economic and environmental benefits of using a solar water heating system for hot water applications in a typical British commercial building. Of particular interest was to initially estimate the energy use for heating of water. The most relevant variables were the horizontal solar irradiance, the sky clearness index, the solar declination angle and the ambient air temperature. Since the incident energy is a function of the solar collector tilt angle, an optimum angle which fortunately is equal to the average UK household roof pitch was determined. The Solar Savings calculation was used to calculate the amount of the total conventional hot water heating load (delivered energy and tank standby losses) provided by solar energy less any associated parasitic energy use. These figures were used to determine the commercial gas and electricity retail price predictions and clean cash-back tariffs from the Renewable Heat Incentive (RHI), a cost analysis was performed to appraise the viability of selected system. Integration of solar water system may produce considerable savings and becomes financially attractive at present, but only to the extent that it is supported by the RHI incentives. Finally, a carbon emission analysis was performed revealing that significant cuts in commercial CO2 emissions are achievable, again depending on the site and system selected.

Chapter 1: Introduction

Background to the Project

One central issue facing policymakers and electric utilities around the world is the need to identify how to satisfy the rapidly increasing global demand for electricity while not increasing global greenhouse gas emissions in the process (Holton, 2005). The need is clearly great but time is also of the essence. Indeed, projections of a tripling of electricity by mid-century are common and electricity generation is already responsible for an estimated one-third of all greenhouse gas emissions (Holton, 2005). In this setting, identifying viable alternative energy resources represents a timely and valuable enterprise. One promising alternative for electricity production is solar power, but following the end of World War I, the world made the switch from coal to petroleum rather than to solar. In the historical analysis, petroleum was found to be more efficient and dependable, especially for the war effort, with Britain making the change from coal to oil for their warships. In fact, Winston Churchill was instrumental early on in encouraging the transition:

Oil is a much more flexible fuel than coal and holds within it a denser concentration of energy. Because it can flow, it is more easily transported. It is cleaner when burned. Much of the time, it was cheaper than coal. Three barrels of oil have the heating capacity of 1 ton of coal and at the prevailing prices early in the century, the oil usually cost only half as much as coal. Because of oil, the number of men tending the furnaces on a steamship could be reduced from 100 to four. Loading a ship with coal had taken 100 men toiling for a week; now one man in one day could load a ship with enough bunker fuel to cross an ocean. (p. 251)

By sharp contrast, solar energy has since taken root throughout the United Kingdom, but the technology has not been widely adopted to date (Miller, 2004 p. 19). Given recent incentive programs by the U.K government and the impetus provided by the European Union’s target of producing 22% of its electricity, and 12% of all energy, through renewable sources by 2010, suggests that the time is right for many businesses to consider deploying solar thermal systems of their own. Although the EU leadership acknowledges that its target goals will not likely be met, if more countries follow the lead established by the U.K., they just might have a chance of succeeding. Absent additional support, though, the European Union’s leadership believes that renewable energy will succeed in account for only l0% of total energy production (Miller, 2004).

Renewable energy currently accounts for 6%, compared to 40% for oil, 23% for natural gas, 16% for nuclear power, and 15% for solid fuels (Lander, 2005). Although wind energy applications are being deployed in Germany and Denmark, these technologies have been less well received in France because the electric utility does not want to share its power grid with other energy companies (Lander, 2005). Likewise, Lander advises that, “In Britain, until recently, builders of windmills could not obtain permits from local authorities to erect turbines” (2005 p. 117).

Despite these constraints to progress, few companies, it seems, can afford to ignore the environment any longer, with the UK government, for example, setting ambitious targets for reducing carbon dioxide emissions by 20% by 2010 and 60% by 2050. To help companies achieve these objectives, in 2001 the government established the Carbon Trust, art independent organization that helps UK businesses and public sector organizations find ways to reduce their carbon footprint. It does so through a number of means-for one, by providing small and medium-size companies (SMEs) with interest-free loans of up to £100,000 (£200,000 in Northern Ireland) to help them invest in energy-efficient equipment (Hawser, 2006). According to Bradford and Bean (2011), in 2010, the United Kingdom’s solar water heating market for both small and large-scale installations grew by 18.1 per cent, to 73,640 kWth of installed capacity. These authorities assert that, “This is perhaps surprising given a 13.1 per cent decrease across the rest of Europe. An uncertain economic outlook, high fuel prices, and the proposed introduction of a Renewable Heat Incentive seem likely reasons for continued growth in the UK” (Bradford & Bean, 2011, p. 1).

