Posted by: Pete | October 25, 2011

What’s the best Alternative Energy?

Having invested in Solar PV panels over a year ago and been pleased with the return, now we’re thinking – should we go for solar water heating, a biofuel boiler, or heat pumps?

The Government will offer ‘Feed In Tariffs’ on all of these next year so, as with Solar PV, we’ll get paid for the energy we produce. When stock markets and most other financial investments are falling apart, and with oil prices set to escalate in years ahead, it seems sensible to me to spend on something that will not only save money but help the planet as well.

Of course, it would help the planet more if Governments could divert a larger amount of of the money they spend on centralised generation towards micro-generation. Not only does this deliver energy at the point of use, but it avoids the environmental impact caused by power stations, wind farms, and the web of pylons covering our countryside.

If you are still undecided about PVs, you should be aware there is a strong possibility that Feed In Tariffs will be reduced in March 2012.

So how have we done so far?

Our 4 Kilowatt PV installation cost us £17,000 including VAT and it went live after a trouble free installation on October 19th 2010. The 30 degrees roof of an outbuilding was available and although this wasn’t the optimum orientation; it faces South East, this meant our house roof needn’t be used. We suffer from a small amount of shade late in the day but our location in Cornwall is one of the best for solar radiation in the country. The estimated income from Feed In Tariffs was £1353 and it was assumed we would save around £189 off our electricity bill. So far we have received £879 for the electricity we generated between October 2010 and June 2011. We estimate a further £546 will be paid for the period ending September 8th, which gives us £1425 earned with a month to spare until a full year is up. Given the poor summer this year, we feel pleased to have exceeded the estimate given.

As we can’t realistically monitor the coincidence of solar generation which is weather dependent, with actual energy use by the various devices in our home,  it isn’t possible to know what our savings have been on the electricity bill. We had only recently moved in when we installed the panels, so had no track record to compare with. But we suspect our savings have also been greater than the estimate as we installed an electric Aga which is programmed to take most of it’s power during daylight hours. However, if we use the estimated saving, our return in year one has been £1614 on an investment of £17,000 or 9.5%. Comparing this to my other investments including ISA Share Schemes that decreased in value, it’s looking good. Only one alternative investment that has delivered a steady 8% came close.

To put it another way, our payback will be around 10 years and after that we should earn a further £25,500 at today’s energy prices. This will take us to the end of the 25 year guarantee period.

In the long term, we don’t know if the capital cost has increased the value of our property by the amount spent, we don’t know if the savings due to escalating oil prices will accelerate, and we don’t know how long other investment alternatives will under perform. This makes the ‘opportunity cost’ difficult to predict. We haven’t any idea what would happen if we moved, it seems logical to me that the new owners should take over the tariff benefits, but even if they didn’t they would enjoy reduced energy costs. We don’t plan on moving so it’s not a concern for us but means ours is a ‘sunk’ investment and not one in which we’re expecting to recover the capital.

As I’m semi-retired, the reduction of recurring costs is almost as important as securing predictable income streams. So we’re keen to explore other opportunities to reduces our energy costs.

This is particularly the case as we’re converting an outbuilding into a holiday cottage to provide a modest boost to our income. It has no space or water heating so we have been exploring the alternatives. With Government grants of up to £1000 against installation costs, ‘Renewable Heat Incentives’ worth thousands of pounds and the forthcoming ‘Green Deal’, there are plenty of incentives for the various technologies.

But which to go for?

Air Source Heat Pumps are simple to install and promise a 4:1 to payback on energy use i.e. 1 kilowatt of electrical energy is needed to suck 4 kilowatts of heat energy out of the air and into your home. But can it really perform during the winter? Some say yes – it’s good down to minus 15 degrees Centigrade, others say no – you have to pump more power in to get a usable temperature out when the weather is cold. But then I hear there are new systems with more efficient pumps and better refrigerants and they can deliver – or so I’m told.

Ground Source Heat Pumps seemed a logical choice for us as we have anyway to dig a 200 metre trench to connect our cottage to our private drainage system. However, recent cold winters have provided a permafrost that reached some of the shallow installations which depend upon the ability of the ground to retain heat. Vertical bore hole installations can overcome this by using geothermal heat but they are more costly and judging by the water temperature from our 100ft fresh water bore hole, I’m sceptical about what can be achieved without an extremely deep hole.

Biomass boilers look very attractive and are certainly capable of delivering enough heat energy but I have concerns over the continuity of fuel supply. Premium wood chip pellets currently rely upon the waste timber from the construction industry – so what happens if there is a decline in that industry or demand rapidly increases for the pellets? I’m guessing prices will rise. The Tariffs should be indexed linked and well in excess of what will be paid for fuel, but the uncertainty over supply is worrying. There are also standard pellets produced from biomass crops like Miscanthus that grows like cane. However, the boilers that can use these require more frequent cleaning as the ash content is higher than premium pellets making them less user friendly, and the questions over supply still lurk.

Solar Water Heating systems, remain an attractive proposition although their ability to generate sufficient heat relies upon a large enough array and reasonable levels of solar radiation on a daily basis.

With most alternatives, the heat source needs to be permanently running to capture sufficient low level energy over a longer period of time than conventional oil and gas boilers. In the case of biomass, it is also to avoid having to relight the system.

For this reason, convecting radiators or better still, underfloor heating is preferred. That latter acts as a heat sink and although taking longer to heat up, retains it’s heat for longer when the temperature drops.

I haven’t considered the installation of a wind turbine for my home as a large enough installation would be too intrusive and noisy for us.

The conclusion

At the moment, I’m thinking I should investigate the claims further for the latest air source heat pumps and consider installing one with a solar water panel to pre-heat the water. The combination, in addition to my PV panel generation, might tip the balance sufficiently but I’m open to suggestions.

If anyone out there has some better advice, I’d be very grateful for their comments.

Otherwise, with the weather down here in Cornwall today, maybe I should do as we suggested in the book Passage to Redemption and engineer a device to produce electricty from rain fall!


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