Is Renewable Energy Worth Installing?

This is a question that more and more households are grappling with and in the future we will all have to consider and act upon.

When looking into which energy is the best for your particular household it is important to understand the costs of the fuel in both £ and the environmental impact.

At the time of writing this article, for the average household, the current fuel costs per kilowatt hour of the different energy sources are approximately as follows:

• Ground Source Heat Pump (GSHP) 5p/kwh *
• Air Source Heat Pump (ASHP) 7p/kwh **
• LPG 19p/kwh ***
• Biomass 12p/kwh ****
• Oil 9p/kwh ***
• Gas 5p/kwh *** (NB – this cost is likely to grow rapidly as it is currently capped and driving energy companies into bankruptcy)
• Electricity 21p/kwh

* Based on the cost of electricity at £.021p/kwh and 4.5 to 1 COP heat pump performance.
** Based on the cost of electricity at £.021p/kwh and 3 to 1 COP heat pump performance.
*** Based on gas boilers being 80% efficient and oil boilers being 70% efficient on average.
**** Assumes that you do not have your own wood supply.

The above figures clearly show that, with the exception of mains gas, renewable energy it is now almost always the lowest cost of energy to run the heating of a house. The greatest opportunity for savings is for those who currently heat their house on oil or electricity. The benefit of switching if you heat your house on Gas is much less.

Renewable electricity – electricity produced via sunlight, wind or water – accounted for 47% of the UK’s electricity generation in 2020. By 2035, all electricity generation within the UK is set to come from renewable sources.

This is the reason why there is going to be a momentous shift in the cost of this energy within the UK in the coming years. The generation of electricity is constantly becoming ‘greener’ meaning the ‘climate change levies’ that were previously added to a household electricity bill no longer make any sense, why would you tax something that is producing less and less carbon every single time a new solar PV array or wind farm come online. From now on it is proposed that levies will be applied to the cost of gas; a fuel that powers around 83% of UK homes and emits huge amounts of carbon. For many years now, consultants have talked about an incoming ‘carbon tax’ to move people away from fossil fuels and encourage the take up of heat pumps. This is that carbon tax!

The Department for Business, Energy and Industrial Strategy (BEIS) said: ‘We want to encourage people to take up technologies such as heat pumps and electric vehicles. Affordability for consumers and taxpayers will be at the heat of our approach’.

This is good news for anyone who already has, or is considering, switching to renewable energy, which usually means a heat pump system, the savings a heat pump provides vs fossil fuels will grow ever greater as carbon taxes and legislation changes force people away from traditional, polluting boilers. Considering a heat pump reduces a building’s carbon emissions by over 65% when replacing a gas boiler, the financial benefits of installing a heat pump system are starting to match the environmental benefits.

All of the above is good news however none of the above covers the up-front cost of installing a Heat pump. This cost varies greatly from house to house depending on all sorts of variables such as current energy source, your plumbing system, insulation standards etc etc etc. The costs are currently covered by the RHI (Renewable Heat Incentive) which unfortunately for all concerned with the environment is due to end in March 2022. The RHI is proposed to be replaced with a £5,000 up front grant to cover the cost of an Air Source Heat Pump (ASHP) or £6,000 for a Ground Source Heat Pump (GSHP). Industry observers are making the point that these figures do not come close to covering the initial installation cost. The UK average cost of actually installing the systems in a 150m2. house are £13,000 for an ASHP and £25,000 for a GSHP, so welcome though the grants are they do not cover the cost or future payback if you are on Mains Gas and you would need to be driven by a strong belief in protecting the environment (although the cost of gas is likely to grow rapidly once the artificial government cap is removed). If, however you are burning oil then it makes sense to change as you will get a payback within a few years additionally however there is always the impact on the environment to consider. Those who wish to reduce their impact should be tempted to take the government up on its offer whilst it is still there.

It remains a fact that by 2030 you will not be able to replace a fossil fuel boiler with a new one. Therefor if your current boiler breaks down or is getting old, now is the time to consider changing to renewables as you will save a great deal in future running costs and reduce your personal impact on the planet.

If you are thinking of welcoming some sort of renewable technology into your life or want to know more, we are here to help.