# 1. Define the initial and ongoing costs, ongoing savings and revenue for each of the alternatives…

1. Define the initial and ongoing costs, ongoing savings and revenue for each of the

alternatives listed in the case study (i.e. photovoltaics, ground source heat pump and

energy conservation measures). Use the assumptions given in the case study. (Hint:

remember you are considering the alternatives relative to the base case)

2. Evaluate each of the alternatives using the following measures: net present value

(NPV), modified internal rate of return (MIRR), simple payback period (SPB), and

levelised cost of energy (LCOE). (Hint: Put a table of results in the main body of the

report and put the full spreadsheets in the appendix)

3. For the following conditions discuss which analysis measure is most suitable.

a. To compare between an alternative and base case.

b. To select from between the three alternatives.

c. To define the risk of the investment.

4. How would the results be likely to differ in practice?

5. If the alternatives were used in combination (i.e. 1+2+3, 1+2, 1+3, or 2+3) then,

without recalculating them all, how would you expect this to affect the results?

Assume there is no limit to capital available for the investment.

Task B – RETScreen based

Use RETScreen to answer the following questions:

1. Use the sensitivity and risk analysis functions to investigate further the GSHP

alternative’s initial assumptions, and comment on your findings. (Hint: you should do

more than simply present screenshots if you wish to achieve a good mark for this

section).

2. Would adopting the energy conservation measures in Task A (Alternative 3) with

the GSHP have a positive or negative impact on the overall investment and why?

3. If the base case heating system was electrical rather than gas, calculate the impact

on its feasibility. (Assume the electrical heating system is 100% efficient, i.e. the

electricity supplied for heating is the same as the heating demand.)

4. Investigate and comment on the impact of the following incentives on the GSHP’s

feasibility:

a. The Government’s initially planned Renewable Heat Incentive (RHI) of 7 p/kWh

from years 1 to 20.

b. The present proposal for 18.8 p/kWh available for years one to seven of the

project.

c. A RHI Premium payment of £1,250 in Year 0.

d. A Green Deal loan to cover £10,000 of the capital cost, repaid over 20 years at an

interest rate of 6.96%, plus an annual finance charge of £20. The intention is for the

loan to be repaid through savings in energy bills. (Assume the family remain in the

house for 20 years).

Task C (suggested max 1000 words)

1. In the context of your wider understanding, what do the answers for Tasks A & B

tell you about the appropriateness of the Government’s past and present incentives

for increasing micro-generation?

2. How is the future development of the electricity market likely to impact individual

consumers both with and without sustainable energy technology? In your answer

you should consider both the impact of changing consumer demand profiles and also

greater penetration of the electricity supply market by large scale renewables, such

as off-shore wind.

(Hint: In answering Task C you should refer to your results for Tasks A & B. However,

you should also consider topics discussed in lectures and further reading.)

The Case Study – Domestic Microgeneration

Background Information

The family

The family consists of the two adults and two children, plus their dog. During a

typical day the two adults will go to work in the city centre 3 miles away, and the

children will go to school one mile away. They all travel in the family car, which is a

large 4WD.

The House

The house is a medium size semi-detached house, with a very large garden, located

on the edge of Nottingham. For the purpose of this exercise you should assume the

postcode is NG7 2RD (i.e. in the same location as the DABE Creative Energy

Dwellings).

General Assumptions

? You should assume a discount rate of 7.5%.

? All options will be considered over a fixed lifetime of 20 years, regardless of

warranties or tariff lifetimes.

? You do not need to account for inflation.

? Gas:

o The present unit price is 4.68 p/kWh

o The unit price will increase annually at 3.5% above inflation for the lifetime of the

project.

o The CO2 emissions for mains gas are 0.184 kgCO2/kWh.

? Electricity:

o The present unit price is 15.03 p/kWh

o The unit price will increase annually at 3.5% above inflation for the lifetime of the

project.

o The CO2 emissions for mains electricity are 0.481 kgCO2/kWh.

The Base Case

Heating

? For the base case a grid connected gas boiler is used for both space and water

heating.

? The present boiler is broken and needs replacing. You should assume a total

replacement cost of £3,000 for an 80% efficient boiler and labour, and also an

ongoing maintenance cost of £100 per year.

? The predicted total annual gas demand is approximately 20,000 kWh.

? The windows are double glazed but there is no other significant insulation.

