Invest in the Sun for Water Heating

Solar water heating may be a long-term investment worth considering

By Hannah McKenzie

Invest in the Sun for Water Heating

Solar water heating collectors vary in design, from flat panels to dark tubes.

Q: I’d like to install a solar water heater for my home, but they seem to be very expensive. Are they a good investment, or should I consider other technologies to limit my monthly expenses and impact on the environment?

A: Maybe. So many choices require balancing our values with how we spend money. Solar water heaters are no exception.

A typical residential system for a family of four consists of three components:

  • Two 4-foot by 8-foot solar collectors;
  • One 80-gallon solar storage tank with an electric backup heating element; and
  • One heat exchanger freeze protection system, which is basically fluid-filled pipes that connect the solar collectors and storage tank.

Depending on the weather, season, tree cover and water use habits, these systems can provide up to 70 percent of a home’s hot water used for bathing and cooking. The remaining 30 percent is heated by an electric backup heating element.

Upfront installation costs range from $7,000 to $10,000 for a 64-square-foot solar water heater system, but homeowners may be eligible for a federal solar tax credit that pays back 30 percent of the cost. This incentive, for example, would take an $8,500 system down to $5,950. However, the tax credit will be dropping to 26 percent in 2020 and to 22 percent in 2021.

Additionally, not everyone is able to take full advantage of federal income tax credits, so check with a tax professional to confirm your eligibility.

Other considerations when evaluating solar water heaters are annual operating costs and payback periods. A standard electric storage water heater costs about $330 per year to operate, while a solar water heater costs only about $145. Using these estimates, a $5,950 system would pay for itself in energy savings in approximately 32 years. Most solar water heating system components have a 10-year warranty, and collectors have a 30-year design life. Assuming you’re comfortable with long-term maintenance, a solar water heater in this scenario would be more of a hobby than a money-saving investment. Crunching numbers will show whether a solar water heater will save you money and be a worthwhile investment.

Current solar photovoltaic (PV) panels are so much more efficient than previous models, so purchasing them to power an electric storage water heater may offer lower annual water heating costs — about $130 — and a shorter payback period. PV panels also have a 30-year design life, qualify for federal tax credits, have fewer components to maintain, and can meet a homeowner’s renewable energy goals.

When the circumstances are right, letting the sunshine heat your water can be practical. Reach out to your local electric cooperative to help decide if this is an option for your household, and if any incentive programs are available. As always, get at least three quotes and check references before embarking on a pricey home improvement project.

More information, including cost calculators, is available from the U.S. Department of Energy (bit.ly/cc-solarwaterheaters).

About the Author

Hannah McKenzie is a residential building science consultant at Advanced Energy in Raleigh who specializes in working with nonprofit developers like Habitat for Humanity to make new affordable housing energy efficient.

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