The roof could accommodate a 3960W installation. This would require an area roughly in the regions of 20-30m2 dependant upon the panels used. An installation of this size would roughly cost £21,000. It is estimated that maintenance costs would be around 1% of the capital cost per annum. The expected output would be 4468kWh per annum and with the grid price around 13p, this would give an annual saving of £580.84.
If all the initial capital were available, there would be no loan required and the payback period for such an installation would be around 40 years. This is neither realistic nor very appealing.
However, with the new feed-in tariffs (FITs) introduced in April of this year, there is considerably more potential economic value available. A FIT is a scheme where a price is paid for every kWh of electricity generated, regardless of whether the power is used or exported. An additional export tariff (of around 3p/kWh) can also be negotiated for any power that is exported back to the grid.
To qualify for a FIT for a dwelling, the building must be suitably energy efficient. Since the overall proposal for the area involves improvements of insulation and draught-proofing, along with energy efficient boilers, then these dwellings should qualify for FITs.
An overview of the FIT rates for photovoltaics can be seen in Table 1.
SIZE OF PV SYSTEM |
Feed in Tariff (p/kWh) |
<4kW (new build) |
36.1 |
<4kW (retrofit) |
41.3 |
4 - 10kW |
36.1 |
10 - 100kW |
31.4 |
100kW - 5MW |
29.3 |
Off Grid Systems |
29.3 |
Table 1 – Feed in Tariffs for Photovoltaics
It can be seen that the greatest rate is paid for a retrofitted installation with a peak rating of under 4kW. If the Sanyo 220W HIT panels were used and the full area was utilised, an installation of 5720W could be feasible. This would generate more power at a lower tariff. A sensitivity study was carried out to determine whether the possible 5720W installation would be more economical than a 3960W installation.
The results took into account average quoted installation prices for such systems and included a 1% (of capital cost) annual maintenance cost for cleaning and general operation. A comparison was made of the expected annual outputs of each system and from these values expected from the FIT. On top of this, the output was compared to the typical demand of a tenement block to estimate the amount of power that could be exported. Using these figures with a 20 year loan 7%, the annual profit can be obtained (minus the annual loan repayment) and then added to the saving from the grid price that would have been paid before. Figure 1 highlights the income that could be generated, it is also compared with the possibility of a reduction in capital cost due to the current installation prices dropping as PV technology progresses.
Figure 1 – Comparison of Two HIT Installations
It can be seen from the graph that at the current estimated installation prices, both schemes could be profitable from the offset. However, the profit margin is greater for the 3960W system unless the initial capital cost falls by around 17%. By configuring the peak rating of the system just under the cut off for maximum FIT, the greatest return can be realised in this location.
Figure 2 shows the previous results compared to some other possible configurations of the lower rated panels.
Figure 2 – Solar Panel Comparisons with loan at 7% interest
The 100W Poly panels were limited by the area of the roof. The HIT installation that is just lower that the 4kW limit still appears to currently be the most economical. The 167W Poly panels are similarly cost effective with only the lower rating reducing output. However, the addition of an extra panel here would take the rating over the 4kW threshold.
This comparison is also very sensitive to the interest rates of the loan. A sensitivity analysis was undertaken on varying interest rates, if the interest rate were to increase to 9% then all of the schemes become uneconomical in the short term.
The main consideration is that the scheme is economical in the short term at 7% interest so it can be applied efficiently to tenements. If the capital was present to forego the necessity of the loan, then the schemes would be easily economical. If the aim is for a larger, widespread application requiring greater capital then this is unlikely to be possible. The scheme consisting of 220HIT panels, generating 3960W of electricity, appears to be the most economical.
Given the recent trend in PV unit price that is showing a steep decline, buying into such a scheme is likely to become cheaper. However, the expected FIT is expected drop to coincide with the expected PV unit price drop.
In this instance, keeping the installation below 4kW allows for the greatest economic gain. Economic gain is crucial when considering the application of such a scheme to a tenement block.
Tenements often have a high turnover of tenants, such as students or young families, so the incentive for a long term economic investment is not present. There is also no desire to be tied into a long term loan. There is also the issue that each property owner in a block has a part-share in the roof. However, this feasibility study has proved the possibility of annual economic gain, somethingß which should appeal to tenants or landlords from the offset. There are limited maintenance costs, with the most likely cost being the cleaning of the panels, which have been factored into the study.
When considering this application over multiple buildings there would be economies of scale to consider. The purchase cost is likely to decrease. If such a scheme was undertaken by an independent contractor or by a council body, the margins should be such that there could be profitability for landlords and contractors alike. In the area of Dennistoun, there are thought to be around 440 separate sites suitable for this type of scheme. If all sites were utilised, then generation of around 2GWh could be achieved annually.