Variable Speed pumps
10 Oct 09 | Solar Hot Water, solar thermalTACO (Thermal Appliance COmpany) is one of my perennial favorites. I have used their circulator pumps for all of my solar hot water installations. I like them because they are efficient units, well made, rugged, easy to service and are manufactured in Rhode Island, which, last time I checked, was a part of the United States.
What has me intrigued today is their 00-VT variable speed control product line for solar hot water applications. They appear to have integrated a Differential Temperature Controller (DTC) into a variable speed motor drive and attached it to a circulator pump.
From the TACO website:
The (00VT) circulator continually adjusts its speed, maximizing the output of the collector, increasing the usable higher temperature water throughout the day, eliminating short cycling and increasing system performance by 20%.
Features:
- All-in-One Pump and Variable Speed Solar Control
- Available in Several Sizes, 006, 008, 009 and 0011
- User Definable Line Voltage Output,
- Supports Drain Back Applications
- Freeze Protection for Open Systems
- Holiday Function, Minimizes Collector Stagnation
- Adjustable Storage Tank Maximum Setting
Makes a lot of sense to reduce the pump speed based on the Δt of the heat exchanger. This reduces electrical use of the circulator pump, increases the heat transfer efficiency of the heat exchanger and eliminates short cycling. From the literature, I cannot tell if the pump has an full featured differential temperature controller which would eliminate the need to install a separate one.
I called the factory to ask that question, but did not receive a good reply, so the question remain unanswered. I believe next spring I will purchase one of these units to experiment with.
The variable speed motor controller is one of two designs, either a variable frequency drive (VFD) which will work on some permanent split capacitor motors such as the 00 circulator pumps use, or a TRIAC device. One issue with variable speed motor drives is they can often cause RFI (radio frequency interference) if they are not properly shielded and grounded. It would be interesting to learn which type controller this pump uses and whether or not it produces RF noise.
Tags: pumps, Solar Hot Water, TACO
Calculating energy needed to heat water
05 May 09 | Solar Hot Water, solar thermalIn order to properly size a Solar Domestic Hot Water (SDHW) system, a few pieces of information are needed:
- Current and future occupants of the house or average hot water use.
- Water supply temperature
- Desired hot water temperature
- Stand by loss of heating unit
We know that in this area (Mid Hudson Valley) ground water temperature averages 53 degrees. I know this because I have personally measured the well water temperature at all of our SDHW installations. This is a good starting point.
Most people desire their hot water temperature to be between 110 to 120 degrees. There are some applications where hotter water (laundry, dish washers, etc) is desired. For general purposes 115 degrees is a good ending point.
We also can base average hot water useage on the number of occupants of any house. The rule of thumb is 20 gallons per person for the first two people, 15 gallons per person for any additional people. This means that the average family of four uses 70 gallons of hot water per day (20+20+15+15 = 70).
Standby losses for water heaters generally range from 5-10% for electric and oil fired systems and 40% for natural gas or propane water tanks.
For the purposes of Solar Hot Water, an appropriate unit of energy would be the BTU. If we were using SI units (metric) it would be the Mega Joule (MJ). Since most HVAC contractors understand things in terms of BTUs, it is easiest to use this unit.
A BTU is defined as amount of heat required to raise the temperature of one pound of liquid water by one degree Fahrenheit. That is close enough for our purposes.
Therefore, the formula to calculate energy use is:
BTUneeded= 8.34 x Gallons x (desired°F-supply°F) x Standby
Where:
- BTUneeded = BTUs needed to heat the water for one day
- 8.34 = Weight in pounds of one gallon of water
- Gallons = Gallons of hot water used in one day
- desired°F= Desired temperature of the hot water
- supply°F= Cold water supply temperature
- Standby= Standby loss of the heating appliance
A typical family of four heating their hot water with electric or oil would expect to use:
BTUneeded = 8.34 x 80 x (115°F-53°F) x 1.10 = 45,503 BTU/day
A typical family of four heating their hot water with gas or propane would expect to use
BTUneeded = 8.34 x 80 x (115°F-53°F) x 1.40 = 57,913 BTU/day
To get an idea of cost, BTUs need to be converted to energy units that are used for electricity, oil, and gas.
