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Solar thermal panels are one of the top renewable energy solutions for self builders and renovators – but the financials of installing solar panels in the UK have changed considerably since 2022 began.
Previously, solar thermal was supported by the Renewable Heat Incentive (RHI), which paid out 22.65 pence per kilowatt-hour (kWh) of heat generated by domestic installations. The RHI, however, closed to new applications in March 2022.
The new Boiler Upgrade Scheme (BUS) has since launched, supporting heat pumps and biomass boilers with government-backed grants. The casualty in all this is solar water heating, which is not supported by BUS.
That’s a shame, as solar hot water is a lower-cost option than other renewable technologies. What’s more, we are better at insulating our homes than we used to be – which means there’s less demand for space heating. As a result, the proportion of heating required for domestic hot water (DHW) has gone up.
So, the big question is whether solar thermal panels are still a worthwhile investment for self builders and renovators, despite the withdrawal of the RHI.
This takes some calculating, so here we’ll examine the key factors that will decide if solar hot water is good value-for-money for your home – including:
Before we begin, let’s recap on the basics of solar hot water panels and howw they work.
Solar thermal panels collect energy from the sun and harvest this to heat the water we consume for washing and bathing. They are rarely used to contribute towards space heating. Much of the energy required to heat water is used to take it from cold to a lukewarm temperature so, even on dull days, the panels can do some work.
Well-designed and operated systems can provide 50% of the energy required to meet domestic hot water demand over the course of a year, depending on location. This is known as the solar fraction. A secondary source of heat – usually a fossil fuel boiler or a heat pump – will be required during the winter and as backup at all other times.
The key components of a solar water heater are the collectors (the panels), a twin coil hot water cylinder and a controller.
Two main types of solar thermal collectors are in common use – flat plate and evacuated tube.
Flat plate versions normally have a Perspex cover mounted over an absorptive panel, through which the collection fluid is pumped. The whole unit is insulated below and at the sides.
Evacuated tube collectors comprise one tube contained within another, with a vacuum between the two. The vacuum allows the radiation from the sun to pass through to the inner tube (containing the collection fluid) while reducing heat loss.
In a solar thermal setup, the hot water cylinder has two sources of heat – the solar coil and the boiler coil. Hence, it is known as a twin-coil hot water cylinder.
As heat rises, the base of the hot water cylinder is normally cooler than the top. The solar coil is therefore located near the base of the tank where it is coolest, to make the best use of whatever solar resource is available.
There’s often an electric immersion backup fitted, but this should not be needed if the controls are set effectively.
If you live alone or shower infrequently, the amount of hot water you need is likely to be minimal. What this means is that the cost of fitting a solar hot water system is unlikely to be a worthy investment.
Just as importantly, in this scenario the environmental impact of installing a setup might not be repaid either. So, it’s important to do the calculations before you start talking to installers.
If, on the other hand, your household is a family of four or more and everyone is showering daily, your demand for hot water will be very high, with similarly increased demand for washing machine, kitchen and sink use.
This means that the fixed price of installing a solar thermal system will be spread over a much larger overall demand, which of course means this would be more cost-effective. So, put simply, the higher your household’s hot water demand, the better value for money solar water heating will be.
Read More: How to Save Water for a More Efficient Home
A two-panel, in-roof flat plate solar thermal collector system from Grant was installed in this extended five-bedroom house, alongside a 300L twin coil hot water cylinder
Well-designed and insulated modern housing should have a very low space heating demand. So, in newer homes, domestic hot water forms a higher proportion of heat energy use than it does in older buildings.
If you’re self building, you therefore have greater freedom to focus your attention and investment on driving down the running and carbon costs of your hot water demand.
That could lead you down the path of solar thermal panels.
In fact, I’d argue if you’re self building a new family home, in most cases solar water heating is even better value-for-money than it used to be
Read More: Should I self build or renovate?
It’s not news to anyone that energy prices have more than doubled in 2022. It’s difficult to predict whether this will persist after the current international political unrest is resolved.
Clearly, however, most of us will be on higher tariffs for some time to come. So, let’s take a look at the expected payback period for solar thermal water heating, based on the current energy price cap.
The payback period is the length of time that it would take a capital investment to be repaid in terms of the savings it achieves.
Here’s a benchmark guide for a typical solar thermal installation in a new build house (based on a hot water demand of 5,000kWh per annum):
*Based on 5,000kWhpa (kilowatt-hours per annum) of gas for domestic hot water.
Depending on what happens to energy prices, these calculations could change markedly. For instance, at a gas unit cap of 10p/kWh, your annual savings from solar thermal could be as much as £250pa, providing payback in just 12 years (£3,000/£250).
The £3,000 installed cost for solar hot water panels quoted here might be considered low by some installers, so let me explain the reasoning.
In modern houses there is often more than one shower, and it’s quite possible that two showers will be in operation at the same time. A standard combi boiler (which doesn’t use a cylinder) can’t serve this need.
Generally, a hot water cylinder will be required in any case within a new build. So, the cost of installing a solar water heater should only reflect the additional cost of installing a twin coil cylinder rather than a standard hot water cylinder – plus the collector, controller etc, of course.
Also, if you’re building new, then you will already have scaffolding in place, easy access to the roof and to all service runs. So, the installation process for solar panels should be much cheaper, reducing the payback period even further.
Read More: 12 of the Best Ways to Save on Home Energy Bills
The calculations given above are based on a gas boiler as the backup for your solar panels (ie for when the sun’s not shining).
If your backup is a heat pump, for example, then the payback period will be significantly quicker. This is because heat pumps are less effective at providing domestic hot water than space heating. That’s due to the fact the delivery temperature for hot water (60°C) is much higher than that for space heating (35-40°C for modern underfloor systems).
The pump, which is primarily designed for low-grade outputs, must therefore work harder. Heat pumps are slightly more expensive to run than gas boilers, so the effect is that the payback period for installing solar thermal could be reduced by up to a third.
For those of you using an electric immersion heater for hot water, don’t delay: go for a solar water heater right away. Electrical resistance heating is the most expensive way to provide hot water.
High-efficiency Vitosol 300-T evacuated tube solar thermal collectors from Viessmann
As is clear from the discussion above, it’s cheaper to install solar water heating in a new building than to add it to an existing house. Since the savings will be broadly the same, this means that solar water heating will give you a quicker return on investment if you’re self building a new home.
The fact the RHI has been removed of course makes solar water heating less ‘worth the money’ than it used to be, as you can no longer access the cashback tariffs.
However, the other factors we’ve looked at here – especially the rise in fuel costs – combine to offset this and more. So today, solar thermal panels are as good an investment as ever.
It’s also worth bearing in mind that sustainability is about more than just carbon and money.
Solar water heating systems are produced here in the UK, unlike most solar electric panels. So, by investing in this tech, you’re also doing your bit to buy local and encourage the local economy.
Main image: iStock.com/Jeff Hu
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