Payback Period Information

The payback period for a new Solar Hot Water installation varies from location to location due to various factors.

The current form of fuel used to heat your hot water has an influence on what you will save on a yearly basis due to the difference in cost between different fuels.

Electric hot water for example, is the most expensive way to heat water. The next most expensive is Oil followed by Natural Gas and Propane.

The first step is to determine what your yearly cost is for heating your hot water. This can be done easily in some cases and is more difficult in others.

For Oil heated water you need to determine how much Oil is burned during the summer months when the Oil is just heating your hot water. Determine a monthly figure based on June July and August usage and multiply by 12 and that is your yearly cost for hot water.

With electric you need to estimate what percent of your electric bill goes towards your hot water. It is usually 25 percent depending on how much hot water your family uses.

With Natural Gas and Propane, if you also have a gas dryer or stove you need to estimate what percent of your cost is just for your hot water heater.

Once this is done the second step is to take roughly 75 percent of the yearly heating cost for your hot water and that will be the approximate savings which your solar hot water system will produce. Remember that due to the changing seasons the solar heating system produces an average of 75 percent of your yearly hot water needs depending on usage.

The timing of that usage can influence how often your backup system will come on. If you do a hot water wash on the morning of a sunny day the backup fuel will not need to come on to replenish the hot water.

The third step is to divide the cost of the system by the yearly savings in fuel costs and that number will be the number of years it will take to break even on your investment.

After that break-even time has passed your savings will accumulate over the years. The savings will go towards periodic maintenance and repairs.

A few comments on break-even issues. Most people spend their energy savings as they accumulate. I donít know of many people who take their estimated savings and place those funds into an interest bearing account. Most people spend the money on food and entertainment or other daily living expenses.

Quite often I encounter customers who need a replacement water tank or they might need to do a re-roof and the panels need to be removed and replaced. Sometimes both events occur at the same time. The customers start to question if it is worth the money to keep the system going. After all, they reason that their system is over 20 years old and should just be tossed into the dumpster.

Many roofers donít help by advising the customer that no one does solar anymore and they can dispose of the panels for them. Of course most roofers dislike solar panels, as they are an obstacle in the way of the performance of their job.

Plumbers usually have no training on Solar Systems and don't want to deal with the roof component of the functionality. They often advise the customer to get rid of the system when given the chance. A Solar System is just another thing to complicate their job just as it is with a roofer.

I have to remind the customer that the money they are spending today is theoretically the same money that has accumulated over the years in the savings from the solar hot water system. If they didnít put those savings aside for the eventual tank replacement or re-roof that is not an excuse to somehow incorrectly rationalize that the system is not worth keeping.

I have found that the original homeowners of the system are much more likely to want to keep their system up and running. It is usually the new homeowners who have not had the benefit of the years of savings who question the value of the system.

Additionally, the industry was decimated with the loss of tax credits and thousands of service companies went out of business nation wide making it difficult to locate qualified service people.

One point I like to emphasize to customers is that a Solar system is the only system that will eventually break even and even pay you back for your investment. Does your Oil Burner or electric hot water heater ever let you break even or pay you back for your investment? No, not ever!

I personally have to mention the primary reason I have implemented various solar systems at my own residence. I donít care too much about the break-even point. I know that in the long run I am saving money. I think it is an interesting technology where you can get free energy from the sun.

A big reason for me is to help our county become less dependent on foreign oil imports. Another reason is to reduce the carbon dioxide emissions a conventional hot water system will directly or indirectly contribute to the atmosphere. I want to do my little part to reduce Global Warming. If millions of homes across the county would do the same thing we could make a huge difference.

 

Back