Consequently, many Europeans are growing concerned about the imminence of peak oil which many experts project to be around mid-century, as well as recent signs that energy costs are threatening national security (Lander, 2005). For instance, according to Lander, “In 2000, a rise in the price of fuel was compounded by higher taxes, which ignited protests and blockades by truckers from Britain to Germany. At this point in time, the expectations among many observers and policymakers are that high prices will rekindle an appreciation for windmills, solar panels and other alternative energy sources in the United Kingdom” (2005, p. 2). Moreover, the UK lags behind other EU member states, with only 1.3 per cent of its energy currently being generated from renewables compared with 8.5 per cent across Europe (Bradford & Bean, 2011). In order to meet the EU-wide target of 20 per cent by 2020, it is clear that renewable resources must be exploited to their maximum advantage. According to a recent report, solar water heating has the potential to deliver up to 6.3 per cent of this EU-wide target, making it a potentially important technology for the future energy needs of the continent. The introduction of the Renewable Heat Premium Payment Scheme, Renewable Heat Incentive, the Feed-in Tariff and the Scottish loan scheme are important steps in helping to bridge the gap (Bradford & Bean, 2011). There remains a paucity of real-world performance data for solar thermal systems, though. To this end, this project evaluated the application of solar thermal systems in hot water heating in commercial buildings in UK. At present, commercial enterprises account for about half of the UK’s carbon emissions (Emery, 2008). Different solar thermal systems were investigated and compared with the conventional hot water systems in terms of application, energy consumption, environmental impact, cost and efficiency.

Aims of the Project

The aims of the project were as follows:

1. Compare with the conventional system in term of energy usage, financial analysis, environmental impact and efficiency.

2. Determine the energy production and energy saving that can be achieved.

3. Determine the energy cost with renewable and the payback period of the system in order to evaluate feasibility of proposed system.

4. Consider the carbon dioxide emission and environmental impact of the solar thermal system.

5. Determine carbon dioxide emission reduction that can be achieved.

Overview of Project

The project will evaluate the application of solar thermal systems in hot water heating in commercial buildings in the UK. Different solar thermal systems were investigated and compared with the conventional commercial hot water systems in terms of application, energy consumption, environmental impact, cost and efficiency. The study is divided into six chapters as follows. Chapter one described the background of the project and discussed the aims of the project as well as their importance. Chapter two provides a review of the relevant and peer-reviewed literature, and chapter three presents the study’s methodology, a description of the study approach, the data-gathering method and the database of study consulted. Chapter four is comprised of an analysis of the data developed during the research process and chapter five presents a discussion of the findings. Finally, a summary of the research and important findings are presented in the project’s concluding chapter.

Chapter 3: Methodology

The methodology used for this study involved calculation of the annual performance of the thermal system and the study of solar heating economics. The long-term performance of the SDHW system was estimated using collector physical characteristics and relevant weather data as inputs. Cost and CO2 reduction analysis were performed using local data available from both commercial and professional bodies. A majority of current thermal rating programs require the equipment to be tested in accordance to a standard test under specified testing conditions. This approach provides reliable data because it is possible to replicate such tests within an accepted uncertainty band. There are, however, some rating programs which combine a standard test and a calculation procedure to produce a performance rating. Such is the case for the energy guide label for electric and gas hot water heaters. A similar method has been developed to provide a practical rating system with the goal of presenting an easily understood comparison between SDHW systems and conventional hot water systems. Note that the performance any individual commercial enterprise will experience may differ due to location and hot water usage.

The thermal performance rating is based on the system design and performance projections derived from testing of the collector components used in the system, or from testing and evaluation of the system as a whole. The type of auxiliary system (e.g. gas or electric) utilized will have a large impact on the overall performance of the system. These differences arise because different types of auxiliary systems have varying standby losses and fuel conversion efficiencies. Although the auxiliary system may affect the solar system’s performance, in many cases, the solar output is mostly independent of the auxiliary system used. Because gas backup systems have lower efficiencies and higher standby losses than do electric systems, it should be expected that the entire system’s (including backup) performance will be lower, even if the solar output from both system types is equal.

Chapter 4: Comparison of Solar Thermal Systems with Conventional Systems

The Solar Energy Factor (SEF) was used in this study to calculate the performance rating for solar water heating systems as described further below. In this context, the SEF is calculated as being the amount of energy that is delivered by the system divided by the electrical or gas energy that is put into the system. The resulting calculation of the Solar Energy Factor is presented as a number that is comparable to the Energy Factor (EF) assigned to conventional water heaters by the Gas Appliance Manufacturers Association (GAMA); however, the exceptions noted in the Rating Parameters Section are also taken into account as shown below.

Where:

QDEL

Energy delivered to the hot water load: Using these rating conditions, this value is 43,302 kJ/day (41,045 Btu/day).

QAUX

Daily amount of energy used by the auxiliary water heater or backup element with a solar system operating, kJ/day (Btu/day). To convert to kWh, divide this value by 3,600 (3,412). To convert to therms, divide this value by 105,000 (100,000).

QPAR

Parasitic energy: Daily amounts of AC electrical energy used to power pumps, controllers, shutters, trackers, or any other item needed to operate the SDHW system, kJ/day (Btu/day). To convert to kWh, divide this value by 3,600 (3,412).

