1. The energy net saving calculations is energy the bought fuel displacement potential minus any energy used. It is important to consider: 1.1. The estimate of the energy delivered by the system as hot water at the taps (not just by the panels, which will be higher) Units are usually kWh per year. 800-1200 kWh for a 2.8 sq m Solartwin is within our expected range for most of UK.
1.2. The total energy efficiency of the hot water system, such as a boiler, at producing hot water. (This is lower than its combustion efficiency or SEDBUK percentage!) This may be a percentage in the range 25%-60% if a gas boiler is used, but 70%plus with electric immersion heating if it has typical storage and distribution losses. Bear in mind that many gas and oil boilers tend to operate at low efficiency when working below their peak rated load - which is what tends to happen when they are heating water only for washing and bathing in summer. It is also important to factor in the fact that reducing the use of a boiler often means slightly lower electricity bills as well as gas/oil bills since it will be pumping (and maybe also using flue fans) less.
1.3. Dividing the first figure by the second gives the fuel displacement potential in kWh of solar. This can be calculated by dividing the system (not panel) delivery of the solar water heating system in terms of hot water production at the cylinder divided by the efficiency of the hot water system at producing hot water if fuels such as gas or oil are displaced. Whether this efficiency figure is chosen to be 35% (as in Sutherlands tables for hot water at the taps rather than at the cylinder) or a higher figure, can have a huge bearing on the final environmental and cost effectiveness figure for solar. So this fuel displacement potential is usually far, far higher than the estimate of the energy delivered by the system.
1.4. However this displaced energy figure probably needs to be reduced by a usability fraction. Not all homes are occupied 365 days a year. And even they were, perhaps not all of the energy in the solar hot water would be used. So this percentage will rarely be 100%. Perhaps it might be 90%?
2.
Now convert this displaced energy figure into money.
2.1. This calculation depends on the fuels displaced and tariff(s) at which they are bought. For example a fuel displacement potential of say 2500 kWh of low cost mains gas displaced at say 4p a kWh is worth £100. But with more costly bottled gas the figure may be over £200. These are hypothetical figures. Please use your own.
2.2. A further reduction needs to be be applied to this figure for alternative systems other than Solartwin because of the cost of the energy used by parasitic mains powered equipment: such as the pump, controller motorised valve, etc. It is important to deduct rather than ignore the energy and fuel use impacts of the parasitic electricity use of other systems since their usage can be significant and may well exceed 5% of the claimed cost-benefits of a 2 square metre tube system and over 20% of its environmental benefits. In general:
2.2.1. Mains electric solar circulating pumps run at around 30-90 W for an average of a few hours a day. You may need toestimate or calculate the cost of running one. (You may also want to reduce this figure a bit, since some of their energy probably ends up in the solar hot water. On the other hand, large uninsulated metal pumps can act as heat dumps.)
2.2.2. Controllers run at around 3-10 W, usually 24 hours a day. Use the figure inclusive of the transformers they use at 230 V, not just the low voltage transformed figure. Deduct this cost along with any pump running cost.
2.3. Further reductions to any remaining savings may need to be applied due to
2.3.1. maintenance charges, and
2.3.2. costs of antifreeze
2.3.3. all or part of the cost operating water hardness control systems if relevant, unless their use is regarded as a general benefit rather than cost
2.4. On the other hand, if a boiler is being used less as a result of having solar, a boiler life extension of say £10 can be added to the figure. After all, if a boiler is being used, say 20% less, it may be reasonable to expect it to require less maintenance and to last rather longer. Say a £1000 boiler was normally expected to last 10 years, but were instead to last 12 years because of solar, then the annual write-off of the capital sum of £1000 would be reduced from £100 to £83. So a further saving of £17 might thus be attributed to having solar.
3.
The cost of the finance is also extremely important. 3.1. If the money spent were invested or in a bank account or elsewhere, how much might it be earning there? Less tax.
3.2. If the panel is bought using borrowed money, at what rate of interest?
3.3. This gives you a negative cost of finance figure to set against your savings.
4. Now tot these numbers up to get a final figure for savings/losses. (Now also tot up how many assumptions you have made!)
Variables are shown in italics above! Some will be known accurately, others will need to be estimated. That calculation was only about possible savings in one year, not payback.
Payback is another multi-input time calculation based on the above money figure, plus even more data. All factors need to be considered. These include:
1.1. Initial cost (Say £3699)
1.2. The sum if any, of this which adds to the capital value of the home if it were to be sold (Say £1000) Again this cannot be verified at present. Wait until HIPs analyses give this answer with rigour.
1.3. The difference between these is the net capital balance to be repaid via a payback calculation. Include the deduction above unless the owner thinks that solar payback must, uniquely, happen twice! (In this example £2699)
2. The fuel price inflator issues.
2.1. Estimate an annual percentage price rise (or drop) for the fuel(s) which you are displacing by using solar.
2.2. Decide whether to apply a simple or compound interest to these price changes.
2.3. Now calculate the actual payback horizon calculation in years: divide the net capital balance to be repaid each successive year by the previously calculated savings (with an annual fuel price inflator built in), to calculate what is the break-even threshold to your particular solar water heating system.
