An economic assessment was carried out on the proposed schemes to determine whether they would be viable in the real world. This assessment involves accounting for the capital costs and expected annual maintenance of each system, and calculating the corresponding expected income generated and/or savings that could be made.
When large capital costs are involved, it is most likely that a loan would be required to finance the scheme. In order to account for this, we have assumed a standard loan for the expensive schemes. The details of this loan are as follows;
7% interest
20 year payback
This allows an annual loan repayment to be factored into the calculations.
When assessing the savings that could be made from the grid energy prices, the following tariffs have been used:
Sector |
Domestic |
Industrial |
||
Energy |
Gas |
Elec |
Gas |
Elec |
Grid Price (pence/kWh) |
3.8 |
13.0 |
2.7 |
9.4 |
Table 1: Grid prices used for different sectors
The newly introduced Feed in Tariffs (FITs) have also been included when calculating the income that can be attained from power generation. The FITs have been introduced by the government to stimulate the growth of the small scale renewable energy sector by providing economic incentive for any power generation. Any generated electricity will receive a tariff based on the technology and level of generation. The costs of this tariff are to be covered by the large energy supply companies, and although they are likely to be reviewed in the future, once agreed they will vary only with the relative price index. The tariffs are scaled to the size of generation and the relevant tariffs are outlined in Table 2.
Technology |
Scale |
Tariff Level (p/kWh) |
Tariff Lifetime (years) |
Anaerobic Digestion |
≤500kW |
11.5 |
20 |
Anaerobic Digestion |
>500kW |
9 |
20 |
PV |
≤4kW (retrofit) |
41.3 |
25 |
PV |
>4kW |
36.1 |
25 |
Wind |
>500kW-1.5MW |
9.4 |
20 |
Wind |
>1.5MW-5MW |
4.5 |
20 |
Table 2: Relevant FITs
In addition to a generation tariff, if a grid connection exists, an export tariff is also payable on top of the generation tariff. This Tariff assumes 50% export and will be subject to agreement, although will have a base rate of 3p/kWh.
Although energy price trends have not been included in the calculations, they can be considered in the evaluation. The trend for energy prices has been a rise in recent years, and should this continue then calculated grid energy savings would increase, thus making the schemes more economically attractive.