Source: OG-300 Certification of Solar Water heating Systems at http://www.solar-rating.org/facts/system_ratings.html#RATING

The Solar Energy Factor can then be converted to an equivalent Solar Fraction (SF) using the following steps:

For the standard electric auxiliary tank, the Energy Factor is 0.9; conversely, the EF for gas tanks is 0.6. The application of this method means that the Solar Fraction is the percentage of the total conventional hot water heating load (delivered energy and tank standby losses) provided by solar energy.

Notes:

1. An alternate definition for Solar Fraction is frequently used. In this alternate definition, solar fraction is the portion of the total water heating load (losses are NOT included) provided by solar energy.

2. The alternate method of calculating solar fraction will yield higher solar fractions. Therefore, researchers should use caution when comparing the solar fraction for specific systems, inputs into energy codes or outputs from f-chart applications to ensure that the same calculation procedure for solar fraction has been followed.

The Solar Energy Factor can be converted to an equivalent Solar Savings (QSOLAR) as follows:

Where:

QCONV

Daily amount of energy used by the auxiliary water heater or backup element without a solar system. The standard electric auxiliary tank has an energy usage of 47,865 kJ/day (45,369 Btu/day). The standard gas auxiliary tank has an energy usage of 72203 kJ/day (68,439 Btu/day).

EF

The Energy Factor is the ratio of delivered energy to input energy for the reference electric auxiliary tank without a solar contribution. The balance of the energy is lost to the surroundings due to standby losses and conversion efficiency.

QSOLAR

The Solar Savings is the amount of the total conventional water heating load (delivered energy and tank standby losses) provided by solar energy minus any parasitic energy use. To convert to kWh, divide this value by

3,600 (3,412).

Source: OG-300 Certification of Solar Water heating Systems at http://www.solar-rating.org/facts/system_ratings.html#RATING

Based on the foregoing, the Solar Savings calculation provides the amount of the total conventional hot water heating load (delivered energy and tank standby losses) provided by solar energy less any associated parasitic energy use.

Financial Analysis

The following parameters are used for calculating the daily energy savings and the solar energy factor; these conditions are identical to those used in the U.S. Department of Energy test for water heaters (Federal Register volume 55 number 201, pp. 42161-42177, October 17, 1990) with the following exceptions:

Since the DOE test does not cover solar water heaters, it specifies no solar radiation. Therefore, a 4,733 Wh/m2 — day (1500 Btu/ft2 — day) solar radiation profile has been added as specified in SRCC document RM-1 “Methodology for Determining the Thermal Performance Rating for Solar Collectors.”

The draw profile has been set to begin at 9:30 AM solar time.

An outdoor ambient temperature profile has been added as specified in SRCC document OG-300. The average air temperature is 14.4°C (58°F).

The amount of energy to be drawn from the system was obtained from the April 1994 GAMA Consumers’ Directory of Certified Efficiency Ratings for Heating and Water Heating Equipment (p. 134). This amount of energy is drawn rather than the volume draw specified in the DOE test since the DOE test results are eventually normalized to an energy type draw.

The performance of the systems is determined from a computer simulation rather than by the actual test specified by the DOE procedure.

Source: OG-300 Certification of Solar Water heating Systems at http://www.solar-rating.org/facts/system_ratings.html#RATING

Table 1

Rating Parameters

RATING PARAMETER

(SI Units)

(I-P Units)

Environmental Temperature

19.7°C

67.5°F

Auxiliary Set Temperature

57.2°C

135°F

Water Mains Temperature

14.4°C

58°F

Total Energy Draw (QDEL)

43,302kJ

41,045Btu

Approximate Volume Draw

243l

64.3gal

Draw Rate

0.189l/s

3.0gpm

Draw Type: Energy

Number of Draws: 6 — One at the beginning of each hour starting at 9:30 AM

Source: OG-300 Certification of Solar Water heating Systems at http://www.solar-rating.org/facts/system_ratings.html#RATING

Notes:

1. A comparison of different water heating systems can be achieved using the Energy Factor (EF) and the Solar Energy Factor (SEF); in addition, these calculations can be used to estimate average annual operating costs for the specified rating conditions.

2. The SEF includes all of the specified conditions for the DOE EF test, plus several solar specific conditions.

3. The EF and SEF can be used to compare solar and electric system’s energy use on a one-to-one basis.

4. A higher SEF or EF indicates less conventional energy use, and consequently, lower operating cost.

A comparison of electric and solar and gas and solar thermal systems is presented in Table 2 below.

