Solar water heater economics

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Vacuum tube collectors

I have about 20 years in the solar business as well as installing high efficiency boilers and floor heating. In the 90s when there was cheap gas and oil, most people who were in the solar business were true believers, and maybe there were a few business people among them.  Now though, everyone smells the money. Except that it is not there….at least not in the normal sense of buying and selling heating equipment. When you go to buy a furnace or boiler, it has gone from the manufacturer, possibly to a distributor, then to a wholesaler, a contractor and finally to you. Each level adds anything from 5 to 30% to the cost of the product.  This is not the case with solar hot water.

Solar thermal systems are held to a higher standard of payback than any other heating product because they are not considered a necessity.  Therefore we have to try to keep the price down. The simple fact is that a good solar water system costs $8000 (without any government rebates) or more, and will produce about  500-600 kw/h of heat per square metre of collector.  Many collectors don’t produce that much. ( If my numbers don’t make sense to non metric folks, I  include an explanation below.) Since most solar water heaters have two 4×8 foot collectors (3m2 each), the output for a good system could be 3000 kwh annually.  This however is under ideal conditions.  In practice you can expect about 25oo kwh per year.

Where I live in Ontario, if you have an electric water heater you are paying about $.12/kwh including all fees and taxes. The equivalent customer on natural gas is paying about $.06 /kwh. This means that if you’re on electricity, a solar thermal system will net you an annual savings of $300.  If you’re on gas (in Toronto, we pay about $.50/m3 or $1.50 per therm) the savings would be about $150 per year.

I am always coming across companies who are new to the business and promise the world.  I know of one company, for example, that sells a very cheap thermosyphon system (tank on the roof with collectors made of vacuum tubes from China) and advertises a savings of $350.  This is impossible.   The collectors are only 2.7m2 size and the sun puts out about 3000 watts (at peak times) onto the face of the collector.  The entire system would have to be well over 100% efficient to deliver this kind of savings, which is mathematically impossible.  The best systems (collectors, tank, pump, and taking into consideration all the heat losses from piping etc.) are really only  about 50% efficient.  The system this company is selling has been tested and actually produces about $60 in savings (based on electricity) per year.  The package is very tempting as the vacuum tubes from China are at a really good price.  But as in most things in life, you get what you pay for.


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