October 05, 2007

Getting Yourself Into Hot Water?

One of the advantages of attending a performance of the baroque Mass of Notre Dame, as I did recently, is that it gives you a good two hours with nothing else to do but to sit and think as the sounds of the hurdy gurdy and Gregorian chant wash over you.

It was during this period that I got to wondering about how you could increase the take-up of alternative energy systems like solar water heating.

As you do. It's one of those chicken-and-egg situations isn't it? Even disregarding the benefit in reducing usage of fossil fuels, surely it's something everyone should be doing? Free energy, and it'll pay for itself after ten years or something.

So why haven't we all got it installed? It's that initial cost isn't it? A couple of grand isn't that easy to do without for ten years while you're recouping the cost. We thought about it when we had the bathroom done on the house in Cambridge, but couldn't quite justify the outlay given that the tenants would get all of the cost-savings. In the end we settled on a compromise measure, and had the right kind of hot-water cylinder fitted so when it's done in the future it will just need a couple of pipes run into the bathroom.

What we need then is some way for everyone to finance the installation without needing the cash up-front. Otherwise, solar-water heating will remain a doing-my-bit middle-class indulgence rather than a widely-adopted, distributed step in stemming global warming.

You could argue that the government should pay for the installations, or provide cheap loans to get round this problem; and to an extent it already does. However, that just shows what the problems are: there's a limited amount of funding available; you have to jump through all sorts of hoops to get any of it (e.g. you need a certain thickness of loft insulation); there are different grants available from different parts of government (in Cambridge there was a council grant available in addition to the central government one) with different conditions. On top of that, you still need to find someone to actually supply and fit the system.

None of which is very encouraging. We need a way to make it easier, and to remove barriers - not make it harder.

A Distributed Utility?

What if we could make it as easy as a process that lots of people already do, such as switching to a different gas or electricity company? When I switched our electricity to ecotricity last year, it just involved filling in a few fields online and then taking a meter reading. That's the sort of simplicity we need to aim for.

What if there was a different sort of green energy provider; one that, when you switched to them for your gas or electricity, also came and installed solar water heating at your house? Lets call it SOWHAT, the SOlar Water HeATing utility.

The switch-over process would be a bit more complicated, as there'd be an installation to arrange, but SOWHAT would deal with getting the government grants, providing the solar panels, etc. and use their own installers to fit it all. At the end, they'd give you a bill for the cost of the kit and the installation.

You would then decide to pay off as much, or as little, of the bill as you wanted, and the rest would be recovered over the years through your utility bills (plus a certain percentage to cover SOWHAT's ongoing costs and give them some profit). It might mean that it takes 15 years for your solar water heating "investment" to pay off, but in the long-run you'd still get free solar energy and collectively we'd get a lot more green power being used sooner.

Would it work? Does anyone want to build this utility? Let me know if you do, I'd love to be involved, even if it's just as one of the first customers.


Posted by Adrian at October 5, 2007 10:12 AM | TrackBack

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Some obvious problems:
1. The biggest problem is probably financing the operation: you are tying up the capital and cost of installation for the payoff time. It could work if the cost was cheap, and payoff was short, but if the payoff was over 5 years and it was £2500, I think you'd have a problem. Being below the interest rate provided by banks is a sure-fire way to make sure that the company is not going to be financed. You probably need to be hitting about 10% return per year. Not that much different from the rates on credit cards.

2. Energy users can swtich at any time. What if they switch 1 week after installation. You need a good contract. What if the house is re-possessed? You lose your investment.

3. UK government grants are not likely to pay for it. I think I've heard that they usually get all taken up on the first day that each grant season opens.

I'm not all doom and gloom, but I might be a professional skeptic. There are probably ways to make it work, but I think that the cost of the units and of installation have to come down.


Posted by: Jeff Veit at October 29, 2007 08:33 PM
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