- Electricity has 3412 BTU per kWh. Therefore 45,503 ÷ 3412 = 13.3 kWh. Going rate per kWh is about $0.16. 13.3 kWh x $0.16 = $2.13 per day or $778.83 per year
- Heating oil has 138,700 BTU per gallon. Therefore 45,403 ÷ 138,700 = 0.33 gallons. Going rate per gallon $2.459. 0.33 gallons x $2.459 = $0.81 per day or $269.19 per year.
- Propane has 93,000 BTU per gallon. Therefore 57,913 ÷ 93,000 = 0.62 gallons. Going rate per gallon $2.428. 0.62 gallons x $2.428 = $1.51 per day or $549.46 per year.
- Natural gas has 102,000 BTU per CCF. Therefore 57,913 ÷ 102,000 = 0.56 CCF. Going rate per CCF is $1.633. 0.56 CCF x $1.633 = $0.93 per day or $338.42 per year.
Tags: energy costs, SDHW, Solar Hot Water
Solar Hot Water System components
27 Mar 09 | Solar Hot Water, TrainingSolar Domestic Hot Water systems are a great way to save money, cut down on the use of fossil fuels and do a big favor for the environment. We have install many of these systems over the last two years and they work very well, even in the middle of winter.
I decided to install drain back systems because I like their simplicity and their easy maintenance. The average home owner can very easily keep track of the water in the sight glass and add water if needed. They perform well and when properly installed are pretty much bullet proof. I like that.
This is an 80 square foot 80 gallon storage tank system. Enough to provide 80% annually of the hot water for an average family of four.

AET AE-40 collectors on roof
The system components consist of Flat Plate collectors:

AET AE-40 collectors
These are Alternative Energy Technology AE-40 collectors. They are elevated slightly from the roof pitch to facilitate snow removal and better drain back performance. They are also tilted to the left so that the water drains out of the bottom of the collectors when the pump is off. This is a very important detail to avoid freeze damage.

pipe to and from the collectors on the roof
The piping is 3/4 L copper tubing insulated with closed cell (AKA Rubatex or Insultube) R-5 foam insulation. Where ever possible, the insulation is slid over the ends of the pipe instead of cut lengthwise and placed over the pipe. The ends and any slit pieces are glued together with special glue called R-420. The exterior runs are covered with PVC jacket to protect the insulation from UV damage and improve the system appearance.
The drain back tank is mounted on a shelf attached to the basement wall. This is a 10 gallon stainless steel drain back tank with an internal heat exchanger. It has a sight glass which is marked with the proper fluid levels for when the system is running and when it is off.
The solar loop pump is a TACO 009BF5. I use bronze pumps in the solar loop of a drain back system because the water gets sloshed around quite a bit and becomes oxygenated. A cast iron pump will rust and foul the site glass. It also keeps the solar loop a “potable water system” and thus avoids and questions about the single wall heat exchanger in the drain back tank. The pump is mounted below the lowest fluid level in the drain back tank. At the very bottom of the solar loop is the drain valve.
The storage tank loop is a TACO 006B4. This is a larger pump that normal because the storage tank is located about 15 feet away in another room. This configuration is slightly unusual, however, it was the only way to fit the solar system in a crowded basement.
In the storage tank loop there is an air vent at the highest point in the loop to bleed out any air that may become trapped in that loop. Trapped air can cause pump cavitation and or reduce the flow in the loop storage tank loop. For maximum efficiency, the loop needs to move about 4-6 gallons per minute from the bottom of the storage tank through the heat exchanger and back to the top of the storage tank.

80 gallon solar storage tank
The storage tank is an 80 gallon off the shelf unit with a 12 year tank warranty. It has electric back up elements which are not connected because the home owner has an indirect oil fired tank connected to their home heating system.
The system controller is a DTC-2 (AKA Eagle 2) by IMC. I really like these controllers because they have temperature reading for the storage tank and the collectors. They also have variable set points for the high limit and temperature on differential.

Watts 1170 tempering valve on output SDHW system
Finally, the output to the backup heating tank has a Watts 1170 tempering valve. This is very important because the solar storage tank temperatures can get very high durring the summer months. With out a tempering valve scalding water can be sent to the showers and sinks in the house.
Every time I commision one of these systems, I think to myself “There is less oil.”
Tags: SDHW, Solar Hot Water, solar thermal, system components
What ever happened to those solar panels Carter installed on the White House?
