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

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

Energy Policy, 2014, vol. 65, issue C, 552-561

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 kWh 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.

Keywords: Solar energy; Solar thermal system; Renewable heat incentive (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:65:y:2014:i:c:p:552-561

DOI: 10.1016/j.enpol.2013.10.018

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