A simple model for solar energy economics in the U.K.

A simple model is proposed which enables one to find conditions for the economic viability of solar thermal or photovoltaic energy conversion, in the presence of an average inflation rate i and an average interest rate r. It enables one to find the minimum viable conversion efficiency η(T) as a function of the life T (years) of the converter given the sensitized area a (m²), the insolation $\text{P (}\text{Wm}{}^2\text{)}$ averaged over day and night and the year, the cost c (cents or pence per kWh) of the competing fuel, and the cost C ($ or £) of one installation. By a slight extension one can also estimate the maximum economical funding for research and development. This is done by assuming u annual investments C, followed by T annual savings s, both per installation, and discounting costs and savings to the present. This yields a maximum economically viable value for $\text{c}\text{η}$ when the other parameters are given. The maximum annual investment, for example for research and development, can be obtained if the market is known in terms of the number of installations required. This is done on the principle that one must not use more money on R and D than one expects to save by using the converters.It is shown that thermal collectors on mainly domestic rooftops can contribute in the U.K. an amount of energy saving in excess of the hydro electric element, and of the same order as the nuclear element, in the 1974 U.K. inland energy consumption.The model can be applied to other problems of investment in research and development.