27 Jan 09 | Solar Hot WaterThe short answer is, Reagan took them off. After that, we sort of lost track of them. Now, a couple of Swiss film makers tracked them down and made a movie about it. It was back in May of 1979 when the first oil shock was still fresh in our memories that President Carter decided that solar power was the way to go.
The most interesting quote is this:
“A generation from now this solar heater can either be a curiosity, a museum piece, an example of a road not taken or it can be just a small part of one of the greatest and most exciting adventures ever undertaken by the American People…”
Of course, we all know that the panels were removed by President Reagan in 1986 because they weren’t necessary… oil is cheap, after all. Shortly after that, the federal tax incentives were canceled and the first US solar industry collapsed.
The documentary is called “A Road Not Taken” and was shown at the Maine International Film Festival in Waterville, last July. For more information, check out roadnottaken.info or moralequivalent.info. Incidentally, the White House solar panels ended up on the roof of a cafeteria at Unity College, in Maine. They, in turn auctioned them off in 2003 as the panels had reached the end of their useful life.
h/t Huffpo
Tags: renewable energy incentives, solar history, Solar Hot Water, tax incentives
Shortage of Solar Hot Water Collectors
21 Aug 08 | General Business, Solar Hot WaterThis was almost inevitable. It seems that there is a growing shortage of solar hot water collectors. One manufacture that I spoke to is having difficulty getting glass for its larger sized collectors. Others are struggling with higher product demand and fixed manufacturing assets. Solar thermal manufactures may be leery of making large investments in facilities because congress still has not approved the renewable energy tax incentives past December 31, 2008 (which is fast approaching).
On the surface, this would seem to be a good thing. The solar business is growing, more and more people are aware of solar, not just Photovoltaics, but solar hot water too. More and more people want these systems installed on their homes and businesses to off set energy use and save money. Those are the positive aspects.
However for a solar installer, it is difficult to get business if you cannot give the potential customer an installation schedule. I am right now, waiting on several collectors to show up so I can finish two jobs. I am also leary of Congress and the lack of progress on the renewable energy tax credits. As I have said before, unless they pass, a great majority of home owners will not be able to afford solar thermal systems. I do not want to take on a large inventory of flat plate collectors that I will not be able to sell in six months.
And so we wait.
I curse incentives and subsides. Too much tinkering around with the market forces if you ask me.
Tags: Solar Hot Water, solar thermal
How long do Solar Systems last?
26 Jul 08 | Solar Electric, Solar Hot WaterThat is a very common question. The answer is, it depends. Solar systems, like all other mechanical systems require some maintenance. Last week, I came across a solar hot water drain back system that was 28 years old. The great thing is, it was still working just like the day it was installed. The only problem the home owner had encountered was a bad circulator pump, which the plumber replaced.
Properly installed drain back solar hot water systems using distilled water could, in theory, last almost indefinitely. Solar Hot water systems that use antifreeze will likely last only 30 years or so. Still, that is a great payback. For either system, over the course of its operational life, it should easily pay for it self 4 to 5 times over.
Photovoltaics are said to last 25 years however, their output slowly declines over time. After 25 years, most current photovoltaic panels will be producing about 80% of their rated power. Still, that is not bad, and a well designed photovoltaic system should pay for itself at least two to three times over its operational life (with current incentives).
The advantages of renewable energy systems, for those that are in it for the long haul, are:
- Stabilizes energy prices at or below their current levels, gives the property owner more control over expenses.
- Increases the property value of the residence or building they are installed on.
- Reduces emissions and environmental pollutants from nearby electrical plants.
- Reduces overall electrical load on grid, thus reducing the need for more power plants and high tension distribution lines.
- Spreads out electrical generation capacity, thus making it more difficult for any one catastrophic event to cause a regional blackout (distributed generation).
- Reduces the use of fossil fuels and thus dependence on other countries to provide energy for us.
As you can see, there are many advantages to a solar thermal, photovoltaic, wind, or microhydro system
Tags: distributed generation, Environment, photovoltaics, Solar Hot Water
The price of Solar Energy
16 Apr 08 | Sales, Solar Hot WaterThe prices of home energy in New York State, week of April 14, 2008:
- Heating oil: $3.974/gallon
- Propane: $2.953/gallon
- Natural Gas: $1.413/Therm
- Electricity: $0.175/kWh
Source: NYSERDA
The New York State Energy Research and Development Authority (NYSERDA) tracks energy prices with in the state and posts them to the Energy Prices and Supplies page of their website.
