Profitability of Various Energy Supply Systems in Light of Their Different Energy Prices and Climate Conditions

Abstract

The majority of the single-family houses in Sweden are affected by deteriorations in building envelopes as well as heating, ventilation and air conditioning systems. These dwellings are, therefore, in need of extensive renovation, which provides an excellent opportunity to install renewable energy supply systems to reduce the total energy consumption. The high investment costs of the renewable energy supply systems were previously distinguished as the main barrier in the installation of these systems in Sweden. House-owners should, therefore, compare the profitability of the energy supply systems and select the one, which will allow them to reduce their operational costs. This study analyses the profitability of a ground source heat pump, photovoltaic solar panels and an integrated ground source heat pump with a photovoltaic system, as three energy supply systems for a single-family house in Sweden. The profitability of the supply systems was analysed by calculating the payback period (PBP) and internal rate of return (IRR) for these systems. Three different energy prices, three different interest rates, and two different lifespans were considered when calculating the IRR and PBP. In addition, the profitability of the supply systems was analysed for four Swedish climate zones. The analyses of results show that the ground source heat pump system was the most profitable energy supply system since it provided a short PBP and high IRR in all climate zones when compared with the other energy supply systems. Additionally, results show that increasing the energy price improved the profitability of the supply systems in all climate zones.

How do Climate and Macroeconomic Factors Affect the Profitability of the Energy Sector?

“…The review of the existing literature on the subject shows that there are previous studies that have evaluated the effect of climate variables on the financial profitability of energy sector companies (Errebai et al, 2022;Jalilzadehazhari et al, 2020). For example, some studies have evaluated the impact of temperature on wind and solar energy production.…”

Life Cycle Prediction and Maintenance of Buildings

“…Moreover, the profitability of the supply systems was analysed for four Swedish climate zones. The authors [10] concluded that the ground source heat pump system was the most profitable energy supply system, providing a lower PBP and a higher IRR for all the climate zones analysed, when compared with the other energy supply systems. Furthermore, the results reveal that increasing the energy price improved the profitability of the supply systems in all climate zones.…”

“…Jalilzadehazhari et al [10] evaluated the profitability of a ground source heat pump, photovoltaic solar panels, and an integrated ground source heat pump with a photovoltaic system as three energy supply systems for a single-family house in Sweden. This study evaluates the profitability of the supply systems through the calculation of the payback period (PBP) and the internal rate of return (IRR) for these systems.…”