Is solar thermal worth it?

Solar thermal is cheaper than solar photovoltaic (PV) and coupled with the fact it takes up less room on the roof, for many customers it is their preferred option (you can find out the benefits and downsides of the two technologies here). Whilst payback for Solar PV is around 8-10 years, and is fairly consistent across properties, the payback for solar thermal is much more variable from house to house.

Below we give you an idea of the potential payback periods for solar thermal.

Cost of the system

We asked Giles from The Small Solar Company to give us an approximate cost for a new solar thermal system. Whilst he said that every home is different, with its own challenges, a pretty standard benchmark price is about £3,000 for a 3m2 solar thermal system, while a larger 6m2 system might cost nearer £4,500.

Savings

Much of the payback rate of the solar thermal system is down to the energy savings the solar thermal system creates once it is installed – if the savings are big, the payback is fast and visa versa. The savings here relate to producing hot water for free (from the Sun), rather than firing up whatever normally creates the hot water in your home.

Unfortunately, the energy savings associated with solar thermal are more modest than solar PV, although it does depend on how much hot water you get through. The two key factors are how many people live in the property, and what sort of heating system you currently use.

For those on oil and lpg heating systems, savings are larger, because the per unit cost of fuel is higher. For those on electric off peak heating, savings are more modest because night rate electricity is fairly cheap. Gas systems offer savings somewhere in between. For a small system in a 2-person household, expected yearly energy savings range between £50 – £150. For a 4 bed house with 4 or 5 people and a 6m square system, savings will be much bigger – around £200-400.

RHI return

The good news is that it isn’t only the energy savings that drive the return on your solar thermal system.

Solar thermal systems are eligible for the Renewable Heat Incentive. This is a Government backed payment, which gets paid on a quarterly basis over 7 year period from when the system gets commissioned.

How is the RHI payment calculated for Solar Thermal

The amount of hot water produced by the solar thermal system is measured in kWh, and this number can be found on the MCS report. To calculate your RHI payment – you can simply multiply this kWh number by the RHI rate for solar thermal (19.2p / kWh) and this will give you your annual payment.

How the MCS installer arrives at the kWh number is far more complicated, but includes things like the number of occupants in the house (a larger number results in a higher payment), the efficiency of the existing boiler, whether or not electric showers are present in the property, the area that you live in (and the amount of sunshine you get) as well as the efficiency of the cylinder.

Typical RHI payments for solar thermal

A typical small 2m square system for a property with 1 occupant will pay just over a £1,000 over the 7 years. For a 6 person property with a large 6 meter square panel, you are looking at a payment in excess of £3,000.

The return from your Solar Thermal System

Given these guideline figures, we have produced a little table giving you a rough idea of the return on your investment!

Please remember this is just a rough estimate, it doesn’t take into account maintenance costs, inflation, changing costs of fuel and many other minor influences on the rate of return. It does give you a pretty good idea of how long a system will take to pay back however.

System Size Cost Occupants RHI (7 yrs) Est. Savings Return
Small £2,500 1 £1,100 £50 28 Years
Small £2,500 2 £1,350 £100 11 Years
Mid £3,500 3 £1,850 £150 11 Years
Mid £3,500 4 £2,350 £200 7 Years
Large £4,500 5 £3,000 £250 7 Years
Large £4,500 6 £3,250 £300 6 Years

What if you use less hot water?

The RHI is based on the installed system, so whether you use your hot water much is irrelevant to that payment.

The savings figures however will of course vary depending on how much and how efficiently you use your hot water. If you only shower once a week, your savings figure will be a fair bit lower!

Is solar thermal worth it?

Now the RHI has been introduced, it seems to us that Solar thermal is a really good investment provided you go for a decent sized system, although the payback will be impacted depending on your hot water usage.

The RHI payment alone is not going to cover the install cost, and it will be down to your annual savings as to how long the system will take to pay back.

However, the larger the household, the higher the number of occupants, and the bigger the system, the quicker the return.

Installing Solar Thermal

Interested in installing a solar thermal system at home? We have scoured the country for the best tradespeople, so that we can make sure we only recommend those we really trust.

If you would like us to find you a local installer to help install a solar thermal system in your home, just fill in the form below and we will be in touch shortly!


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