This is a great resource for the renewable energy dealer/installer as it allows you to make direct comparisons to the cost of solar energy. The logical way to do this would be to divide the systems projected lifetime production by the net capital cost.
Example:
A solar hot water system is purchased in Ulster County, NY. It consists of flat plate collectors totaling 80 Ft2, a tank and some miscellaneous pumps, piping, valves etc. The expected lifetime of that system is 30 years ±5 years.
A check of the NREL insolation maps indicates that Ulster County receives 4.4 kWh/M2 per day. Convert 80 Ft2 to M2 (80 Ft2 x 0.09290304=7.432243 M2) The above solar array should expect to produce 4.4 kWh/M2 x 7.432 M2 = 32.701 KWh per day, less efficiency and losses, which total around 60%. Therefore, the above solar system should be expected to produce 32.701 kWh x 0.40 = 13.08 kWh per day, without shading.
Yearly that adds up to 13.08 kWh x 365 days = 4774 kWh/year. 4774 kWh x $0.175 = $835.51 per year. Thus, this home owner can expect to save $835.51 per year in electricity costs.
The net system cost is the installed cost minus the tax incentives, or $7,500.00 – ($7,500 x 0.3 (≤$2,000)) – ($7,500 x 0.25 (≤$5,000)) = $7,500 – $2,000 – $1,875 = $3,625.00
If this system were paid for with 60 month loan:
Principal amount: $3,625.00 Payment amount: $71.61 Interest rate: 6.900% Interest compounding: Monthly Total payments: $4,296.51 Total interest: $671.51 Total system cost $4,296.51
Simple System payback $4,296.51 ÷ 835.51 = 5.1 years.
Simple system savings, without utility rate increases, 25 years x $835.51 = $20,887.75 (this is likely low by about $5K).
Therefore, the cost of heating your water with solar is the amount of energy saved, multiplied by the life of the system, divided by the cost of the system, or: 4774 kWh x 25 years = 119,350 kWh. $4296.51÷119,350 kWh = $0.036/kWh.
The cost of solar hot water vs electric hot water is
3.6 cents vs 17.5 cents per kWh.
The average rate of CO2 emissions during electricity production is 1.34 pounds/kWh (source, US Department of Energy). Therefore, the above system will save 119,350 kWh x 1.34 = 159,929 pounds of CO2 emissions, or about 80 tons.
To give you an idea of how much that is, it equates to about
- 130,000 vehicle (average car) miles
- 101,000 vehicle (large SUV) miles
- 347,000 train (AMTRAK, light rail or subway) miles
- 266,000 air miles
- 61,500 tractor trailer (heavy truck) miles (loaded)
- burning 7,175 gallons on heating oil
- burning 40 tons of coal
Tags: marketing, sales model, Solar Hot Water
Formulas for Solar Hot Water Systems
09 Apr 08 | Solar Hot WaterSomething that I get asked quite often is “How do you know this will make enough hot water?” That is a very good question and there are several rules of thumb regarding the size of Solar Domestic Hot Water (SDHW) systems. A properly sized SDHW system will provide between 70-80% of the annual hot water. While it would be nice to provide 100 percent, this is not a realistic goal in the Northeast because of the limited daylight hours during December and January.
General rules of thumb are:
- Allow 20 gallons per day of use for the first two people
- Allow 15 gallons per day of use for each additional person
So the basic house with four people would need 70 gallons of hot water per day. The closest conventional water heater sized to that use is 80 gallons, therefore an 80 gallon SDHW system would be appropriate for that household.
Solar Collector surface area is based on the size of the solar storage tank. Again, these are rules of thumb that have been tried and tested since the 1970’s for SDHW systems:
- Northern New England: 1Ft2/0.75 gallons
- Northeast, New England, Mid Atlantic and Northwest: 1ft2/1.0 gallons
- Midwest and Mountain States: 1Ft2/1.25 to 1.5 gallons
- Southeast, Sunbelt and Hawaii: 1Ft2/1.5 to 2 gallons
- Sunbelt desert areas: 1Ft2/1.75 to 2.25 gallons
Calculating Energy to heat water
If you are not interested in rules of thumb, here is how to calculate the actual energy required for any SDHW system. First, use the Hot Water Formulas and Calculations to determine how much hot water will be used. That use needs to be converted to a unit of energy. In the US, we use BTU, while the rest of the world uses Joule as a measurement of energy.
