Friday, December 14, 2018
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Solar Payback, the good, the bad and the ugly

A few weeks ago, we were talking with a client of ours about the reasons people install a solar systems (PV or water heating).  He was telling us about a house being built in the Okanagan which the architect had specified a 1 KW solar PV system to be installed on the house as it was being built.

There was nothing unusual about installing a solar PV system but the question was asked in this case, why did we think this person wanted a Solar system on this particular house. 

The house in question just happened to be a huge custom home costing approximately $10 million to build.  The comment was made that the clock radios in the bedrooms alone in this house probably use more electricity than a 1 KW PV will produce.  This might be a slight exaggeration but its not far off as we will try to explain further down this post.

Most likley in this case, the home owner is not concerned with "payback" on the system.  Maybe it was a case of "why not, it looks cool".

Why do people "go solar"
When people initially call us up to inquire about solar water heating or Solar PV, We would estimate that the people are split into a few main categories as to why they are looking at a solar water heating system.

A)  40% - People looking to save money on their utility bills.
B)  20% - People looking to reduce their dependance / reliance on the "normal" grid or utilities.
C)  30% - People looking to do something to reduce their carbon footprint or for environmental reasons.
D)  10% - People who like the technology and are keen on building their own systems as a kind of hobby.

In the end though, the people who buy most the solar systems fall into categories C and D.    Unfortunately the reason for this seems fairly obvious - cost. 

What does a solar system cost?
The cost of installing a solar water heating system or a Solar PV (for making electricity) system are similar.  A 1 KW Solar PV system will cost you in Calgary between $7,000 and $10,000 per KW installed.  The Solar water heating system will cost a similar amount.  The payback on a Solar PV system is MUCH MUCH WORSE than for solar water heating systems. This is why we don't install solar PV systems for this reason - its hard enough convincing people to buy a solar hot water system!  We will go into the details later in this article.

Remember these costs are for a system professionally installed in a normal house.   DIY systems will obviously cost you less but we will stick to professionally installed systems for the sake of this article.  However as the install costs of a solar system are a sizeable portion of the total costs, this is why a DIY option for people putting in their own systems can save a lot of money if you have the ability to do it.

The scale of the problem - we currently pay so little for our gas and electricity it is effectively free
I can hear the cries now.... "Free, are you kidding, have you seen how much we pay for our utility bills?".

Right now natural gas prices are at record lows and even the oil and gas companies can barely make profit selling gas at the whole sale costs they are right now.  We have had 40 years of technology developing "normal" gas water heaters so you can now go and buy a gas water heater and have it installed in your house for about $1000.

Feed it natural gas at between $4 and $6 dollars per GJ and heat your water for what amounts to about $40 to $60 in per month depending on the amount of people in your home - a bargain!   Remember that most of these costs are the admin charges.  The Admin charges keep going up so the "gas price" number can be kept low.  In the end though the total costs keep going up......

We wrote about this a while ago in an article about the "True cost of gas".  Also in Canada, the climate is so cold and the houses generally so poorly insulated that they take a huge amount of gas to heat.

Ok.... on to the question "What is the payback....."
The reality is that your natural gas water heater has no "payback".  Its simply a tool we use in our homes until it wears out then we replace it.  No one ever asks their plumber "whats the payback on the gas water heater?" however its usually the first question we get asked about solar water heating systems.

In contrast a solar water heating system costs much more upfront to purchase but will produce hot water from the sun for the next 20 years.

The payback of any system depends a lot of what number you use as the price of gas.   

Does the collector choice make any difference on the payback?
Absolutely it does. The choice of collector makes a big difference.  The two articles you need to read to understand how this works and cut through all the "marketing" are here....
In general Flat plate collectors work great in hot, warm areas.  In Cold cloudy conditions evacuated tube collectors can produce 12 TIMES the heat of Flat plate collectors.
Even when comparing Flat plate vs Evacuated tubes, not all are equal.  The Flats plate collectors can outperform some evacuated tubes.

The tables below show the approximate payback using 2 of our 30 tube collectors using Retscreen to do the calculations.

- Along the top (left to right), the approx total cost of a system varies from $6400 to $9600 for a 2 collectors (60 tubes) system.  The cost along the top varies a lot depending on the size of your house and the complexity of install. 
- Down the left side of the table, from top to bottom,  the "Fuel Cost" varies from $10 per GJ with a variation of +/- 20% in either direction.

Click here to read the full artcle.

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