ORKNEY'S ENERGY FUTURE
DOMESTIC HEATING
COSTS
CAPITAL COSTS
Multiple sources were used to estimate the average capital cost of an ASHP in the UK [1] [2] [3]. The values found ranged from approximately £1,100/kW to £1,300/kW based on total cost of installation, including the cost of replacing radiators with larger ones suitable for use with an ASHP.
The total cost of installing all homes with an ASHP was found to range from £48.1 million to £56.8 million (£m) (Table 1).
Table 1: Range of capital costs per heat pump for different sizes and total cost of installation for all homes.
The capital costs for implementing energy saving measures were calculated using the levels of insulation for different types of home (Table 2).
Table 2: Capital costs for implementing energy saving measures across the homes.
Therefore, the calculated range of total capital costs for decarbonising the domestic heating sector is £54.2m to £63.0m.
OPERATING COSTS
The operating costs for one year were calculated for the ‘worst-case scenario home’ before and after retrofitting an ASHP and implementing energy saving measures to find a financial saving for the home. This is based on the ASHP replacing an oil boiler, the cost of heating oil (kerosene) being 6 p/kWh [7] in Orkney and an electricity tariff of 17.7 p/kWh [8].
Figure 1: Monthly heating costs of 'worst-case scenario' home before and after being retrofitted with an ASHP and energy saving measures.
Over a one-year period, this equates to a 61% reduction in heating energy costs for this home (from £3,642 to £1,424; Figure 1).
PAYBACK TIME
The initial costs of installing a heat pump and adding insulation to a home are high and may be too expensive for some households. However, there are a number of incentives, loans and grants available, such as:
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Domestic RHI: Quarterly payments of 10.85 p/kWh of renewable heat produced, capped at £1,348/year.
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Home Energy Scotland (HES) Loan - Renewables: Interest-free loan of up to £2,500 for an ASHP plus cashback of up to £7,500.
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HES Loan - Energy Efficiency: Interest-free loan of up to £6,000 for internal wall insulation, £4,500 for glazing and £1,000 for loft insulation, plus cashback.
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Home Energy Efficiency Programmes for Scotland (HEEPS): Area-based scheme which allocates Orkney Islands Council with funding (£1.3m in 2018) to cover costs of improving homes with low energy efficiency.
The payback time for homes which make use of these loans and incentives was calculated for two different types of home: the ‘worst-case scenario’ home (Home 1) and a newer, smaller home (Home 2). The details of these two homes are presented in Table 3.
Table 3: Details of two different homes with decarbonised heating system in Orkney selected for payback time analysis.
It was assumed that both homes receive the maximum loans and grants available to cover the cost of insulating and retrofitting the homes. Cashflow over a seven-year period (length of payment from domestic RHI) was calculated for each home (Figure 2).
This shows that even homes which require larger, more expensive heat pumps can still expect to have generated a profit at the end of the seven-year period. Home 2 can apply for enough funding to cover the entire capital cost of installation of an ASHP and the required energy saving measures.
Figure 2: Cashflow over a seven-year period for two different types of home in Orkney having energy saving measures and ASHP installed.
REFERENCES
[1] L. Lucas, N. Kelly, C. Cooper and D. Duncan, "Impact of residential energy system sizing and control over heat pump’s system cost and reliability," in 2nd International Conference in Microgeneration and Related Technologies, 2011.
[2] Aquatera, "Orkney-Wide Energy Audit 2014: Energy Sources and Uses," Orkney Renewable Energy Forum, 2015.
[3] The UK 2050 Calculator, "Air Source Heat Pump Cost Data," [Online]. Available: http://2050-calculator-tool-wiki.decc.gov.uk/cost_categories/64. [Accessed 7 April 2021].
[4] Orkney Islands Council, "Orkney's Fuel Poverty Strategy 2017-2022," Orkney Islands Council, 2017.
[5] E. Yurday, "Average Cost of Electricity per kWh in the UK 2021," Nimble Fins, 7 March 2021. [Online]. Available: https://www.nimblefins.co.uk/average-cost-electricity-kwh-uk. [Accessed 7 April 2021].
[6] Energy Saving Trust, "Roof and loft installation," [Online]. Available: https://energysavingtrust.org.uk/advice/roof-and-loft-insulation/. [Accessed 7 April 2021].
[7] Builder Depot, "70mm Rockwool Insulation," [Online]. Available: https://www.builderdepot.co.uk/70mm-rockwool-flexi-1200mm-x-600mm-5-76m2. [Accessed 7 April 2021].
[8] Household Quotes, "How much does double glazing cost?," 2 April 2021. [Online]. Available: https://householdquotes.co.uk/how-much-does-upvc-double-glazing-cost/. [Accessed 7 April 2021].