Table 2

Comparison of Electric and Solar and Gas and Solar Thermal Systems

Type of System

Calculations

Examples

Electric systems

Yearly Cost ($) = 365 days *12.03 kWh/EF*$x/kWh

Examples: (the following example assumes that electricity costs $0.12/kWh):

1. TYPICAL ELECTRIC WATER HEATER (EF = 0.86)

YEARLY COST = 365*12.03/0.86*0.12 = $612.69

2. TYPICAL SOLAR SYSTEM (SEF = 2.0)

YEARLY COST = 365*12.03/2.0*0.12 = $263.46

Notes:

1. The solar system saves $349.23 ($612.69 – $263.46) yearly.

2. This figure can be used as the energy cost savings basis for an economic analysis of a solar hot water system based on the assumptions for the standard DOE (EF) and SRCC-OG 300 rating conditions (SEF).

3. Other factors such as initial cost, maintenance, inflation, interest rate, and replacement costs also need to be considered when making an economic analysis.

Gas Auxiliary

Yearly Cost ($) = 365 days*0.4105/EF*$x/therm

Yearly Cost ($) = 365 days*0.4105/EF*$x/therm

Examples: (Assume that gas costs $1.60/therm)

TYPICAL GAS WATER HEATER (EF = 0.6)

YEARLY COST = 365*0.4105/0.6*1.60 = $399.55

TYPICAL SOLAR SYSTEM (SEF = 1.1)

YEARLY COST = 365*0.4105/1.1*1.60 = $217.94

Notes:

1. The solar system saves $181.61 ($399.55 – $217.94) per year.

2. This figure can be used as the energy cost savings basis for an economic analysis of a solar hot water system based on the assumptions for the standard DOE (EF) and SRCC-OG 300 rating conditions (SEF). 3. Other factors such as initial cost, maintenance, inflation, interest rate, and replacement costs also need to be considered when making an economic analysis.

Chapter 5: Discussion

Efficiency

One of the fundamental constraints to solar thermal system efficiency is the fact that just a fraction of the solar irradiance that falls on an individual solar cell can be converted to electric power (Fay & Golomb, 2002). Therefore, ensuring collection cells are placed at optimal angles for solar radiation collection represents an essential part of achieving maximum efficiency in these systems (Fay & Golomb, 2002). The energy production and energy savings that can be achieved through the use of solar thermal systems also depends on the efficiency of the type of system that is used for solar collection. For example, direct conversion is accomplished by photovoltaic cells in which semi-conductors and other photosensitive materials are used to collect sunlight and convert this photon energy into electricity, and the efficiency of these systems varies, significantly in some cases (Rogers, 2000). Furthermore, solar energy systems cannot collect and convert insolation (this is the amount of solar radiation energy received on a given surface area and recorded during a given time) into heat or electric energy except during daylight periods and during periods when the sun is not unduly obscured (Rogers, 2000).

By and large, though, solar thermal systems are becoming more efficient, and therefore more cost competitive with the systems they are intended to supplant or replace. For instance, by the year 2000, wind-produced electricity was averaging about 4 cents per kilowatt hour and solar thermal was at about 6 cents in the United States, compared to an average retail cost of 6.8 cents (Podobnik, 2006). Nevertheless, despite many modern renewables approaching price parity with conventional energy systems, they still generally face the disadvantage that the places and times of peak renewable energy production do not normally match up with commercial demand. Large-scale solar thermal systems, for instance, are most advantageously situated in remote plains and deserts, and their power output can fluctuate considerably during different seasons of the year and even within seasons (Podobnik, 2006).

Energy Production and Energy Saving Achievable Using Solar Thermal Systems

In general, solar thermal systems can replace more than half of the energy needed to supply the hot water needed for buildings, but these systems are more efficient during the summer months (Solar Thermal Systems, 2012). According to Rogers (2009), “Numerous industries have installed solar-thermal devices to augment conventional heating systems and reduce heating costs. A few years ago, PV capital costs ranged from $15 to $25 per watt. Costs approaching $5 to $7 per watt now appear to be attainable in a few years” (p. 122). Given the wide array of business sizes and types in the U.K., though, it is not surprising that hot water consumptions rates vary dramatically from company to company.

According to Bradford and Bean (2010), solar water heating systems can achieve savings on energy bills. Typical savings in residential appliations from a well-installed and properly used system, for example, are £55/year when replacing gas and £80/year when replacing electric immersion heating; however, savings will vary from user to user. A well-installed and properly used solar water heating system is likely to provide carbon savings. The typical savings are 230kg/year when replacing gas and 510kg/year when replacing electric immersion heating (Bradford & Bean, 2011). In addition, the amount of energy saved increases the more hot water is used. Generally, commerical buildings with more occupants use more hot water and so they achieve greater benefits from their solar water heating systems (Bradford & Bean, 2011).

