Potential savings when using Solar Thermal

The potential savings offered by solar thermal systems are difficult to calculate exactly and depend on a large range of factors. These include:

  • Initial system cost (depending on size, quality of parts and installation).
  • The energy source that you are replacing (coal, gas, electricity, LPG, oil, etc.).
  • The property’s suitability for solar panels (and the total output of the system - usually between 1000-2500kWh in the UK).
  • The property’s energy efficiency.
  • Eligibility for the RHPP and RHI.
  • Your geographical location and solar resource.
  • Available financing incentives.
  • The cost of the fuel you use for your backup water heating system, if you have one.
  • Your energy needs (the solar thermal system will not provide all of your hot water needs).

Though the above range of factors needs to be taken into account when calculating the potential savings offered by solar thermal systems, it is possible to give a rough idea of how much you can expect to save.

Energy source being replaced Approx annual energy bill saving*
Coal £55
Electricity £95
Gas £60
LPG £100
Oil £75

* These potential savings are given only as a guide. You should always ask prospective installation companies to give you a quote for the expected performance of solar thermal systems. MCS-accredited companies should do this for you.

NB. These figures do not take into account the potential income received from the (as yet unconfirmed for domestic properties) Renewable Heat Incentive. Once this comes into effect, the actual return offered by solar thermal system will be much higher. Non-domestic installations currently receive 8.9p/kWh of energy produced.

The typical output of a domestic solar thermal installation in the UK is between 1000kWh and 2500kWh, though once again this depends on individual factors. When the domestic RHI becomes active the average householder can therefore expect to receive around £200-£400 per year in payments, on top of the reduced energy bills.

This means that householders who install solar thermal technology can expect to recoup their initial investment after 10-15 years. There is also the £300 Renewable Heat Premium toward the initial cost of installing solar thermal collectors.

What’s more, while the energy bill savings outlined may seem modest, they do not take into account the extent to which installing solar thermal systems can protect you from rapidly rising energy bills. What’s more, the RHI payments are RPI-linked, so they will not be eroded by inflation.

It is necessary to underline the fact that a solar thermal system will not fully replace your existing water heating system, and will not provide any space heating. The actual percentage of your water heating demand covered by solar thermal will depend on your energy consumption habits (though this figure is usually between 40% and 60%). Obviously, solar thermal systems are most productive in the summer, when there is most sunlight. You will therefore rely more on other, non-renewable energy sources during the winter months.

If you are planning on adding a solar thermal system to a new build or as part of a larger refinancing job as part of a mortgage, then your payments on the money lent may be considerably lower.

 

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