? The house has 100 m2 of heated floor area, with a heat load of 46 W/m2

? Water heating accounts for approximately 25% of the gas demand.

Power

? For the base case all power is supplied by mains electricity.

? The predicted total annual electricity demand is 4,000 kWh.

? The electrics are all in good order and will require no maintenance.

Alternative 1 – Photovoltaics

? Size = 3 kWp, covering a large south facing roof with optimum orientation and tilt

angle.

? Total installed cost = £6,000

? The initial generation performance is expected to be approximately 2,485 kWh per

year.

? The generation performance is expected to decrease at a compound rate of 1.12%

per year, to 80% of its starting generation after 20 years.

? As the family is out most of the time you should assume 25% of the generated

electricity is used by the family, hence reducing load on the grid, and the other 75%

is exported to the grid.

? You should assume a Feed-in Tariff of 6.85 p/kWh and an Export Tariff of 4.77

p/kWh. (The FiT is low as the house is poorly insulated – if the energy performance

of the house is increased to an EPC level D or better then the FiT would increase to

14.38 p/kWh.)

? Assume there are no maintenance costs, but a new invertor is expected to cost

£1,000 in year 10.

Alternative 2 – Ground Source Heat Pump

? Size = 5 kW heat pump output with horizontal ‘slinky’ style ground pipes and an

expected COP of 3.

? Total installed cost = £13,000 (therefore £10,000 more than replacing the base

case boiler).

? The predicted annual generation of heat is approximately 16 MWh, which is

enough to cover 100% of the annual demand for heating. (Note the difference

between the heating demand and gas demand, due to the inefficiency of the gas

boiler.)

? The annual electricity needed to run the pump can be found by using the annual

heat generation and COP.

? You should assume there are no incentives available until Task B Part 4, as the new

RHI has not yet started.

Alternative 3 – Energy Conservation Measures

? A number of combined energy conservation measures have been quoted for by a

local builder, namely cavity wall insulation, loft insulation, draught proofing, pipe

insulation, and floor insulation.

? The measures will bring the house up to at least an EPC level D.

? The total installed cost of all measures is quoted as £1,300.

? The total annual gas savings are expected to be approximately 9,500 kWh.

? The family may consider using a Green Deal Loan to pay for the improvements, and

by doing so receive £560 cashback in Year 1.

alternatives listed in the case study (i.e. photovoltaics, ground source heat pump and

energy conservation measures). Use the assumptions given in the case study. (Hint:

remember you are considering the alternatives relative to the base case)

2. Evaluate each of the alternatives using the following measures: net present value

(NPV), modified internal rate of return (MIRR), simple payback period (SPB), and

levelised cost of energy (LCOE). (Hint: Put a table of results in the main body of the

report and put the full spreadsheets in the appendix)

3. For the following conditions discuss which analysis measure is most suitable.

a. To compare between an alternative and base case.

b. To select from between the three alternatives.

c. To define the risk of the investment.

4. How would the results be likely to differ in practice?

5. If the alternatives were used in combination (i.e. 1+2+3, 1+2, 1+3, or 2+3) then,

without recalculating them all, how would you expect this to affect the results?

Assume there is no limit to capital available for the investment.

Task B – RETScreen based

Use RETScreen to answer the following questions:

1. Use the sensitivity and risk analysis functions to investigate further the GSHP

alternative’s initial assumptions, and comment on your findings. (Hint: you should do

more than simply present screenshots if you wish to achieve a good mark for this

section).

2. Would adopting the energy conservation measures in Task A (Alternative 3) with

the GSHP have a positive or negative impact on the overall investment and why?

3. If the base case heating system was electrical rather than gas, calculate the impact

on its feasibility. (Assume the electrical heating system is 100% efficient, i.e. the

electricity supplied for heating is the same as the heating demand.)

4. Investigate and comment on the impact of the following incentives on the GSHP’s

feasibility:

a. The Government’s initially planned Renewable Heat Incentive (RHI) of 7 p/kWh

from years 1 to 20.

b. The present proposal for 18.8 p/kWh available for years one to seven of the

project.

c. A RHI Premium payment of £1,250 in Year 0.

d. A Green Deal loan to cover £10,000 of the capital cost, repaid over 20 years at an

interest rate of 6.96%, plus an annual finance charge of £20. The intention is for the

loan to be repaid through savings in energy bills. (Assume the family remain in the

house for 20 years).

