Thermodynamic Hot Water Payback Period and Running Costs Compared to Fossil Fuels

10th October 2012.

We have had a lot of enquiries for Thermodynamic Heating and Hot Water Systems something that we have used for a couple of years in recent weeks as they seem to have become the latest product to be widely marketed by the renewable energy industries.

There is a lot of “mis-information” being put about as to the savings and running costs of the system from the calls we have had. I must say that I think the system is a fantastic system in the right circumstances, but we have a policy – we only want customers to buy products that we think are suitable for their needs. Many businesses focus on just selling whatever they are marketing but at Cernunnos we take a longer term approach to our customers and want to sell the right products only! I sometimes worry that in the long term the renewable energy suppliers and installers will damage the industry by making unfounded claims about products they know little of.

There are many cases when the Energie system is the right product – pretty much whenever you need a hot water system the Thermodynamic solar (or the ESP “Ecocent” replacing or installing (in a new build property or when renovating) I would always recommend the installation of a renewable heating hot water system. Why – because the running costs (provided configured correctly) will always be lower than fossil fuel based systems.

However in the absence of the Renewable Heat Incentive (yes it does finally seem to be coming!) the economics do not always make sense – when the homeowner has a gas boiler and hot water system that does not need updating. You may have a working system that does need updating (old copper tanks with poor insulation, an inefficient boiler etc. etc.) …

Running cost comparison for the system (see below) which are based on 5 person occupancy of a house for an analysis I ran for one of our customers. You will see that whilst the system has significant savings at today’s rate for an efficient gas boiler (some 36% lower running costs even if all the power is purchased in) you will also see that as the estimated annual hot water costs are approximately only £290.47 then the saving on running costs of just over £100 would mean that in the absence of the RHI the system is unlikely to “pay” for itself over its lifespan (20 years).

If you already have Solar PV (as most of the interested parties do) then the system will be capable of running off your generated electricity perhaps most of the time – it consumes very low level of electricity that most PV systems would be capable of generating even on a cloudy day – however it is still difficult to justify changing a gas powered hot water system.

The story is slightly different for users of Oil or LPG – the economic case to “rip out the existing” do of course change – particularly with Solar PV – then even in the absence of any subsidies there is a strong case to change to the Thermodynamic hot water system, regardless of the condition of your hot water system.

All of this changes though with the Renewable Heat Incentive. The RHI is at consultation only, however when it is introduced I would anticipate that payments under the RHI I would expect (and this is only my opinion) payments to range from £160 per annum (total £3200) if the system is classed as an unglazed solar collector (as it currently is) to £477 if classed as a heat pump (total payment £9550) if classed as a heat pump technology. I have used the lowest of the heat pump ranges in this calculation. The payments are calculated over 20 years and would be paid in equal quarterly instalments over 7 years. The Solar Thermal payments were calculated using a two panel system on a south roof, free from shading and installed at a 30 degree angle. This number of panels and the orientation etc. are crucial because as of the current accreditation the Thermodynamic systems efficiency depends on the area of the collectors and payments are deemed (so based on a predicted yield) which is affected by shade and orientation and pitch (even though the operation of the system is not!)

Below I have analysed the “payback” under the RHI based on the annual payment for the system (so over 20 years instead of the proposed fast track payments over seven years) and you can see that the system would indeed pay for itself in about 13 years (with 7 years of “bonus” payments) if it is classed as an unglazed flat plate system and in only 6 years if the system is either reclassified or a “thermodynamic” class is created in the MCS scheme which pays at the lowest proposed rate for the air to water heat pump technologies.

If you would like to be guided through the payback under RHI step by step or would like to discuss whether this heating would work for you call us/ send us a message and we can ensure you make the right energy and design choice. Please see our contact us section for more details.

Thermodynamics v Gas With No Renewable Heat Incentive Payment
Thermodynamics v Gas With PV No Renewable Heat Incentive Payment
Thermodynamics v Oil With No Renewable Heat Incentive Payment
Thermodynamics v Gas With Solar Thermal Renewable Heat Incentive Payment
Thermodynamics v Gas With Heat Pump Renewable Heat Incentive Payment
Assumptions Made
 


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Thermodynamics Running Costs Against Gas With No Renewable Heat Incentive Payment

Running Costs of Thermodynamics vs Gas Boiler

With 50% PV Powered

Thermodynamic Hot Water Running Costs with no RHI but Powered by PV

 


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Oil/LPG with 50% PV Powered

Thermodynamic Solar against Oil or LPG with PV

 


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Thermodynamics With RHI Payment as Unglazed Flat Plate Collector (current status)

Hot Water Thermodynamics against Gas with current MCS status

Thermodynamics With Lowest Air Source Heat Pump RHI Payment

Graph showing potential payments if the Thermodynamic System is paid at proposed heat pump rates

Hot Water Needs Used in Calculations

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(Update – 12th November 2012. Please note that the Thermodynamic Systems are currently suspended from the MCS Database and thus we must assume that they will not be eligible for the first phase of the domestic RHI scheme. The MCS scheme is currently consulting on whether they should be included in the heat pump categories or classified under a new “thermodynamic” category. Therefore our analysis of running costs with RHI payments below should be treated as a “potential” payment but must in no way be relied upon when making a decision to purchase. Please see the MCS Thermodynamic Products update for more information.)