I wrote a time series simulation program (“simulator”) to help make pick the best renewable combination. The simulator shows the options that make best financial sense by displaying their NPVs. After deciding project duration, one simply picks the combination with the highest NPV.
The simulator runs as a web server and accept POST requests containing a JSON description of the project. After running the simulation, it gives a link to a graph of NPVs for each combination.
The first step in creating the JSON is to decide the maximum duration you want to be committed to your investment and benefit from its returns. Commitments and returns are typically:
- preparation costs, e.g. tearing out the old boiler, oil tanks and necessary buiding or electrical work prior to install;
- installation costs;
- periodic maintenance costs;
- ongoing (hopefully greatly reduced) electricity costs;
- income (if any) from exported electricity.
Create the JSON description
Describe your house and project in text description using JSON to allow the simulator to calculate your project’s future energy and financial performance.
The text needs to quantify several parameters, as follows:
- comments;
- time assumptions;
- location and how much sun it gets;
- energy demand;
- energy tariffs;
- target room temperature;
- non-renewable components:
- renewable components:
- permutations of renewable components.
Making a request
Now you have your JSON, you need to forward it as a POST request to the simulator.
If you’re developer with LAMP skills, you may want to pull the simulator from GitHub and mount it on your own server.
Alternatively, you can submit a request to my server.
Understanding the result
A line with a zero slope implies a project with no overall running costs, and a line with a positive slope implies a project that is cash positive. But we should always prefer the permutation with the highest NPV depending on the duration we assume. Looking at the graph above, that meant we should stay with our old boiler (i.e. “none”) unless we could assume a duration longer than 5 years.
Fitting a heat pump on its own (“HP” line) had the earliest duration at which any investment made sense. But note how this line still slopes downwards, just not as steeply as the “none” one.
Perhaps surprisingly, the heat pump made sense before the solar PV only “PV” line did at 6 years. One might expect a synergy between heat pumps, which benefit from cheap electricity, and solar PV. But doing both (i.e. “HP, PV”) only makes sense when considering project durations of 11 years or more. This is because solar PV panels do not generate electricity when heat pump use it most, when it’s cold and dark outside.
Thinking long term
More extensive and costly projects tend to prove more attractive with longer project durations. We were not planning to move which, from a renewable planning perspective, made it possible to think in terms of augmenting a heat pump with solar PV and a battery.
While solar PV alone does not reduce heat pump runnning costs, it does reduce overall energy consumption and greatly reduces the slope of the NPV line. Low running costs are good for NPVs in the long run. And indeed, we managed to improve the long run NPV even further by add adding a battery “B”.
Fitting a battery on its own (“B”) is pretty much the worst investment decision one can make. While it is possible to store cheap electricity and scrape a profit by export it at peak times, these profits are so slim as to be not worthwhile unless one is prepared to wait around 17 years.
But while expensive initially, batteries have great synergies with heat pumps and solar PV panels. They can import electricity from the grid at times when it is cheap and, conversely, can store solar energy for export at better peak times for exporting back to the grid, typically between 4pm and 7pm.
If we planned to be in the house longer than 10 years (which we do), a heat pump on its own would be sub-optimal and it would instead make greater sense to install also solar PV and a battery.
And in the very long term (25 years), there is a staggering near £60,000 long term cost from doing nothing – compared to fitting those renewable components today. That figure is all the more astonishing when one considers that it is a priced at the present day, not some figure discounted way into the future. In other words, our renewable project was financially equivalent to receiving a £60k cheque on the day we embarked on it … at least theoretically!
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