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

Muhammad-Sukki, Firdaus and Abu-Bakar, Siti Hawa and Ramirez-Iniguez, Roberto and Munir, Abu Bakar and Mohd Yasin, Siti Hajar and Mallick, Tapas Kumar and McLennan, Campbell and Abdul Rahim, Ruzairi (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, 65. pp. 552-561. ISSN 0301-4215

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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.

Item Type: Article
Subjects: Q Science > Q Science (General)
Divisions: Faculty of Engineering (FOE)
Depositing User: Ms Nurul Iqtiani Ahmad
Date Deposited: 14 Mar 2014 04:39
Last Modified: 14 Mar 2014 04:39
URI: http://shdl.mmu.edu.my/id/eprint/5387

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