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

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. £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
• Electronic ISSN: 1873-6777
• 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
• Contract Date: Sep 16, 2016