solar hot water payback

Solar hot water payback is possible.  In the summer of 2008 I was helping man a transition stall when a very posh woman told me that my solar PV system would never pay for itself.  She said should know since she was a banker.  A few months later her bank and many others had to be bailed out due the worldwide banking crash, which to my mind puts her advice in some kind of context.

Unfortunately whilst she is not completely right, the payback on my PV systems is slow and at the end of the year I will put a post up on this.  (She is however wrong that they will never pay for themselves.)  However, my first renewable kit has just paid for itself this quarter as at least on one way of calculating it as the graph below shows.

SHW paybackThe first thing to say is my system was subsidy free and has to compete with mains natural gas.  Six months after the installation the grant scheme was introduced,  but grants could not be retrospective.  So the system has always had two financial handicaps.

I have used two methods of calculating the solar hot water payback.  Both use the average Q2/Q3 gas usage before the SHW system was installed as a basis to model the savings using the difference between what it is and what it would have been.   The first method is just that.  Its a bit crude but this one is showing that solar hot water payback has occurred in Q2 this year.  The second is my preferred method (red lines on graph above).  Solar hot water output is not metered, it is possible to buy meters but I don’t have one.  In 2004 however I had a PV system installed on the same roof.  This is metered and using the relative efficiencies of both systems allows me a reasonable guess at how much energy I’m capturing using the SHW system.  I can then work out assuming a 25 year lifespan of the system how much I have bought the energy up front (cost of system/average output kWh/year*25).  This is currently around 8.2p/kWh.  I then use direct proportion to multiply the savings in the first method (saving x cost of gas/8.2).

In 2008 churches in Edinburgh organised a climate change conference.  I was talking on SHW and PV and thought I ought to look at the costs.  I had used another method of calculating the solar hot water payback and had assumed since gas prices had started rising payback was humming along nicely.  Looking again at the solar hot water payback method I had used up until then I decided I didn’t like it and came up with the alternatives described above.   When I bought the system I was paying around 1.3p/unit and as can be seen from the graph payback was negligible.  (Although carbon savings were good, which was the aim of buying the system.) However, by the time the conference came around I could see it was all change in 2008.  Global oil prices reached an all time high as did gas prices in the UK (too that time) and the wholesale electricity prices.   The savings jumped massively that year.  This trend has continued and accelerated since.  I am now paying 5.57p/kWh, down slightly from an all time high this spring.

Other points to note.

  • The solar hot water payback calculations are a bit crude but I have yet to find a better way.
  • Running costs are zero.  The system is freeze tolerant, uses the existing pipework and is solar powered.  Its never gone wrong.
  • 2014 includes Q2 only.  Q3 savings are about half this so on my preferred measure we will be at about 40% still to go.  But even on this trend the system will pay for itself in 2-3 years if gas prices keep rising at the longterm historical trend.
  • I include a small boiler maintenance saving of £20/year, a hidden saving of SHW.  My gas hot water system unlike some does not use a pump.  So there are no electricity savings from this.  There might be on some hot water systems.
  • The payback is slightly higher though in reality since we used to have a washing machine with a hot water feed.  Obviously when using hot water heated by the sun we were saving on electricity costs.  But the savings are impossible to quantify.   Our current machine like almost all now is cold water only.
  • The system used not to work in Q1/4 at all.   In fact on the 30th September for two years in a row we had a glorious warm sunny day.  No solar water.  Then I had a burst lead pipe elsewhere in the house.  I asked the plumber to remove all lead pipes.  Some were those used by the SHW.  He insulated these after replacing them.  This cost is negligible and is not included since its unrelated to the SHW system I would have had the pipes removed anyway and the insulation costs were a few minutes work.  This made the system usable in Q1/4.  I use a slightly different payback system of avoided gas use (gas use measured over 30 minutes and converted to kWh)  to calculate the savings in these quarters since the heating system is more likely to be on which means the above calculation method would not work.  To count I must use the water before the heating system goes on.  Q1/4 savings are pretty small, a few years ago they were £19, less last year.
  • The plumber left some of the existing pipe run uninsulated.  We had some electrical work done and whilst the floorboards were up I finished that section off myself.  The costs are so small I have not included them.
  • In 2008 I came up with the idea of switching the boiler off completely.  Often we were not using it and we have a pilate light that was ghosting.  This makes the 2008/9 jump a bit bigger than just gas prices influenced, but since then the increasing trend is gas price influenced.  I use the immersion heater to fill in.  We have a small double tank and the immersion is fast 15 minutes is enough for a shower/washing up.
  • I discovered I had to turn the upstairs radiators off otherwise they get warm from the SHW panel and the water is a lot less warm.  A pain in Q1/4 when you are using both.
  • A major pain was when I used to pay variable rates for gas.  You paid a lot (x) for the first units then less (y) for the next and sometimes z for the last bit per quarter where z would be even less.  Since we always used the boiler a bit in each quarter we would always be in one of the cheaper bands lowering our savings.  It also made the calculations complicated and a nightmare if the price changed mid quarter.  On one such occasion I spent an entire evening on the spreadsheet when the price had changed mid quarter.  Its one reason I am with my current supplier, who have one rate only and no standing charge.

Solar hot water payback is possible and the gas savings are impressive.  SHW is as we said in our book a basic technology that most of us should fit.  My woodburner will also pay for itself in Q4 this year.  Payback on this will have been much faster than for the SHW.  I will blog on this in the new year.


This entry was posted in climate change, Economics, energy costs, gas, Peak oil, Practical low carbon living, Renewables, Uncategorized. Bookmark the permalink.

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