The Department of Energy says that the average household spends from 14% to 25% of its utility cost for heating water. This means if your monthly utility bills total $100, that $14 to $25 is being spent to heat water.
The Department of Energy also says that a solar water heating system will save between 50% and 80% on the cost of heating water. Using the same totals as above (assuming a $100 monthly utility bill), the monthly savings from installing a solar water heating system will be between $7 and $20.
Using a simple return on investment calculation and assuming the cost of installing a solar water heating system is $6000, and taking the Federal tax credit of 30%, and the Georgia state tax credit of 35% into account, the installed cost of the system (after tax credits) is $2100. Then taking the monthly savings of (between) $7 and $20 and dividing it into the $2100 cost, the return on investment is between 25 years and 8.75 years.
Using some statistical data, for a more specific calculation, from the Department of Energy- Energy Information Administration 2005 survey, table WH6 average annual consumption of fuel type used (physical units per household) for water heating in the south is 2763 KWH. That is 230.25 KWH per month on average. If we assume an average electric cost of $0.10 per KWH, the average household monthly cost for heating water in the south is $23.25. Using this number in our return on investment with the same assumption that a solar water heating system will save between 50% and 80% on the cost of heating water, the monthly savings are between $11.51 and $18.60. Dividing this savings into the cost (after tax credits) of the average installed system, of $2100, the simple return is between 15.2 years and 9.4 years.
When other factors are taken into consideration such as inflation, utility cost increases, and increase in property value from installing the solar system, etc. the real return on investment drops down in the range of 6 to 8 years. Considering the expected life of the equipment is in the 12 to 15 year range, the investment makes even more sense because a positive cash flow is soon recognized.
Complete Resources is a solar contractor and green builder in Athens GA. Complete Resources also offers a training class for teaching installation of solar water heating systems using the Power Partners Solar water heating system. The instructor for the class, Tony Purcell is a North American Board of Certified Energy Practitioners Certified Solar Thermal Installer.
November 23, 2010 at 12:50 pm |
I’m having a solar water heater installed today. Cost $6500. I was told I would be saving $ 70 a month. My house runs on electricity and my monthy bill is $170. Am I reading this wrong this wrong. My savings will not be so great.
November 28, 2010 at 8:03 pm |
You could possibly recognize savings that great, but most likely it will be more along the line of $40/month on average. If you are a large hot water user, your savings could be greater.