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Financial analysis on the proposed renewable heat incentive for residential houses in the United Kingdom: a case study on the solar thermal system.

Abu-Bakar, Siti Hawa; Muhammad-Sukki, Firdaus; Ramirez-Iniguez, Roberto; Munir, Abu Bakar; Yasin, Siti Hajar Mohd; Mallick, Tapas Kumar; McLennan, Campbell; Rahim, Ruzairi Abdul

Authors

Siti Hawa Abu-Bakar

Firdaus Muhammad-Sukki

Roberto Ramirez-Iniguez

Abu Bakar Munir

Siti Hajar Mohd Yasin

Tapas Kumar Mallick

Campbell McLennan

Ruzairi Abdul Rahim



Abstract

This short communication paper focuses on the renewable heat incentive (RHI) scheme in the United Kingdom (UK); and in particular, on its implication on domestic installations of solar thermal systems (STSs). First, a short review on the STS in the UK is provided. Then, a detailed description of the RHI is discussed. A financial analysis is presented afterwards, analysing the impact of the RHI scheme on the applicants, in terms of the net present value and the internal rate of return. From the financial analysis it has been found that the RHI scheme for domestic installations is only attractive if a longer period of RHI payment, i.e. 17 years, or a higher RHI rate i.e. {pound}0.32 per kW h is implemented. The current proposal from the UK government is not financially viable, and as a result, it may hinder the penetration of domestic solar thermal systems in the residential sector in the UK.

Citation

ABU-BAKAR, S.H., MUHAMMAD-SUKKI, F., RAMIREZ-INIGUEZ, R., MUNIR, A.B., YASIN, S.H.M., MALLICK, T.K., MCLENNAN, C. and RAHIM, R.A. 2014. Financial analysis on the proposed renewable heat incentive for residential houses in the United Kingdom: a case study on the solar thermal system. Energy policy [online], 65, pages 552-561. Available from: https://doi.org/10.1016/j.enpol.2013.10.018

Journal Article Type Article
Acceptance Date Oct 7, 2013
Online Publication Date Oct 25, 2013
Publication Date Feb 28, 2014
Deposit Date Sep 16, 2016
Publicly Available Date Sep 16, 2016
Journal Energy policy
Print ISSN 0301-4215
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 65
Pages 552-561
DOI https://doi.org/10.1016/j.enpol.2013.10.018
Keywords Solar energy; Solar thermal system; Renewable heat incentive
Public URL http://hdl.handle.net/10059/1734

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