It is improtant to note, though, that the energy savings that can be realized through the use of solar thermal systems vary widely depending on other factors as well, including the type and level of traditional energy sources that are being supplemented or even entirely replaced. Clearly, these variables will exist along a continuum of potential energy savings. In this regard, Summerton (1999) advises:

Incompatibilities between the cultures of systems can be particularly evident in battles among competitive systems. [So-called] ]soft’ and ‘hard’ energy paths were inherently incompatible. [by contrast], today’s advanced ‘supple’ technologies (wind power, photovoltaics, solar thermal systems) are neither technically nor economically incompatible with existing power systems. Instead, they can provide clear benefits, offering sophisticated means of increasing flexibility and relieving a range of system constraints. (p. 348)

The challenge of defining acceptable technical standards to connect the systems was a clash between two competing systems with highly different system cultures. Abbate argues that to understand this struggle and its impact upon how the systems ultimately were connected, it is necessary to look beyond issues of “technical” incompatibility. Instead the author reconstructs the cultural reference points of the conflicting actors, exploring the goals, expectations and world views behind their arguments and actions. The drawn-out process of negotiation revealed highly divergent perceptions and assumptions among system builders about the social and cultural implications of different technical configurations. “Technical” incompatibilities had deep roots that reflected profound differences in system cultures (Summerton, p. 37).

Although there is significant overlap for generation technologies, “supple” is applied more broadly to include T&D equipment and energy storage devices. Conservation and load management can also be considered supple options on a menu of planning choices. Second, while “soft” emphasizes reliance on renewable resources and focuses on energy flows through the system, “supple” emphasizes modularity and flexibility, focusing on the morphology of the system itself. The third and most important difference is one of interpretation and has to do with the assumed consequences of implementing these technologies. By calling a technology supple, it is not implied that its implementation will cause a change in the institutional, social and political context of the energy system. Based on its physical and operational characteristics and the logistics of its deployment, however, a supple technology is consistent with such change. It does not preclude or discourage change. In other words, supple technologies are indifferent to certain aspects of the larger system in which they are embedded (Summerton, p. 37).

Electric utilities today can employ a number of supple technologies as a result of recent technological advances, cost reductions and operating experience. Photovoltaics (PV) may be considered an archetypal supple technology: the size of existing PV systems ranges over eight orders of magnitude. They impose minimal constraints on a site and its surroundings. Photovoltaics are becoming a realistic power generation option for utility-connected applications because their technical feasibility and practicality has been established in niche markets and many large- scale demonstration projects, and their cost continues to decline. Important technological development has occurred in the area of inverters, which are the interface between a direct current power source such as a PV array and an a.c. grid. Until recently, many utility engineers felt that inverters could not be operated safely and successfully in distribution systems. Due to dramatic improvements in inverter performance and the accumulation of utility operating experience, these views are changing. New inverters are expected to actually enhance power quality in distribution systems (Summerton, p. 38).

Additional progress has been made with other supple generation technologies and their integration into the grid. Wind turbines have seen significant cost and performance improvements over the past two decades. Solar thermal electric generation has also proven to work reliably and is on the verge of profitability in the current economic environment (Summerton, p. 38).

Clearly, it is not so much a matter of all-or-nothing or even a strict quid pro quo outcome. Companies that pursue alternative energy resources as part of their business model have been shown to outperform their counterparts that do not, so making the investment of time and other resources needed to develop efficient solar thermal solutions represents a timely and valuable enterprise. Despite these laudable goals, though, many small- to medium-sized enterprises may lack the resources to implement these solutions unless they know how long it will take for them to recoup their invesmtent, and these issues are discussed further below.

Energy Cost with Renewable and the Payback Period of the Solar Thermal System in order to Evaluate Feasibility of Proposed System

The energy costs of solar thermal systems are nearing cost parity with conventional systems, but there are some initial costs that are involved that will affect the ultimate payback period and every situation will be unique in some way. Some indication of the costs that are involved can be discerned from the fact that an average sized household require three solar panels to provide 75% of its hot water requirements at a cost of approximately £5,000 (this price includes all requisite parts including a new hot water cylinder), VAT (@5%) and installation; however, larger properties realize some cost efficiencies as the cost per panel reduces slightly as the system required becomes bigger (How much does it cost?, 2012, p. 1). According to one industry analyst, “Photovoltaic (PV) panel systems are considerably more expensive than solar thermal systems. The starting cost is about Pounds 10,000, although Pounds 5,000 of that should be refunded as a government grant. Most popular systems are roof-mounted panels. However, it is possible to buy more expensive, fully integrated PV panels that look like regular tiles” (How much does it cost?, 2012, p. 1).

The UK Renewable Heat Incentive. Pursuant to the UK Governments “UK Low Carbon Transition Plan” and “Renewable Energy Strategy” (July 2009), the Government has established the “Renewable Heat Incentive” (RHI), effective June 2011 but delayed until April 2011, in an effort to encourage the installation of renewable heat technologies throughout the U.K. economy (How much does it cost?, 2012, p. 1). According to this source:

1. The RHI is very similar to the FIT scheme for renewable electricity, but applies to technologies that generate heating in a renewable fashion.

2. Heat production is responsible for 49% of UK final energy demand and the aim is to have nearly 12% of all heat generated to be done so from a renewable source by 2020.

