As the solar water heating business expands to the traditional trades (plumbing and HVAC) we get questions about system payback more and more.  The contractors want to understand that the systems they install will rapidly pay for themselves.  While this is an excellent question it comes laced with many pitfalls.

We can quickly go down the road of answering this question for our own satisfaction although I don’t recommend it in general.  According to “More evidence of Rational Market Values for Home Energy Efficiency” by the Appraisal Journal a home will increase in value $20 for every $1 reduction in annual energy bill.  An average solar water heating system will save a family of 4 approximately $400 per year on their energy bill.  That would mean that if a homeowner installs a system they she see an appreciation in the value of their home of $8,000.  Interestingly, that is also about the national average installed cost of a 64 ft^2 80 gallon tank freeze protected system.  You add to that the current tax incentives which include as a minimum 30% tax credit from the federal government and you now have a system that costs less than it adds in value to your home.  With this stunning fact it would seem that every homeowner that is about to sell there home should add a system simply by the pure economics.  I make the last statement a little tongue in cheek because I understand that some homeowners are concerned about the aesthetics of an installation (I am sure to discuss that later in a future post).

When it comes down to it, the economics of solar water heating are such that a homeowner get shift there assets from their bank to their home and in return get a huge chunk of cash from the government and start saving money immediately on their utility bills.  This should be a no-brainer economically.  Although the logic is clear I don’t recommend sharing this with those that question the value of solar water heating (or more likely solar energy in general).  People’s prejudices, party affiliations and biases are such that rare is the person that will listen to logic.  I would recommend to focus the selling of systems to people that are already convinced of the value of energy efficiency they can be seen all around us.  They are the people that drive hybrids, purchase high SEER air conditioning, bicycle to work, use compact fluorescent lamps, or install programmable thermostats.  The people that are ready are all around us so we need to stop focusing on the people that won’t be convinced no matter what the logic.

Another article that might be interesting is: http://www.pmmag.com/Articles/Column/BNP_GUID_9-5-2006_A_10000000000000620715