Task C (suggested max 1000 words)

1. In the context of your wider understanding, what do the answers for Tasks A & B

tell you about the appropriateness of the Government’s past and present incentives

for increasing micro-generation?

2. How is the future development of the electricity market likely to impact individual

consumers both with and without sustainable energy technology? In your answer

you should consider both the impact of changing consumer demand profiles and also

greater penetration of the electricity supply market by large scale renewables, such

as off-shore wind.

(Hint: In answering Task C you should refer to your results for Tasks A & B. However,

you should also consider topics discussed in lectures and further reading.)

The Case Study – Domestic Microgeneration

Background Information

The family

The family consists of the two adults and two children, plus their dog. During a

typical day the two adults will go to work in the city centre 3 miles away, and the

children will go to school one mile away. They all travel in the family car, which is a

large 4WD.

The House

The house is a medium size semi-detached house, with a very large garden, located

on the edge of Nottingham. For the purpose of this exercise you should assume the

postcode is NG7 2RD (i.e. in the same location as the DABE Creative Energy

Dwellings).

General Assumptions

? You should assume a discount rate of 7.5%.

? All options will be considered over a fixed lifetime of 20 years, regardless of

warranties or tariff lifetimes.

? You do not need to account for inflation.

? Gas:

o The present unit price is 4.68 p/kWh

o The unit price will increase annually at 3.5% above inflation for the lifetime of the

project.

o The CO2 emissions for mains gas are 0.184 kgCO2/kWh.

? Electricity:

o The present unit price is 15.03 p/kWh

o The unit price will increase annually at 3.5% above inflation for the lifetime of the

project.

o The CO2 emissions for mains electricity are 0.481 kgCO2/kWh.

The Base Case

Heating

? For the base case a grid connected gas boiler is used for both space and water

heating.

? The present boiler is broken and needs replacing. You should assume a total

replacement cost of £3,000 for an 80% efficient boiler and labour, and also an

ongoing maintenance cost of £100 per year.

? The predicted total annual gas demand is approximately 20,000 kWh.

? The windows are double glazed but there is no other significant insulation.

? The house has 100 m2 of heated floor area, with a heat load of 46 W/m2

? Water heating accounts for approximately 25% of the gas demand.

Power

? For the base case all power is supplied by mains electricity.

? The predicted total annual electricity demand is 4,000 kWh.

? The electrics are all in good order and will require no maintenance.

Alternative 1 – Photovoltaics

? Size = 3 kWp, covering a large south facing roof with optimum orientation and tilt

angle.

? Total installed cost = £6,000

? The initial generation performance is expected to be approximately 2,485 kWh per

year.

? The generation performance is expected to decrease at a compound rate of 1.12%

per year, to 80% of its starting generation after 20 years.

? As the family is out most of the time you should assume 25% of the generated

electricity is used by the family, hence reducing load on the grid, and the other 75%

is exported to the grid.

? You should assume a Feed-in Tariff of 6.85 p/kWh and an Export Tariff of 4.77

p/kWh. (The FiT is low as the house is poorly insulated – if the energy performance

of the house is increased to an EPC level D or better then the FiT would increase to

14.38 p/kWh.)

? Assume there are no maintenance costs, but a new invertor is expected to cost

£1,000 in year 10.

Alternative 2 – Ground Source Heat Pump

? Size = 5 kW heat pump output with horizontal ‘slinky’ style ground pipes and an

expected COP of 3.

? Total installed cost = £13,000 (therefore £10,000 more than replacing the base

case boiler).

? The predicted annual generation of heat is approximately 16 MWh, which is

enough to cover 100% of the annual demand for heating. (Note the difference

between the heating demand and gas demand, due to the inefficiency of the gas

boiler.)

? The annual electricity needed to run the pump can be found by using the annual

heat generation and COP.

? You should assume there are no incentives available until Task B Part 4, as the new

RHI has not yet started.

Alternative 3 – Energy Conservation Measures

? A number of combined energy conservation measures have been quoted for by a

local builder, namely cavity wall insulation, loft insulation, draught proofing, pipe

insulation, and floor insulation.

? The measures will bring the house up to at least an EPC level D.

? The total installed cost of all measures is quoted as £1,300.

? The total annual gas savings are expected to be approximately 9,500 kWh.

? The family may consider using a Green Deal Loan to pay for the improvements, and

by doing so receive £560 cashback in Year 1.

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