3. The RHI is due to come into effect in June 2011 (delayed from April 2011 as announced in the October 2010 spending review), and details have now been announced to confirm this (How much does it cost?, 2012, p. 2).

Generally, the RHI is intended to stimulate interest among consumers and businesses alike in deploying renewable heat technologies, including solar thermal systems, that are initially more expensive to install and operate compared to conventional fossil-fuel heating systems (How much does it cost?, 2012). In response to these constraints to deployment, the U.K. Government has established an incentive scheme that provides a framework in which users are paid every 3 months based on the total amount of renewable heat they generate (as expressed in kWh) (How much does it cost?, 2012). According to this source, “The scheme aims to generate a return on investment of 12% for all technologies and 6% for Solar thermal. This is more than the investment return the FIT scheme attempts to achieve and this is because the technologies available are less well-known, more expensive to purchase and run on a standalone basis (i.e. there is no grid connectivity to allow the generator to sell excess production)” (How much does it cost?, 2012, p. 2). The rate of return for solar thermal systems is lower because it is a widely known technology that has lower barriers to entry and less expensive installation costs compared to some other alternative energy resources (How much does it cost?, 2012).

The scheme is being brought in over two Phases as shown in Table 3 below:

Table 3

Two-Phase Implementation of the UK Renewable Heat Incentive

Phase

Description

Phase One

This phase started June 2011 and involves the Renewable Heat Incentives for the non-Domestic sector including Corporates, Public Authorities, Schools and Hospitals. The U.K. Government has expanded the definition of the domestic sector to include a number of business-related enterprises including: “…where a renewable heating installation serves a single private residential dwelling only. This does not include multiple residential dwellings served by one renewable heating installation (e.g. district heating) nor residential dwellings which have been significantly adapted for non-residential use. For example, a house where someone works or runs a business from home would be considered domestic whereas a house converted to be a shop or bed & breakfast would be considered non-domestic and could receive RHI support. This means that if a company, private landlord or registered social landlord installs single renewable heating units, in one or multiple residential dwellings, this would constitute a domestic installation and they will not be able to receive RHI tariffs from the outset, but will be able to claim from 2012.”

Phase Two

This phase will include the domestic sector in October 2012 when the Green Deal is introduced with the following technologies being included:

1. Air Source Heat Pumps (these were not included in phase one).

2. Ground Source Heat Pumps: similar to Air Source Heat Pumps although they take their heat from the ground.

3. Solar Thermal: Collects heat from the sun which transfers the heat to the building. All solar systems contain a storage element in the form of a hot water tank that ensures the hot water/heat can be supplied at the desired time rather than just when the sun is shining.

4. Biomass Boilers: boilers that generate heat through burning organic matter.

5. Biogas: biogas can be burned to generate heat.

6. Biomethane: similar to biogas, but involves removing the carbon dioxide and other impurities.

7. Bioliquids: biomass turned into a liquid and used for heat generation.

8. Combined Heat and Power (CHP): this is the simultaneous generation of electricity and heat from a fuel. It uses the fuel more efficiently as it captures the heat and transfers it to where it is needed, whilst also using the fuel for its primary objective of generating electricity.

Source: http://www.cernunnos-homes.co.uk/fit-rhi/uk-renewable-heat-incentive-rhi/.

Notes:

1. Wood burning stoves, air heaters and open fires are NOT included under the scheme.

2. Only technologies that are MCS accredited, and installed by MCS accredited installers, will be eligible for the RHI payment.

3. The MCS accreditation scheme is in place to ensure that purchasers of systems have peace of mind that they are getting a system that really will last and produce the amount of energy they say they will (UK Renewable Heat Incentive (RHI)

The FIT has two payment components:

1. Generation Tariff: a fixed payment by your electricity supplier for each KWh of electricity you generate, regardless of whether you use it or not. This payment is fixed for the first year and then linked to the RPI. The total program will last for 25 years (for solar electricity), and 20 years (for Wind electricity) from installation date.

2. Export Tariff: This is a payment that has a floor price of 3.1p/kWh from the electricity supplier for each unit of renewable electricity that is generated but is not used and thereby is “fed back” into the national grid. The amount that is fed-back into the grid will eventually be measured by Smart Meters, which will be installed in every house in the future under a Government scheme; however, until the use of Smart Meters is more widespread, the Government has set out that 50% of total electricity generation will be “assumed” to have been exported. The 3p/kWh is also a “floor” price, and renewable energy generators (i.e. participants in the FIT scheme) can negotiate higher Export Tariffs with their energy supplier.

