Heating Water with the Sun

Q: I have heard that the price for solar panels is dropping and incentives are available this year. What should I consider before taking the plunge? Would it be a good investment?

A: This is a terrific time to consider solar technology for your home. Solar technology has dramatically improved, prices have dropped and generous renewable energy incentives are available through the end of 2015 and 2016. The two most common systems found on homes in North Carolina are solar water heating systems and grid connected solar electric photovoltaic (PV) systems.

Solar hot water systems are the most popular solar technology.  A typical residential system appropriate for a family of four consists of two four-foot by eight-foot solar collectors. The system also includes one heat exchanger freeze protection system and one 80 gallon solar storage tank with an electric backup heating element. These systems may provide up to 73% of a home’s hot water used for bathing and cooking. The remaining 27% of hot water is heated by an electric heating element. The percentage of water heated by the sun versus electricity will vary based on the weather and a homeowner’s water use habits.

Don’t let sticker shock deter you! Current incentive programs make solar water heating systems very alluring. Typical installation cost is $7,500 to $8,500 for a 64 square-foot system. Assuming you spend $8,000 on a new solar water heating system that meets all the state and federal tax credit requirements before December 31, 2015, the net installation cost is reduced to $4,200. That cost may be reduced even more by local government or utility incentives. A comprehensive listing and explanation of federal, state, local government and utility incentives is available at www.dsireusa.org.

$4,200 is still far more expensive than a conventional water heater but the typical first year electricity cost savings is around $280. $4200 divided by $280 reveals a payback period of 15 years. After the payback period has elapsed, the solar water heating system provides essentially free energy for the remaining life of the system other than routine maintenance costs. Most solar water heating system components have a 10-year warranty and collectors have a 30-year design life. With proper maintenance and upkeep, a solar water heating system is expected to live long past the payback period. The payback period may be further reduced as electric rates increase in the coming years.

I am always looking for ways to save a dollar and purchasing a solar water heating system seemed like a great idea! The solar assessment of my home started and ended with a phone call. A quick glance at an aerial photo of my home revealed substantial tree cover. The trees save me a lot of money on summertime cooling costs, but they would lengthen the payback period so much that purchasing a solar water heater wouldn’t be a wise investment.

Whether solar is a good investment will vary from house to house. Even though solar technology is considered “cheap” at the moment, it’s still a big chunk of change. Next month we will explore photovoltaic (PV) solar systems.