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Can solar cost add up for energy and heat?

A row has broken out between the Royal Institution of Chartered Surveyors (RICS) and solar manufacturers over the real economic costs of the technology.

The Greener Homes Price Guide produced by RICS to provide advice to homeowners said it will take more than 200 years to pay back the installation costs for solar thermal systems through energy savings.

RICS has been forced to admit this week that the calculations included in the guide are out of date due to recent sharp rises in energy costs, but insists the pay back time remains around 100 years.

Renewable experts have reacted angrily to the claims. Solarcentury said the pay back is closer to 13 years for PV and will be similar for solar thermal – particularly with current rises in energy costs adding up.

It insists solar installations add to the value of a property while offering a chance to save on bills and sell the surplus electricity back to your energy supplier.

RICS pay back claims
Cavity Wall Insultation -
Cost = £440 for a terraced house and £2,400 for a detached.
Energy bill saving = as much as £145 per annum
Pay back = As few as three years.
Replacing a wall mounted boiler:
Average Cost =  £1,720 on average Energy bill saving = £95 per year. Pay back = up to 18 years.
Solar thermal systems:
Cost = between £4,000 to £5,000 Energy bill saving = £50 to £80 per year.
Pay back = up to 100 years.
Jeremy Leggett, Executive Chairman at Solarcentury, said: 'We are very disappointed by the irresponsibility of RICS on this issue. It simply isn't helpful to be issuing inaccurate information on the cost of solar when a clear and informed debate is vital.

“Solar is not only an intelligent, reliable and long lasting technology but makes financial sense both from return on investment and 'payback' perspectives, especially in this age of increasing energy insecurity. RICS calculations completely omit to consider return on investment. 

Furthermore, their figures do not assume any rise in energy prices, when a conservative estimate of 10 per cent a year would transform the calculations.'

RICS says the report which was put together by its Building Cost Information Service is not against any technology, but wants to explain to people the full costs of installing and using different green approaches.

A RICS spokesman refused to detail how the calculation was made on solar thermal. They
said: “We accept that with the recent price rises it is probably more realistic to say it will save £50 to £80 a year, but that is still a pay off of around 100 years and we haven’t included maintenance costs. It is still an expensive option and you wouldn’t get your money back.

“We are not slamming solar panels – we are saying they need investment to make them cheaper so they can be a viable choice.”

Building Cost Information Service Executive Director, Joe Martin, said: “We all have a role to play in helping to reduce our carbon footprint, be it through changes to our behaviour or by choosing greener alternatives. 

'The reality is, however, that most people struggle with the cost, time, and effort it takes to make these changes.

“The Greener Homes Price Guide gives consumers a comprehensive heads-up about the costs and effectiveness of green upgrades, whilst protecting them from being duped into changes that won’t save them money or do little to reduce their carbon footprint.

“Consumers need innovation and enhanced technology to help in the fight against climate change, not just a guilt trip about living in the world we have created. 

“We encourage governments and companies not just here in the UK, but all over the world to continue to invest more in the research and development of green technologies.”

Solarcentury insists the figures do add up for solar:
The company said: “A typical domestic retrofit system saves over a tonne of carbon dioxide per year and £350 per year off electricity bills at today's prices. 
“The system is warranted for another 20 years and will last another 20 years beyond that.  “Right now, solar installers are offering retrofit PV systems with a 'payback' of 13 years, not the 100 years quoted by RICS. 
“That figure will drop further with future electricity inflation and falling solar PV costs.  In addition, the Government's grant programmeoffers guaranteed domestic PV grants of up to £2,500 till mid 2010 towards the cost of installation.

“For solar hot water, the RICS research assumption peddled as 'fact' annual energy savings of just £24 and a 208 year 'payback' is simply incorrect.
Solarcentury is still working on its calculations for solar thermal technology, but believes it will be broadly similar or better than the savings estimated for PV systems.
It continued: “Only this week, the many micro-generating customers of  Scottish and Southern Energy received the news that from 1st September they will be paid 20p per unit for their exported electricity. 
“This means that the typical UK domestic PV owner will be saving well over £350 per year on their electricity bills at today's prices. On this basis, a typical domestic PV  system will pay back in about 13 years. On top of that the value of their property will have increased as a result of their decision to install PV. 
 “Additionally, the supposed 30 year working lifetime of photovoltaics is very much an underestimate. Some of the first solar panels manufactured by Sharp and installed in Japan over 40 years ago are still generating electricity today.  And that's using half century old technology.  Just because a solar panel has a warranty of 25 years doesn't mean that should be taken as an indication of its lifetime.”