The Arizona Corporation Commission (ACC) decision on November 14 to impose a monthly fee on future rooftop solar homeowners left many observers wondering whether it was:
Economics of Solar Hot Water
Initial investment is in the $2,000 - $5,000 range, though some systems, such as do-it-yourself systems, cost less. State tax credits (25% of the purchase price with a maximum of $1,000 per installation) and, in some cases federal grants, reduce initial costs significantly. If conventional heaters need replacement, initial costs are further lowered by about $450.
Maintenance costs for solar water heaters, if any, are low and savings versus conventional heaters thus are very substantial. Electric water heating costs in Arizona are estimated at an average of $28 per month or $336 per year, based on electricity rates of 10 cents/kWh. This would result in a payback of 5.6 - 6.7 years after state tax credits. For households with above average usage the payback is shorter.
DWH is also economical compared to natural gas, though the payback period is longer. In both cases, solar water tanks have a larger capacity (80 gal. versus typically 40 gal.) plus a higher R-value, so that hot water availability is significantly greater with solar.
The following table shows the approximate annual savings which can be expected when a solar water heating system replaces a conventional electric system. Actual savings depend on family size, electricity rates and location. Solar substitution of 70% of electricity is assumed. Costs of operation pumps, maintenance and replacement costs, which are generally minor, are not included. Also, the benefits of avoiding damage to the environment from electric power plants burning fossil fuels to society ("externalities") are omitted or reduced.