Home Cleantech – What is it?

Home Cleantech is our way of describing the various ways that you can reduce your bills and carbon footprint by installing different ‘renewable’ solutions in, on or around your home.

What are renewable solutions anyway? They are various ways of producing renewable energy, which in turn can be defined as energy resources which are naturally replenished, such as sunlight, wind, tides and so on.

When we started researching for our own homes we found it was quite confusing, so we hope that these pages simplify the different types of solutions available as well as the “pro’s & con’s” of each.

Why The Existing Housing Stock Matters

As 40% of global emissions (& slightly more in the UK) come from buildings, a transformation in the existing housing stock is necessary to achieve the targets set to avoid global climate catastrophe (80% reduction from 1990 levels of carbon emissions by 2050).

Other areas where reductions need to be made, such as transport, are far harder to achieve in any meaningful way – can you imagine a world where only 20% of current aircraft travel levels are permitted? However, with domestic cleantech, the solutions are proven, cost-effective and pretty simple to achieve.

We hope the table below will help to explain the different domestic cleantech options available on the market:

Fundamental 1: Central vs Domestic Energy Generation

Currently the vast majority of the energy we consume is generated centrally and then transported to our homes and offices via various types of ‘grid’ (electricity / gas etc). Additionally, most of this energy is generated in the first place from fossil fuels. Less commonly understood is the fact that central power generation is extremely inefficient, for example a coal-fired power station loses 70% of the energy generated in the form of heat. Even the latest generation of Combined Cycle gas plants are only 55-60% efficient, meaning that 40-45% of the energy is lost.

The transportation of the energy itself is intrinsically inefficient as it requires effort and manpower to move or control it, quite apart from the fact that the energy itself depletes over distance (there is approximately 5% transmission loss in the UK).

Domestic Energy generation means that the energy you use to heat (or cool) & power your home is generated ‘in situ’ – it does not need to be moved anywhere apart from perhaps your roof or from the garden.

At It Won’t Cost The Earth we think that this is a key point in Domestic Cleantech’s favour. Whatever the other arguments made by vested interests or doubters, the fact is that it is more efficient to produce energy where it will be used.

Fundamental 2: Electricity vs Heat

Many of us get easily confused with what different forms of domestic Cleantech actually do. This is not surprising as the industry is not very good at explaining itself and replete with jargon! Let us help clarify it for you. Domestic Cleantech solutions generate energy in two forms, heat & electricity.

Heat: in the form of hot water or air, and used to either heat water for bathing / showering etc, or for central heating.

Electricity: to power household appliances and in some cases heating appliances (such as immersion heaters).

Electricity is higher ‘grade’ energy than heat. Put simply this means that it is more useful in that it is more flexible than heat (indeed it can be used to create heat via an electric fire or immersion heater for example). It is also higher grade energy than chemical energy (eg oil or petrol, for example).

The following table sets out what each Cleantech solution can and can’t do.

† some systems claim to be able to provide both hot water and central heating but this is not common.

Fundamental 3: Value for Money

We are all concerned that whatever we decide to invest in, be it solar pv, solar thermal, heat pumps or other solutions, that there is a clear financial return over & above the obvious environmental benefits.

It is quite easy to be distracted by the concept of ‘payback’, which is often used by critics of Cleantech to muddy the waters! In the ‘payback’ argument there is a misplaced focus on the period of time a Cleantech solution needs to be operating before it covers it’s costs of purchase & installation. Arguments rage over how long these periods really are which in essence are impossible to predict due to the volatility of fossil fuel energy prices amongst other factors (such as energy security, exchange rates and production costs of cleantech equipment). Besides, who measures a ‘payback’ period on a new kitchen or bathroom? And yet several new kitchens or bathrooms may be fitted to a house during the 25-30 year lifespan of a typical solar photovoltaic or thermal system.

In our view, a better measurement is Return on Investment (“ROI”), which shows the percentage increase in the value of your investment. We can use a simple solar thermal installation as an example:

• You currently spend £300/yr on hot water for your home.
• You purchase and install a Solar Thermal System for £4,000.
• Your hot water spend reduces to £100/yr as 66% is being produced by the Solar Thermal installation.
• Your “ROI” is 5%, which compares favourably against the interest you would currently get on that original £4,000 if you had put it in the bank!

And what about the free hot water that you (or indeed the next person to live in the house) will enjoy until the system needs replacing (usually in 25 to 40 years)? The second part of this point is particularly important, as property values start to reflect purchaser’s desire for lower ongoing energy costs in the same way that broadband speed is already having an effect on house prices.

The Compelling Case for Solar PV

The ROI on some renewable technology took a big leap forward in April 2010 with the introduction of Feed-In Tariffs (“FITs”). Simply put, for Solar PV and Wind Turbine installations you receive a payment for the amount of electricity you generate, measured in KiloWatt Hours (kWh), whether you use that energy or not. If you do not use some of it, it gets automatically exported to the national grid and you receive a further payment for the exported amount.

As wind turbines are not a realistic option for the vast majority of UK properties, we concentrate on PV here.

For a typical domestic installation of under 4kWp (sorry for the jargon), you currently receive 21.1p pence per kWh generated (whether you use it or not) and an additional 3.1 pence per kilowatt hour exported. Furthermore, in order to understand your true ROI you need to remember that you’re no longer drawing so much electricity from your supplier (because you are generating and using your own instead, from your PV or wind installation). Of course this is obvious, but in our experience many people struggle to get their head around this aspect which is a really fundamental attraction of the FIT mechanism. Here’s an example from a recent installation which may help illustrate:

• Customer’s old electricity bill: £440/yr
• Cost of PV installation: £9,000
• Customer’s new electricity ‘credit’: £400/yr (because FITs will create a repayment rather than a bill)
• ROI for Year 1 is therefore the “upside” of £840 better off (the old £440 disappears, and the new £400 is credited), as a percentage of the cost of the installation: £840 / £9,000 = 9.3% ROI

Furthermore, FITs are free of tax, index-linked to the Retail Prices Index (RPI) and guaranteed for 25 years. This in turn means that ROI rises over time. Therefore quite apart from the environmental benefits offered by installing a PV or Wind system, there are very compelling reasons from an investment point of view, not least in comparison to current savings rates (or indeed annuity rates).

Please see here for further information on FITs.

In the same way that FITs have stimulated renewable electricity production, the Renewable Heat Incentive (“RHI”) and there Green Deal will be announced by the government in Autumn to reward householders for installing renewable heat technologies such as solar thermal panels and heat pumps.