Table 4 below provides the current Generation Tariffs and these rates are depicted graphically in Figure 1 that follows:

Table 4

Current Generation Tariff Schemes

Scheme

Pence per kWh >December 2011

Life of Scheme (years)

Solar PV <4kW (retro fit)

21

25

Solar PV >4kW (new build)

21

25

Solar PV 4-10kW

16.8

25

Solar PV 10-50 kW

15.2

25

Solar PV 50-100 kW

12.9

25

Solar PV100-150 kW

12.9

25

Solar PV 150-250 kW

12.9

25

Solar PV 250-5MW

8.5

25

Solar PV Standalone

8.5

25

Source: Based on tabular data at http://www.cernunnos-homes.co.uk/fit-rhi/uk-feed-in-tariff-fit/

Figure 1. Current Generation Tariff Schemes

Source: Based on tabular data from http://www.cernunnos-homes.co.uk/fit-rhi/uk-feed-in-tariff-fit/

Notes:

1. The Generation tariff is linked to the RPI and changes every April. Ofgem will calculate the new tariff rates and publish them at the end of each March.

2. The total length of the scheme is guaranteed for 25 years for Solar PV and 20 years for Wind technologies.

3. The Export Tariff is set with a floor price of 3.1p/kWh; however, this is a minimum price and higher prices can be negotiated with energy suppliers, and this will obviously be dependant on the market rate at any time during the 25 years of the scheme. Should the market rate increase over the years, then it will be likely that energy suppliers will negotiate higher “export” rates also.

4. To avoid the need for additional Export Meters to be installed before a roll out of Smart Meters, the Government allows renewable energy generators to assume an export rate of 50%.

5. Those that think they export more can install export meters/smart meters of their own accord. Others can just take this 50% export rate until Smart Meters are rolled out across the country.

6. For companies, they must pay tax, but can accrue depreciation tax benefits on the systems installed.

For systems installed after April 2012 the Generation Tariff for the first year of the system decrease to take into account the expected fall in the costs of installing renewable energy systems as they become more widespread (and due to technological advances). Benefits of the FiT include the following:

1. The Government has created a very good incentive scheme that not only makes it cost effective to install renewable energy systems, but also makes the decision a financially viable investment decision.

2. Receive a fixed and guaranteed income for generating renewable energy that is inflation linked (Generation Tariff)

3. Export energy back to the grid to receive a further payment that also protects you from rising energy costs as it is a floor price (Export Tariff)

4. Reduce electricity bills because users generate their own electricity

5. Companies can gain other tax benefits (although they must pay corporation tax on FIT payments).

In some cases, this lengthy payback period has caused project developers to switch from solar thermal systems to photovoltaic (PV) systems despite the lesser reliability of the latter compared to the former. For example, Fister (2011) emphasizes that, “Even with a few large-scale endeavors underway, the amount invested in solar thermal projects lags behind that in PV projects. And in some cases, the cost difference is so extreme that project planners are replacing planned solar thermal project plans with PV” (p. 37). To date, four solar thermal projects that had been planned for installation in California, with a combined power generation capacity of 1,850 megawatts, changed from solar thermal specifications to PV to reduce costs (Fister, 2011). According to Nye (2009), “SOL2o, one of the North East’s leading renewable energy companies, has reported a huge surge in interest from businesses across the region in new and renewable energy technologies, as they recognize the value of those technologies to their businesses and to the wider community” (p. 37).

This report is a clear indication that the time has never been more opportune for the deployment of solar thermal systems in the U.K. According to Nye, “The recently announced feed-in tariff introduced by the U.K. Government has also increased interest in renewable energy as the utility companies will now pay businesses and individuals to generate their own electricity and for any excess electricity they produce which is fed back into the National Grid” (2009, p. 37). The company’s head of operations, Steve Wigham, emphasizes, “The guarantee of getting an income on top of saving on energy bills will be an incentive to businesses, householders, landowners and communities wanting to make the move to low-carbon living. The feed-in tariff will also change the way many businesses think about their future energy needs, making the payback for investment far shorter than in the past. “In addition to this, generating your own electricity will help you cut your energy costs, reduce your CO2 emissions and therefore cut your carbon footprint.” (p. 3).

In addition, as a reflection of the growing take-up of solar thermal systems by businesses in the UK, SOL20 has worked on developments including providing solar thermal systems at housing developments at Whinney Banks on Teesside, Kielder Village and Hadston in Northumberland as well as the sports and leisure centre at Catterick Garrison, a number of NHS health centres in the region and a new office complex at Wallsend’s Cobalt business park (Dent, 2009).

Carbon Dioxide Emission and Environmental Impact of the Solar Thermal System

The U.K. Government has established an ambitious goal of reducing carbon dioxide emissions by 34% by 2020, a goal that will require 14% of the country’s demand for heat needs to be satisfied by the use of alternative sources by that year (Dent, 2009). Although solar thermal systems were shown to be able to help reduce carbon emissions compared to conventional heating systems, they are not without their environmental impact. For instance, Croxford and Scott (2010) emphasize that, “Possible negative environmental impacts of solar energy systems include land displacement, air and water pollution from manufacturing, operations and maintenance, and demolition of the system” (p. 1). At present, there are approximately 100,000 solar thermal systems in place in the U.K., with the majority of these being installed in the domestic sector (Croxford & Scott, 2010).