The basic formula is:
Energy (BTU)= Vgal x 8.345 x (Texpected – Tin) x eff
Where:
Vgal is the volume of water in gallons
Texpected is the expected hot water temperature
Tin is the temperature of the cold water supply
Eff is the system losses
The temperature for both the cold water supply and the expected hot water need to be know to calculate (Texpected – Tin). This is called the Δ T (delta T), or change in temperature. For example, the incoming water supply from a well is 45 degrees F. The expected hot water temperature is 125 degrees, this leads to a Δ T of 125 degrees – 45 degrees = 80 degrees.
From the above rules of thumb, or the Hot Water Formulas and Calculations, the example household is using 70 gallons of hot water per day.
A gallon of water weighs 8.345 pounds. It takes 1 BTU to warm 1 pound of water 1 degree Fahrenheit.
Therefore, 70 gallons of water x 8.345 pounds is 584.15 pounds of water. To 584.15 pounds x 80 degrees F = 46,732 BTU, plus efficiency losses and system losses. Efficiency losses in a SDHW system are in the solar collector glazing transmissivity, heat exchangers, pumps, etc. Generally they run around 10 to 15 percent. System losses are stand by tank loss, piping loss, etc. Generally they run about 10 percent.
Therefore, the entire solar collector array will need to collect 125 percent of the required BTUs noted above, or 46,732 BTU x 1.25 = 58,415 BTU per day.
Below are comparisons of how much conventional fuel would be used to heat the water in the example household:
- Electricity has 3,413 BTU per kWh. Electric hot water systems are 100 percent efficient, but have standby losses. Therefore (46,732 BTU x 1.10)/3,413 = 15 kWh per day. At $0.175 per kWh utility company rates, that equals $2.625 per day
- Propane has 91,600 BTU per gallon. Propane hot water systems are about 65 percent efficient and have stand by losses. Therefore (46,732 BTU x 1.55)/91,600 = 0.80 gallons of propane per day. At $3.05 per gallon, that equals $2.41 per day
- Natural gas has 100,000 BTU per Therm (Therm is 1 CCF or 100 cubic feet). Natural gas hot water systems are about 65 percent efficient and have stand by losses. Therefore (46,732 BTU x 1.55)/ 100,000 = 0.73 CCF per day. At 1.60 per Therm, that is $1.15 per day
- Heating oil (#2 distillate) has 140,000 BTU per gallon. Oil fired hot water systems are generally 80 to 85 percent efficient and may or may not have standby losses. Therefore (46,732 BTU x 1.2)/ 140,000 = 0.40 gallons per day. At $3.97 per gallon, that is $1.59 per day.
Calculating size of solar array based on energy needed
Here is where things get a bit complex. Every location has a different amount of Insolation which is the amount of solar radiation received on a given surface. The NREL (National Renewable Energy Lab) has a program called PVWATTS which can give very specific data on a month by month basis. This is important for sizing of solar thermal space heating systems. Usually this data is given in units of kWh/Meter2 per day. That is acceptable because that can be converted to BTU/Ft2 per day by multiplying kWh/M2 by 317. Each kWh equals 3,413 BTU, A M2 equals 10.76391 Ft2. Therefore 3,413 BTU/10.76391 = 317.
I like to pick a moderate month, such as April or September, and size the SDHW system to meet 100 percent of the load in that month. I often find that this is the best compromise for the New York region as it will give more hot water than needed during the summer months, and less during the winter.
The example household requires 58,415 BTU per day from the solar system. According to the PVWATTS program, a solar collector tilted at latitude for the month of April will receive 4.63 kWh/M2 per day. Convert to BTU per Ft2, 4.63 kWh/M2 x 317 = 1,579 BTU/Ft2, therefore 58,415 BTU/1,579 BTU/Ft2= 37 Ft2.
