As essential part of this project, a financial analysis was carried out to estimate the economic performance of the Visitor Centre as a Net Zero Energy Building. It was based on the results derived from the energy analysis, which determined the building’s demands for energy imports and potential exports.
The aim of this analysis is to allow an economic comparison to be made among the supply combinations tested and identify the factors that affect their financial potentials or restrictions.
When investigating the economic feasibility of various technologies, including the supply options in question, several parameters should be considered in order to determine the most cost-effective solution. In our analysis, we decided to look at capital costs, maintenance expenses, operational costs, revenues from funding schemes, costs and revenues as well as the payback periods for each of the tested supply mixes. Is must be highlighted that the economic results for each supply mix are greatly site-specific and refer to the needs, size and functionality of the Visitor Centre. Consequently, the outcomes from this financial analysis are not to be used universally for any office, but only for offices-meeting hubs with similar energy, occupancy and climate characteristics and given the same market prices.
It should be noted that in undertaking our financial analysis, the following assumptions have been made:
Where available, the capital costs shown on the table below were taken from the Energy Saving Trust website, supplemented with average prices sourced from literature and the market.
Equipment type | Capital Cost |
---|---|
18* / 24 / 30 PV panels (4.5 / 6 / 7.5 kW) |
£7,500 / £10,000 / £12,500 |
Wind Turbine (2.5kW / 6kW) | £14,000 / £25,000 |
Air Source Heat Pump – 5kW | £7,000 |
Ground Source Heat Pump – 5kW | £13,000 |
Biomass Boiler – 5kW | £9,000 |
Electric Heaters* (x2) | £150 |
Solar Thermal* | £4,000 |
Where available, equipment maintenance requirements were taken from the Energy Saving Trust website, supplemented with average prices sourced from literature and market.
Equipment type | Maintenance Cost |
---|---|
PV panels | 0.5% x Capital / year |
Wind Turbine | 1% x Capital / year |
Air Source Heat Pump – 5kW | £100 / year |
Ground Source Heat Pump – 5kW | £50 / year |
Biomass Boiler – 5kW | £150 / year |
Electric Heaters (x2) | - |
Solar Thermal | £30 / year** |
The energy operational costs of the Visitor Centre include costs for electricity bought from the energy supplier, as well as the cost for wood pellets in the scenario of installing a Biomass boiler. Fuel prices are constantly changing. However, in all our calculations we assumed the following average fuel prices, according to the Energy Saving Trust price figures for England, Scotland and Wales.
Fuel Type | Fuel Prices | Standing Charge |
---|---|---|
Electricity (standard rate) | 13.86 pence/kWh | £69.04 / year |
Wood Pellet | 4.34 pence/kWh | - |
Under the renewable supply mixes investigated, the Visitor Center is eligible for two types of Government funding:
Feed-In-Tariffs and the Non-Domestic Renewable Heat Incentive schemes.
The Feed-in Tariffs (FITs) scheme is a UK Government subsidy scheme designed to encourage uptake of a range of small-scale renewable and low-carbon electricity generation technologies. Under FITs, the operators of Visitor Centre could be paid for the electricity generate on-site since they have installed an eligible system like solar PV and/or a wind turbine, as suggested in our project.
More specifically, the Visitor Centre can benefit from FITs payments in three ways:
The generation and export payment rates used for the purpose of the said financial analysis were the current ones, which apply for installations with an accreditation date on or after 1 April 2016. The table below shows the tariffs concerning the electricity supply options we considered in order to meet the annual electrical demands of the Visitor Centre, as they were sourced from the Ofgem website.
Generation Tariffs | |
---|---|
Solar Photovoltaic up to 10kW | 4.32 pence per kWh |
Wind Turbine | 8.46 pence per kWh |
Generation Tariffs | |
All Equipment | 4.91 pence per kWh |
The Non-Domestic Renewable Heat Incentive (RHI) is a UK Government initiative, which helps businesses, the public sector, and non-profit organisations meet the cost of installing renewable heat technologies, in an effort to promote and increase the uptake of renewable heat. As such, the Visitor Centre and any building operating as an office are eligible for this scheme after meeting all the requirements. The heating alternatives investigated in this project, namely Biomass boilers, Ground Source Heat Pump and Air Source Heat Pump, are all eligible technologies. On the other hand, maintaining the existing electric heaters as the building’s heating option deprives Visitor Center from any RHI revenues.
RHI is paid per kilowatt hour (kWh) of heat generated through the eligible technology. The annual subsidy lasts for 20 years for non-domestic buildings are tax-free. Payments vary according to the technology type, heat generated and tariff rate.
The tariff rates used for the purpose of the said financial analysis were the current ones, which apply for installations with an accreditation date on or after 1 April 2016. The table below shows the tariffs concerning the heating options we considered in order to meet the heating demands of the Visitor Centre, as they were sourced from the Ofgem website.
Generation Tariffs | |
---|---|
Ground Source Heat pumps All Capacities |
Tier 1: 8.95 pence per kWh Tier 2: 2.67 pence per kWh* |
Air Source Heat pumps All Capacities |
2.57 pence per kWh |
Small Biomass up to 200kW |
Tier 1: 3.62 pence per kWh Tier 2: 0.96 pence per kWh* |
Solar Collectors up to 200kW |
10.28 pence per kWh |
This index was estimated as:
Positive (+) result means the equipment pays for itself.
Negative (-) result means Visitor Centre still has annual expenses.
In this financial analysis, payback periods were used as a measure to compare the cost-effectiveness of each supply combination when it is particularly used to meet the demands of Visitor Centre. Payback periods were calculated as the ratio of total Capital Cost over the Net Annual Costs or Revenues.
It provides an accurate and credible index since it allows for a comparison between the economic feasibility of each supply mix over the years, not just on an annual or capital basis.