**Summary of this post**
In response to Jeremy Harris and BeanieBots I here attempt to compare solar PV and solar thermal in the whole. The Ed Davies blogs that Jeremy links account for only the cost of the panel. The cost of the whole system is what matters. PV needs more area to get the same kW output and so the roof install costs are much more, meanwhile the internal plumbing for solar thermal is usually more expensive than the internal electrics for PV.

I take 3 looks at the cost-benefit of each option with 3 to 3.5 kW peak system:

(1) If I include the UK incentive system, then PV is better if a typical solar thermal cost is more than about £3,836 (spurious accuracy of course).

(2) Next if I ignore incentives and just consider the cheapest way to heat water, then PV is better if a typical solar thermal cost is more than about £5000

(3) Finally, if I just consider the best way to reduce carbon footprints, then PV is better if a typical solar thermal cost is more than about £2210

Actually a typical solar thermal cost system currently does cost about £5000. So PV is better, however my whole project is to reduce the costs and I am aiming for something like £2,700. So solar thermal is then better except on the carbon footprint measure.

But note that the carbon footprint assessment assumes that the precious PV electricity is not dumped as mere heat into a hot water tank. Please don’t do this, especially if the UK public is giving you a large incentive to generate electricity in order to reduce the UK’s carbon footprint. (But if you do, I blame the UK government for producing this perverse and pernicious incentive. )

The larger roof area required by PV in itself is not included, so a roof including both systems is possible. Also many may feel that a large PV panel is an eyesore, and may detract from the value of a house.

A final point is the news stories about Chinese manufacturers dumping PV panels in the European market. The low cost of PV may not be permanent and technology-related, but let’s hope that it is.

The rest of the post just fills out the details on the above.

Apologies to all you non-UK residents.

**Comparison of financial return including UK incentives**
I have compared the outcome from a Solar Thermal and a Solar PV installation, with each collecting about 3 to 3.5 kW at peak. The roof area was not a consideration in the calculations, but of course the PV will require about 4 to 5 times the roof area to collect the same kWh. This usually limits the kW peak, but incentive payments drop above 4kW.

I used an Excel spreadsheet with the “NPV” function – “Net Present Value” which adds up all the costs and benefits of a project allowing for the way that future benefits are less valuable now than equivalent immediate benefits.

For the solar thermal I used the most typical of the sites I have installed in my early applications: a family house with 2 flat panels and a predicted 2442kWh per year collection. The incentive is the Renewable Heat Incentive (RHI) and will be paid at 19.2 p per kWh for the first 7 years. Note that the RHI scheme is not quite yet full confirmed and set in stone by the UK government.

For PV I used the sites listed at the bottom of this post.

The calculation showed that the £5000 PV system generated sufficient income to give a positive NPV of £1,885 (i.e. invest £5000 to get back the £5000 plus £1,885 more).

For the solar thermal system to achieve the same NPV the amount invested had to be smaller as the high returns only lasted the 7 years of the RHI. The solar thermal gave the same £1,885 NPV if it cost £3,397. Any higher solar thermal cost and you are better off with Solar PV. You could argue that the NPV as a % on initial investment is the better measure. In this case the PV’s NPV is 38% of the £5000 investment. The same 38% return is achieved with solar thermal if it cost £3,836. So solar thermal must be cheaper than that to be the better investment.

I am aiming for something like a £2,700 cost, which is a 96% return. (Total return, not annual).

**Comparison of costs to achieve water heating – no incentives **
Now the comparison without UK public subsidies and incentive payments. The certification of my solar thermal installation gave a predicted annual generation of 2442kWh for the 3kW peak power system. The numbers below (£400 per annum at 14.9p per kW) suggest 2685kWh. However the solar thermal number includes the effect of not being able to use all the heat collected on long sunny days because the water use can’t keep up. A normal solar tank can be fully heated several times on a long summer day. The PV does not include this effect because all energy collected can be used or exported to the grid. If we assume the PV is used just to heat water, then the annual kWh collection will be much less. The cost of installation will be a little less as well because the electricity need not be converted to 240V and set to be in tune with the mains. On the other hand if it is not 240V the immersion heater will probably need changing which involves plumber costs.

The complications discussed in earlier posts – efficiency at below peak sunlight, effect of ambient temperature compared against water temperature, short bursts of sunshine and the thermal lag in a piped system, etc, are in theory accounted for in the sums above. However, I imagine both the PV and solar thermal calculations of annual kWh are quite ropey.

The conclusion of this is that equivalent peak kW systems will do a similar job in heating water, with the solar thermal doing a bit better. The cost of the thermal system should therefore be cheaper – so less than about £5000, to be better.

**Comparison of carbon footprint – no incentives **
Now the comparison from the point of view of reducing carbon footprint. Here there are 2 key assumptions (1) – THE PV ELECTRICITY IS NOT DUMPED INTO THE HOT WATER TANK – but is correctly used as electricity, this is vital and quite a bugbear of mine. And (2) the solar thermal system displaces water heating using gas burnt by a modern efficient boiler. If it displaces electricity, oil or LPG the solar thermal will become more attractive.

The results show that the solar thermal system must cost only £2,210 to match the £ per CO2 saving of the PV system.

**PV Costs etc and Carbon Footprints Web search results **
http://www.energysavingtrust.org.uk/Generating-energy/Choosing-a-renewable-technology/Solar-panels-PV#3
Updated January 2013

“The average domestic solar PV system is 3.5 to 4kWp and costs around £7,000 (including VAT at 5%), with the typical cost ranging from £5,500 to £9,500.

Costs have fallen significantly over the last year.”

http://www.theecoexperts.co.uk/how-much-do-solar-panels-cost-uk
“The average family home needs a solar PV panel that provides about 3kW of electricity. This will cost between £4,000 and £6,000 and cover about 21m² of roof space.”

This page also gives the latest info on annual returns including the feed in tariff: FiT £400, sell back rate £60 and savings £100.

http://www.theecoexperts.co.uk/35-kw-solar-panel-system
Published: Friday, 11 October 2013

“systems of the 3.5kW size will generally cost you around £4,000 to £6,000 to install.”

Carbon footprint numbers were from:

http://www.carbontrust.com/resources/guides/carbon-footprinting-and-reporting/conversion-factors
Download the pdf and it gives, page 4:

Electricity is 0.44548 kgCO2 e per kWh, natural gas is 0.18404 kgCO2 e per kWh. 100% electricity use efficiency assumed, but 85% for a modern gas boiler.