number crunch: solar thermal vs. PV

 The calculations presented here depend on a large number of factors and may not apply to your case.  If you have numbers that differ from these, please let us know so other readers can benefit from your experience.

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Solar thermal is an older, simpler, more efficient technology than solar photovoltaics. But given the current state of the market, photovoltaics might be taking solar thermal’s job.

original image by Alfred Twu (2010), released under CC0 1.0 Universal Public Domain Dedication

After huge price drops, PV is now so affordable that running an electric water heater on solar panels might be less expensive than installing a solar hot water system. This seems backwards — how can it be less expensive to make heat out of electricity out of sunlight than to make heat out of sunlight directly?
As this article will illustrate, the key factor is the difference in FITs. In the UK, solar PV enjoys a healthy FIT schedule, while a solar thermal installation only gets a one-time £300 rebate from the government. The RHI is supposed to begin in the summer of 2014, which would see solar thermal earning 17.4 p/kWh (higher than PV!)… but the measure has already been delayed twice, and that number is not yet set in stone. So keep your fingers crossed.
The bottom line is that today, consumers would do well to consider both options for a domestic hot water system. There are many factors that might predispose your site for one technology or the other. Here’s a short list.

+Let’s say you want to get started with a renewable technology and you don’t have thousands of pounds to fork over. Solar thermal systems start at £2500 or so, while it’s difficult to find a solar PV installation for under £4000. Note that both technologies are available for financing under the Green Deal.

+If your current water cylinder is twin-coil (or has the capacity for another coil input) then you won’t need to install a new cylinder for solar thermal. Instead, you could run the solar thermal heating elements directly into your current boiler without having to mess with any plumbing. It’s too easy! And it’s likely to cut at least £800 off installation costs. But this raises another question:

+Do you need to replace your water cylinder anyway? Consider getting one compatible with the heating system you choose.

+As solar thermal is a more efficient technology per unit area, it “scales” better, requiring less additional material to do more… and making it competitive with PV for large-scale projects.

+Solar thermal is less finicky about partial shading and sun-ward orientation.

On top of those factors, you’ll have to decide between the technologies within solar thermal and PV as well, and of course, some are more expensive than others. So even with site-specific details, an exact pound-for-pound comparison is nearly impossible. You’re best off finding all the variables, doing as much figuring as you can, and then getting quotes from installers.
Nevertheless, I’ve promised a number crunch, so I’ll take a stab at 2 likely scenarios here. The goal is to walk through the process of how to calculate savings for each technology. Insolation data is based on Manchester, England; electricity price is 14 p/kWh. Also, I’m keeping the export_tariff out of this comparison, so I’m assuming the the consumer uses every kWh generated. Okay, here goes.

Round 1: light usage

You’re a household of 2 people with moderate electricity consumption and gas heating. You’re considering a PV installation to cover electricity use only. You decide on a 3.6 kWp array, which is about 15 panels. It costs you £7500, which includes the panels, the inverter, installation, hardware, everything. Your installation is predicted to generate 2890 kWh/year. Considering this is 2890 kWh that you’re not buying from the grid, this installation saves you about £400/year. Additionally, the generation tariff brings in £445/year. So excluding the export tariff, you’re netting £845/year with this array.
But for £3390 more, you could add 5 panels, upping your system to 5.3 kWp and a projected 4350 kWh/year in total. With this wattage, you can cover hot water usage in addition to household electricity. To do so, you’d have to install an electric water heater or combi_boiler (at £800, say) to preheat your water before it enters the gas tank, shifting almost all your hot water use to your solar array, leaving the gas on just in case. If you concentrate your hot water usage around dusk time, then these additional panels could cover 60 of your 70 liters per day, the other 10 coming from your gas cylinder*. That’s an additional savings of about £160/year, plus an additional generation tariff of £225/year.
Or! For the same price of the extra PV panels, you could install a small solar hot water system. Putting numbers to solar thermal is more difficult, but it is feasible that for the same £3390 it takes to expand your PV system (+ the RHI’s current £300 rebate), you could install a “properly-sized” solar thermal system… which means it covers 55 – 85% of your hot water use, depending on how much you synchronize your usage.* (You might have to install a new storage tank as well, but for our purposes, you would have to do the same with a full PV setup — the £800 combi boiler — so this cancels out). For a similar price up front, then, you’re saving slightly less, say £140/year.
You can see then that from the standpoint of shear savings, a PV-only system is a slightly more economical option for the light usage consumer: £160/year in savings vs £140/year earned from covering your hot water usage . This is assuming your gas comes from the grid into your “reasonably efficient” gas heating system. But what really puts financial distance between the two technologies is the generation tariff: £225/year for the extra PV panels, 0 (currently) for solar thermal. So in this case, here’s the final score:
thermal + PV:     savings of £985/year                pays for itself in 11th year
PV-only:             “savings” of £1230/year            pays for itself in 8th year
Remember that the site and usage are the main determining factors. As was discussed in the skinny on solar hot water, solar thermal is better-suited for heavy use applications. The next matchup explores this scenario.

Round 2: mid-heavy usage

Let’s assume that your family of 4 (or your small restaurant) uses 200 liters of hot water per day. Your annual power bill is £2k+ for electricity and heating together. A solar PV installation to cover most of your electricity and hot water use would be near 10 kWp, which, if we’re talking about standard polycrystalline silicon modules, is on the order of 60 square meters. Is your roof that big? Probably not. A PV installation that size could cost up to £20k, but if the use stays steady, it will pay for itself in well under 7 years.
So instead of going for one enormous PV array, you divide it up, devoting 4250 kWh of your annual usage (household appliances, say) to your PV system. This would justify a 5.3 kWp system (a modest 28 square meters, £10,500). For your 200 liters/day of hot water, you opt for a solar thermal installation, which is likely to cost £5-6k. So in this case, the solar thermal system costs 60% of its comparable PV system. Here, solar thermal seems to make more sense.
Until you get to the FITs! With a full PV system, you’re earning over £550/year more than a PV + thermal system (plus any export tariff), which again makes PV — if you have the space for it — the better buy in the long run.
thermal + PV:    savings of £2695/year            pays for itself in 5th year
PV only:           “savings” of £3120/year            pays for itself in 6th year
Notice that the PV + thermal system actually pays for itself first. However, it looks like the PV-only system will “out-earn” the other in the long run. Note also that under the proposed RHI, the outcome would be much different.
So it’s become clear: under the current state of FITs, PV usually wins.
The last word? It’s still a case of apples and oranges.

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* The spare kWh’s come from the nature of a yearly average. Accounting for ample hot water in the summer and much less in the winter, I average daily hot water generated to something like 87% of total usage for solar PV and the range of 55 – 85% for solar thermal.