solar Thermal panels?

Panels are typically in the region of 80% efficient, although this does vary slightly between manufacturers.

What other technologies are eligible for Feed in Tariffs?

The RHI is the newest of the Feed in Tariffs, which include the excellent rates available for photovoltaic systems which produce electricity.

Early evidence for photovoltaic systems suggests that a return of 8% (on a tax free basis for owner occupiers) is achievable on the cost of installation. It is expected that a similar return will be achievable for Solar Thermal systems.

Why do we need to invest in Low Carbon Technology?

The reason that the Government is encouraging low carbon technologies is that a legally binding carbon reduction commitment of 80% must be achieved by 2050. Heat is responsible for 47% of the UK’s carbon footprint. So in order to help facilitate the updating of the UK’s housing stock, these, and other incentives are gradually being put in place to encourage all home owners to adopt low carbon technologies.

This carbon reduction commitment is borne out of the belief that Global Warming is on the increase. However, there is another important argument, in the use of limited natural resources. Increasingly the UK is having to compete with populous countries such as China and India, for those resources. This will probably lead to much more expensive energy in the future. Whilst these renewable energy technologies will play a very important role in decarbonising the UK economy, the first action that any home owner needs to do is to ensure that their loft insulation is sufficient and to have cavity wall insulation where possible. If householders are not sure if they have enough insulation, they are advised to contact their energy supplier who will arrange for an inspection.

For further information on both Solar Thermal and Photovoltaic Systems, please contact The Energy Performance Company on 01636 525117 or info@tepc.co.uk