Determine Carbon Dioxide Emission Reduction that Can be Achieved

Burning fossil fuels contributes to atmospheric pollution, resulting in a wide range of damage both to the environment and public health (Energy Efficiency in Buildings, p. 1-2). Solar thermal systems typically produce heat at rates of 450 KWh/m2 per year or more for flat-plate collectors and 550 KWh/m2 for evacuated tubes, with corresponding annual carbon savings of 100-110 kgCO2 / m2, respectively (Solar Thermal Systems, 2012). A solar thermal system of between 2-4 m2 would produce an annual output of 1000-2000 KWh, thereby reducing carbon emissions by approximately 0.2-0.4 tons per year (Solar Thermal Systems, 2012). Although the carbon savings that can be realized through solar thermal systems are relatively modest, these systems are an effective and visible means of demonstrating that an organization is making an honest effort to reduce their carbon emissions (Solar Thermal Systems, p. 3).

According to Fister (2011), “Solar thermal projects will need to be more cost-competitive for them to be adopted on a global scale, although the zero-emission characteristics provide tremendous incentive for worldwide utilization. As the technology improves and the price goes down, it will become a more competitive choice” (p. 37). From a project management standpoint, designing and building a solar thermal project is more like a conventional power plant, but it operates without the emissions associated with burning coal, natural gas or oil, or the waster disposal associated with nuclear energy (Fister, 2011).

Chapter 6: Summary and Conclusion

Summary

The research showed that solar thermal systems vary from passive approaches, such as straightforward passive daylighting techniques for commercial structures that can be designed into the architecture, to highly sophisticated active systems, such as solar water heaters, parabolic trough and dish concentrator systems, solar ponds, and central receiver systems that can be designed or retrofitted as the case may be. These solar thermal systems were shown to be increasing cost competitive with the conventional energy sources they are designed to supplant or replace, and there are numerous incentives available for pursuing these alternative energy schemes that make their adoption even timelier today. Indeed, given the increasing concern over long-term global warming trends and near-term climate change, the time is right for businesses of all types and sizes to investigate the viability of pursuing their own optimal blend of solar thermal systems and conventional systems in ways that will be mutually beneficial for all of the stakeholders who are involved.

The research was consistent in showing an increasing growth in the popularity of solar thermal systems due in part to skyrocketing fossil fuel prices and demand from emerging economic powerhouses such as China, India, Russia and Brazil. In sum, solar water heating systems were shown to be able to achieve savings on energy bills but the payback on these investments varies widely, depending on the unique circumstances of the businesses that are involved and the types and levels of the systems that are used as well as those that are being supplanted or replaced.

Based on the results of a recent trial, typical savings from a well-installed and properly used system are £55/year when replacing gas and £80/year when replacing electric immersion heating; however, as noted above, actual cost savings will vary from user to user. Nevertheless, the research also consistent in showing that well-installed and properly maintained solar water heating system can help reduce carbon emissions, with the typical savings levels of 230kg/year when replacing gas and 510kg/year when replacing electric immersion heating being achieved in recent years.

Conclusion

Solar thermal systems are not the magic bullet that will save the world from the imminence of peak oil, probably sometime around mid-century, but these alternative energy resources represent part of the solution to this impending threat to global progress. One of the more interesting issues that emerged from the research concerned the need to identify all of the relevant costs that are involved in deploying solar thermal systems, including the carbon additions resulting from their manufacture and eventual disposal. Even these costs, though, are further compounded by their overall impact on the environment in some parts of the world where workers are exposed to toxic e-wastes with little regard for their harmful effects on the surrounding communities. In sum, then, the carbon dioxide emission reductions that can be achieved with solar thermal systems vary from site to site and situation to situation, but properly installed and maintained, these systems offer a viable alternative to the conventional energy sources they are designed to supplant or replace and can provide users with substantive reductions in carbon emissions and energy costs.

In reality, then, deploying a solar thermal system today may have an adverse impact on third world nations in the future by contributing to their recycling industries that fail to meet minimal safety standards. Despite these types of considerations, though, it must be assumed that every bit of energy saved in homes and businesses using solar thermal systems will be just that much less that national security is tied to energy needs. In the final analysis, solar thermal systems are a good investment in general, and for businesses — especially in the United Kingdom where a number of government incentives are available to help with the installation and maintenance of these systems in ways that will provide a revenue stream for these businesses while helping them reduce their energy costs now and in the future. Because there are some cost efficiencies involved as solar thermal systems grow larger, businesses can use their buildings and surrounding landscapes in innovative ways to capture as much of the sun’s light as possible with little or no diminution in the aesthetic quality of these resources. Given the potential savings in costs, reduction in overall carbon emissions and reduction in the dependence on foreign sources of energy, deploying solar thermal systems is a downright patriotic act, as well as being good business.

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