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Cost Effectiveness of Renewable Energy Equipment (WJEC GCSE Science (Double Award)): Revision Note

Katie M

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Katie M

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WJEC Science (Double Award): PhysicsWJEC Physics

Cost Effectiveness of Renewable Energy Equipment

  • Some households install their own means of generating renewable energy, such as roof-top solar panels and domestic wind turbines 

  • The cost-effectiveness of introducing domestic solar and wind energy equipment can be determined by evaluating

    • The installation cost of the equipment

    • The amount saved in fuel costs

  • This is called the payback time

p a y b a c k space t i m e space open parentheses y e a r s close parentheses space equals space fraction numerator i n s t a l l a t i o n space c o s t s over denominator s a v i n g s space p e r space y e a r end fraction

  • This is a way of determining the amount of time (in years) that the equipment needs to be fitted before the savings start to outweigh the installation costs

    • For example, if a solar panel costs £5000 to install and saves £500 per year in electricity bills, the payback time would be 5000/500 = 10 years

Worked Example

A household installs solar panels on their roof to heat their domestic water supply. The cost of fitting the solar panels was £5500.

The domestic water supply is heated using gas. Before installation, the household pays £980 for gas. One year after installation, the household pays £610 for gas.

Calculate the expected payback time. 

Answer:

Step 1: List the known quantities

  • Installation cost = £5500

  • Savings per year = £980 − £610 = £370

Step 2: Calculate the payback time

Payback time = fraction numerator i n s t a l l a t i o n space c o s t s over denominator s a v i n g s space p e r space y e a r end fraction

Payback time = 5500 over 370 = 14.9 years

It will take about 15 years before the savings start to outweigh the installation costs

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    Katie M

    Author: Katie M

    Expertise: Physics

    Katie has always been passionate about the sciences, and completed a degree in Astrophysics at Sheffield University. She decided that she wanted to inspire other young people, so moved to Bristol to complete a PGCE in Secondary Science. She particularly loves creating fun and absorbing materials to help students achieve their exam potential.