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When Does Solar Hot Water Make Sense? Lessons Learned


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Our goal is to provide practical guidelines for area homeowners – to help you decide when investing in solar hot water makes sense. We don’t have all the answers, but we are making progress!

And, the stakes are huge. Today most homes are equipped with very inefficient water heaters – electric, oil or gas tank-type heaters. Over the next five years thousands and thousands of water heaters will be replaced here in the Capital Region. We are all looking for cost effective ways to save energy. The water heater is typically the second biggest energy consuming appliance in the house, second only to the furnace. This is a very big opportunity indeed!

The two most energy efficient options to consider are solar hot water (SHW) and on-demand water heaters – each with its advantages and disadvantages, which I will review in detail another time. Plus there are other options: indirect water heater with a high-efficiency boiler and electric heat pumps which move unwanted heat from the basement into your hot water – I’ll discuss these at another time too. Here is a summary of some key points we have covered so far regarding SHW:

How can we use less hot water?: The first question regarding any aspect of energy use should be, “Can we use less?” Conservation is always the most cost effective way to reduce our energy use. Can we waste less, increase efficiency, or do we need as much? Shorter showers, low-flow shower heads, wash clothes with cold water, run dishwasher only when full, don’t leave water running while hand washing dishes, etc., etc. These are some of my favorite things… 

Many do not have adequate solar access: Unfortunately, for the last 100+ years most houses have been oriented to the street rather than the sun. Many city, suburban and country homes’ roofs are not situated for good access to the sun. If not on the roof, the SHW collectors need to be ground-mounted close to the house to be effective; many houses do not have ground mounting as an option due to their setting or lack of space. This is certainly a shame, but often there is little that can be done about this fundamental detail. Take a quick look at your house from the south. Do you have 40 to 120 square feet of roof or ground that is in full sun from 9 am to 3 pm throughout the year? If you are not sure, then get a professional to answer this important question for you – there may be options that are not apparent to you. 

Energy used for hot water is unknown: How can you say how much you will save, if you don’t know how much energy you currently use to heat your water? We all get utility bills for heat and whole house electric, but no one gets a bill for their hot water. Those with natural gas can often look at the non-heating months to see what is used for non-heating (hot water, cooking, clothes drying) and then some estimates may be made. Even so, very few can accurately say how much energy is used to heat water. There is one fairly easy opportunity for those with electric hot water – install a rebuilt house electric meter on the water heater ($30/meter delivered, www.hialeahmeter.com/). So, while it won’t be easy or precise, currently most of us have to estimate hot water energy and cost based on estimated hot water usage, estimated water heater efficiency, and estimated heat losses from the tank and piping – a lot of estimating.

Actual hot water usage is unknown: Most people have no idea how many gallons of hot water their household uses a year – I sure didn’t. That is because the ability to estimate how many gallons of hot water are flowing through a pipe for showers, dish & clothes washing, hand washing, cooking etc. is not intuitive; as a matter of fact, we use way more than we typically guess. A good SHW contractor can work up a pretty accurate estimate of your household’s hot water usage and so can you with a little estimating, timing and measuring. The point is, in order to estimate how much energy you are using for hot water you must estimate how much hot water you use.

In the future I hope many more people have meters on their hot water, just so we can start making this energy use a little more apparent. Today you can install a water meter ($65/meter delivered, www.watermeters.com). If you do install such a meter be sure it is on the cold side of the hot water tank (meters that handle hot water cost more) and be sure it measures the water that goes through the mixing valve (tempering valve - that keeps scalding sun-heated water from your taps) as the sum of these two quantities is how much hot water that comes out your tap.

Households using little hot water probably should NOT invest in SHW: Without a detailed hot water usage analysis, it is clear that some households use very little hot water. This is especially true with households of one or two, where longer showers are not taken daily. Seldom is SHW the best investments for these households. If the water heater is installed in an unheated basement (very typical in our region), install an on-demand water heater to minimize heat loss to the space and invest further in air sealing, insulation or other energy conservation opportunities. 

The type of fuel you have access to dramatically affects SHW Breakeven: When you factor fuel type into the evaluation of when solar hot water makes financial sense, the numbers spread. If you are lucky enough to have access to natural gas, then only the very highest users of hot water are financially justified in their investment of SHW. Whereas, if you have access only to propane, oil or electric, then you don’t need to use very much hot water before SHW makes financial sense. Here is my analysis:

Water use breakeven4

You can see all the assumptions and calculations in RESOURCES below.

The bottom line is that SHW will pay for itself for nearly any typical family of three or more that does not have access to natural gas today and do so more quickly in the future, as energy prices increase!

We evaluate investments differently: We have different criteria for deciding whether or not to make an investment. The Environmental/Solar Extreme would invest in solar to eliminate the use of some or all fossil fuels; after all, it is their money and that is how they prefer to spend it. The Economically Rational Extreme will invest whenever the investment pays for itself over the investment’s lifetime. The Rational Economic would want to look at all such opportunities and first invest in the one that saves the most energy relative to its cost.

