Some folks in South Carolina -- which is currently ranked a dismal 20th in the nation in terms of total installed renewable energy capacity -- are making an effort to move the state up in the ranks.
Students from Unity College in Maine join prominent environmentalist Bill McKibben next week for a road trip, carrying a very old solar hot water panel from their college campus to 1600 Pennsylvania Avenue.
Even though we're going to get pretty granular here, let's start with the big picture: you're thinking about installing a solar hot water system in California. Since you're probably wondering how much it costs, you'll want to know how much the state is willing to pay you in rebates. The California Solar Initiative (CSI) Thermal Program has ample funds that have yet to be tapped, since they only began issuing rebates in May. It's a great time to get solar hot water in the land of the Governator.
With an ideal climate and helpful incentives, Tucson, Arizona is poised to become a hot spot for solar water heating. The city boasts near constant sunshine and Tucson Electric Power provides generous incentives: a $750 up front rebate and performance based incentive covering $0.25/kWh of avoided electricity use.
Solar water heaters rarely get the attention they deserve from homeowners and the solar community, even though they have lower price tags, relatively short payback periods, and an immediate impact on home energy use. Installing a solar water heater in Arizona makes good financial sense -- and doing so in the Tucson is a particularly good proposition. Let’s walk through how purchasing one would impact a family of four.
When a family decides to replace their water heating system, a solar water heater -- assuming a gross installed cost of $7,000 -- looks pricey compared to an electric one ($600). However, with estimated power prices of $0.10 per kWh in Arizona, according to the U.S. Department of Energy, solar water heaters can be an attractive investment choice. Let's see how the high upfront cost and annual savings would look over the heater's lifespan:
- First, the additional cost of the solar hot water heating system is reduced to $6,250 when TEP’s up front incentive comes into play ($7,000-$750=$6,250).
- With an 80 gallon tank and a OG-300 rated system, our family would avoid using 2,700 kWh annually, saving them $270/year on their utility bill (2700 avoided * $0.10/kWh).
- With TEP's performance-based incentive (PBI) of $0.25/kWh avoided, our family will earn $675 in the first year (2,700 kWh avoided * $0.25/kWh avoided). The PBI would only apply in the first and second year of ownership, since TEP’s rebates per system are capped at $1750. (This works out to $750 for the upfront rebate, $675 for the first-year PBI, and $325 for the second-year PBI.)
- The federal and state tax incentives available would also cut down the capital costs significantly. The federal government provides a 30 percent tax credit that would deduct $1,875 in tax costs, and the state of Arizona’s tax credit (25 percent, capped at $1000) would lower costs by another $1000.
- When all incentives are accounted for, the net cost of installing a solar hot water system instead of a conventional one comes to $3,375.
- Assuming 5 percent annual inflation in electricity prices and TEP's performance based incentive for solar hot water, the system would pay for itself in roughly seven years.
- Over the 15 year average lifespan of a water heater, the family would save over $6,000 on their energy bills with and fetch a rate of return of 11.4 percent. Note that this 15-year useful life is a fairly conservative estimate. Your system may well be operational for 20 or more years, in which case your return on investment would only get better.
Clearly, the numbers will vary for individual solar homes -- shading, hot water demand, and the cost of the particular system you purchase all matter. However, the generous incentives provided by TEP, and many other utilities for that matter, make solar hot water well worth investigating.
**Notes: For this exercise we assumed that the family would be replacing an electric water heater and that they would be able to keep their current system as a backup. The expected annual kWh of avoided use for an 80 gallon OG-300 rated system came from an Arizona installer in the GetSolar installer network. Depending on your situation, there may be additional costs. All rebate information came from the DSIRE database and is also accessible through the solar cost section of our website.
This prime solar state offers an enticing return on investment for solar hot water. First, being smack dab in the middle of the Sunbelt means that owners of solar hot water systems will benefit from some of the world's most consistent sunlight as well as relatively high temperatures. The high outdoor temperatures are especially helpful, since a low chance of freezing means that simpler solar hot water technology can be used.
How do you allocate roof space for both a solar PV system and a solar hot water system? True solar enthusiasts occasionally run into this type of dilemma. It's most common to see one or the other on an individual roof, but the space requirements for these complementary technologies add another dimension to choosing between photovoltaics (PV) and solar hot water, or going with both.
Look who's investing in solar hot water technology. While the rest of us are worrying that solar thermal lacks the trendy appeal of other solar tech and wondering when people will realize how much sense it makes, China is quietly stepping up and installing more solar hot water capacity than anyone in the world.
So you're interested in solar hot water? We're happy to hear it. Solar water heating is an effective way to lower your utility bill. And, compared to solar electric -- or photovoltaic (PV) -- systems, solar water heaters are typically less expensive. (For more info on the differences between these technologies, see our post Solar Hot Water vs. Solar PV.)
When it comes to solar hot water, these are The Little Islands That Could. Hawaii's strong investment in solar water heating technology has given their state the enviable designation of Solar Hot Water Leader within the United States. It's also made these water heating systems an even more attractive investment. Check out the size of Hawaii's market compared to other key states:
“OG-300” might sound like something George Lucas invented for a Star Wars movie, but it actually marks a rating designation that’s crucial for solar water heaters.