Should I divert surplus solar electricity into my hot water tank?

Alexis Rowell discusses with our Head of Residential Sales, Jon Cowdrill, and our Technical Director, Chris Jardine what you should do with your surplus solar electricity.

If you don’t use all the electricity you generate from your solar panels, then it goes into the grid for someone else to use. But there are ways to keep it in the family by diverting the surplus electricity into your hot water tank. Joju Solar supply the ImmerSUN PV controller for this (see image below), but there are others on the market, including iBoost, Solamiser and Optimmersion.

So is this a ‘good’ or financially sensible thing to do? Our Head of Residential Sales, Jon Cowdrill, and our Technical Director, Chris Jardine, discuss:

So what are these devices?

Jon: Well, basically, if you have a grid-connected PV system, then a lot of the time you’ll be exporting electricity back to the grid. However, you could maximise your benefit from installing PV by using all the output yourself, so a PV controller automatically diverts electricity that would otherwise leave your home, into your own hot water tank. When we talk to our customers, we’re certainly seeing a lot of demand for such products right now.

Chris: They’re certainly a ‘smart’ piece of kit, and technically very good. I think over the coming years we’re going to see the rise of smart grids and smart appliances, and this kind of flexibility and storage of energy is likely to become more important.

So why are people so keen at the moment?

Chris: I think it’s pretty clearly driven by the low price householders get from exporting electricity to the grid. If you have a solar PV system, you get paid 4.7p/kWh for any electricity you export to the grid. However, if you use the electricity yourself, you save about 15p/kWh off your bills. So there’s a clear financial imperative to consume the electricity you generate from solar if you can.

Jon: When I talk to customers, I’m seeing other motivations as well. The Big Six energy suppliers are deeply mistrusted right now, especially after massive price increases, and there’s often a motivation for people to be a little more autonomous. Others are just generally interested in new bits of technology and want to try out the latest thing.

There’s clearly an upfront cost. What are the economics of that like?

Jon: Well an average 3kW system might generate 2,500kWh a year, of which half might be exported – let’s say 1,250kWh. A 10p/kWh price differential between export and self-consumption, works out at £125 per year. With kit and installation at about £750, that’s a payback of 6 years, and after that you’re in profit. That’s not bad. In fact it’s comparable with the PV unit itself.

Chris: And if you’re out all day, with your appliances off, then your export would be even higher than Jon assumes. In this case the benefit of a PV controller could be even greater.

Jon: Indeed! So savings could be excellent depending on circumstance.

Chris: I have to add a very important caveat here: you’ll only be saving 10p from avoided imports if you currently heat your water with an electric immersion heater. If you currently use gas, you’ll be buying gas at about 5p/kWh giving you no financial savings at all! So I’d say it’s only worthwhile for places that already have electric immersion heaters, and maybe oil boilers. But if you’re on gas, you absolutely shouldn’t get an electric immersion heater put in – it won’t make sense in cost terms, even if you produce the electricity yourself.

Will a device like this reduce carbon emissions?

Jon: Yes, you are generating green electricity from your roof. If you use this to power lights and appliances you will reduce your carbon footprint a certain amount. But if you use otherwise surplus electricity to heat your hot water as well you will reduce your personal carbon footprint further. However, electricity is roughly three times more carbon intensive than burning gas, so if you currently heat water electrically, then you will reduce your personal carbon footprint more than if you currently heat with gas.

Chris: I think it also depends very much on where you draw the boundaries around this. For the householder, the situation is as Jon describes. But for the UK as a whole, the situation is different. Because electricity is 3 times more carbon intensive than gas, it would be better in carbon terms to let other people use it for lighting and appliances, rather than offset emissions from your comparatively clean gas heating. If you heat water with gas, and you divert with one of these devices, overall you’d save less carbon than if you let your neighbour use the surplus electricity!

So what does the future hold?

Chris: I think things will change when smart-metering of all households comes in, which should allow householders to receive a more realistic value for their exported electricity, with price maybe altering on a half hourly basis, in line with wider energy markets. So here electricity would be valued in line with how much other people require it, which is much fairer than the currently undervalued 4.7p/kWh for export

Jon: In the short-term, I still see demand for this kind of product, and so I suppose ultimately the market will decide. We’re certainly happy to install them if people decide that’s what they want to do. Hopefully this piece will help them form an informed and balanced opinion!