If you are an Environmental/Solar Extreme you should know that heating water with the sun works well in Germany with less sun, well in Saskatoon, Canada where it is much colder, and it will work well here, in that it saves fossil fuel. The only question is whether or not the energy saved is equal or greater than the embedded energy needed to build and install the solar hot water system; a question for another day.

If you are Economically Rational Extreme in your decision making, then the above chart is your guide – if your household uses more than 12,540 gallons (as my energy-conscious family of four does) and you don’t have access to natural gas, then it makes economic sense for you to invest in solar. To check for sure, install a water meter on your hot water and consider how you might use less. If you are satisfied you are using what you need, then go ahead and invest in solar hot water.

If you are a Rational Economic then there are probably better investments you can make to save energy. This is certainly true if you have not upgraded your home’s insulation and its heating system and assured it is as air tight as practical, and is probably true if the car you drive gets less than 30 miles to the gallon. Get a home energy audit and take a look at your car(s) first, then consider using the sun to help heat your home or water!

In addition to economic reasons, some may want a SHW system “just” to have hot water should the grid go down. Solar PV would be needed, but the electricity needed for the circulator pump and controls is minimal compared to the energy required to heat water. So there are other reasons to be considered, but here our focus is financial and energy, so I will continue along this path.

We should evaluate against the best option, not what was: Here is more for the Rational Economic to consider. When evaluating a solar hot water system, you shouldn’t evaluate it against what you currently have, but rather evaluate it against the next best alternative – typically an on-demand water heater.

A typical on-demand water heater costs about $2,500 installed by a reputable contractor that warrantees the equipment and his work (typically requires new gas and electric lines and possibly rerouting some hot water pipes). A basic solar hot water system costs about $2,800 net of tax credits and incentives (also depends on your home-specific situation). You can install either yourself, but you won’t save enough installing a solar hot water system yourself to make up for the incentives and possibly the tax credits you will miss out on! 

So, the decision rests with how much you can install an on-demand water heater for versus the cost of a solar hot water system. Let’s say the difference is $1,000. You will use more energy with the on-demand water heater. The financial problem then becomes how long will it take you to make up the $1,000 (or more) with fuel cost savings between using solar and an on-demand electric water heater?

In my case (assuming a professionally installed system works no better than the used system I installed and assuming we used 13,000 gallons of hot water last year) we would have used 2,293 kWh (based on Mfg efficiency rating) to heat our water with an on-demand electric unit (13000 gal X 8.34 lb/gal X 70 deg temp rise)/(3412 BTU/kWh X .97 Mfg EF) instead of the 1,146 we actually used. Thus we saved 1147 or half the total electricity needed. At $0.15 per kWh our system would make up the $1,000 difference between the solar hot water system and the on-demand water heater in less than 6 years! The biggest assumption here is the gallons of hot water used. My New-Year Resolution is to measure our hot water, now that I have found a practical source for a water meter.

The biggest factor in this analysis was the financial incentives and tax credits – without them the cost difference is much greater. Still these solar incentives dwarf the incentives and costs associated in delivering fossil fuels!! 

SHW system design is important: There are a number of key details to consider when designing a solar hot water system, including: amount of hot water you need heated by the sun; size, type, orientation & tilt of collectors; size & insulation of preheat tank; type of collector fluid, exchanger & pumps; and how you will “finish off” the preheated water to the desired temperature. All these factors affect cost and performance and all the parts must work together.

There are different philosophies among solar installers regarding how much energy the sun should provide relative to total energy for the hot water needed. More is better but it becomes increasingly expensive to provide solar hot water for when the sun does not shine! Some will design for a higher percent of solar supply. It is important to understand how many BTUs it is estimated will be delivered by the sun and how many by fossil fuel when comparing quotes.

Also, when calculating payback and system sizing. Some contractors feel the system should be sized for the house (three bedrooms = 4 people, where hot water usage is based on standards); these installers feel that the system is part of the house and typically people don’t stay in the house the life of the system, so it makes more sense to base the design on the house than the current number of people. Some contractors feel it is more appropriate to do a detailed use analysis and base the system on hot water currently needed by the people living there. There is no standard on how to design a system at this time but the State is working on such guidelines. You should at least ask what the assumptions of payback are being based – the gallons of hot water you use or some other number.

Another Lesson learned: There have been few studies on the economics of solar hot water and none that I have found based on our climate and energy costs specifically. An interesting Florida study shows side-by-side various options, but Florida’s climate is too dissimilar to ours. A national cost/benefit analysis made assumptions that are not ideal for us, but still it is useful. If you know of other studies, please comment. If you know how much hot water you are using (metered) and how much energy you are supplying in addition to the sun (metered), please comment.

If we want to maintain a level of civilized comfort with the reasonable use of hot water we need to fully answer this question: When Does Solar Hot Water Make Sense?

Dan Gibson is the Reporter and Chief Coordinator of Our Energy Independence Community (www.OEIC.us). Previously he performed home energy audits for five years in NYSERDA’s Home Performance program and new home ratings in the New York ENERGY STAR Home program. He is currently building a 100% Solar Home. He can be reached at DanG@OEIC.us

RESOURCES:


PDF Document:   SDHW Breakeven Analysis

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