That would be a perfect world theoretical solar collector and it is a good median figure. Like many things, there are other considerations:
- The efficiency of the collector absorber plate coating
- The efficiency of the Heat Transfer Fluid (HTF)
- The incident angle of the sun on the surface of the collector in both the horizontal and vertical axis
- The ambient temperature of the collector
- The internal temperature of the collector and the HTF
At this point, the equation becomes a calculus problem and a somewhat complex one at that. The general idea is to increase size to overcome the collector losses. Field work indicates that in the Northeast, doubling the theoretical size works well. This equates to about a 50% loss over the theoretical model noted above. This is how the above noted rules of thumb on collector size vs. storage tank size are formed.
1. Absorber plate coating also called “Black Chrome.” Solar selective coating has come a long way since the 1970’s. Basically, it is a type of paint that accepts and converts more energy, in the form of visible, infrared and UV light, from the sun and converts it to heat without radiating it back into the atmosphere. These are highly specialized products and are not normally available to the general public.
2. Heat Transfer Fluid or HTF. HTF removes the heat from the absorber plate and transfers it to a heat storage tank. It can be water, antifreeze, oil, etc. Water is the best HTF as far as efficiency is concerned, but can present freezing problems.
3. Sun incident angles on the collector surfaces. A solar collector is at it’s optimum when the sun is 90 degrees from the surface. The further away the sun is from perpendicular, the less dense the energy is that is striking the surface.
4. The solar collectors have operating categories based on the ambient temperature (Ta) that the collector is in vs the water temperature within the collector (Ti). This is known as the Ti-Ta. In the summer time when the Ti-Ta is 36 or less degrees Fahrenheit, the collector is operating as a Category C unit. In the winter time when the Ti-Ta can be 90, 100 degrees or even greater, the collector is operating as a Category D unit.
Tags: SDHW, Solar Hot Water
Solar Thermal Systems
21 Feb 08 | GeneralWhen you say solar, most people assume that you are talking about photovoltaics. Solar thermal systems have been around for longer than photovoltaics and have a proven track record of working well and paying back there costs many times over.
I install both types, and lately I have been receiving quit a few calls regarding solar thermal (i.e. solar hot water, or radiant floor heating) systems. I think this will continue as the price of energy goes up.
A solar thermal system move fluid through solar collectors, which collect heat. The fluid is then stored or used in the building. In reality, a solar thermal system is about plumbing. A Solar Domestic Hot Water (SDHW) system has three unique parts that other hot water systems or heating systems don’t have. The first is the solar collectors, the second is some type of heat exchanger and the third is some type of controller. As regarding the solar collectors, I believe that SDHW systems work best with flat plate collectors.
The flat plat collector design has been around for many years. Newer solar selective coatings have been created that increase the system efficiency. In addition to that, better insulation and better high transmisity glass have all improved on the flat plate collector design. Evacuated tubes run at higher temperatures and have problems with the seals between the glass tube and the copper pipe on the inputs and outputs of each tube.
The next unique thing in a solar system is the heat exchanger. The heat exchanger takes the hot fluid from the solar collector and cools it with the fluid from the solar hot water tank. This can be implemented in a number of ways. Some heat exchangers are part of the solar storage tank, some are a part of a drainback tank, and some are external. All heat exchangers are made of metal (stainless steel or copper) and use counter-flow properties to move the heat from one fluid reservoir to another.
Finally, the system controller, which measures the temperature of the collector outputs and the solar storage tank. If there is enough energy in the collectors to transfer to the storage tank, the controller turns the system on, which begins collecting energy.
Beyond that, a solar system is copper piping, valves, drains, hot water tanks, pumps, and other miscellaneous hardware which is all available at the local plumbing supply house.
Solar thermal systems that are designed for space heating are very similar to SDHW, only they are usually quit a bit larger with more storage.
In most cases, all solar thermal systems should have some way of operating in backup mode in case there is a long period of inclement weather. These back up systems entail some type of conventional heating system installed in parallel with the solar system. For example a SDHW system may have an electric tank or electric element in the solar tank designed to turn on if the water temperature gets too cool. A radiant floor heating system may have a small oil or gas fired backup furnace in standby duty.
A well designed solar system should be designed to produce about 80 to 85 percent of the energy needs. More than that and the system design will be too large, causing it to over produce and over heat under normal operating conditions. Less than that and you are leaving a good deal of money on the table, to be taken by the gas/oil companies.
Tags: radiant floor heat, SDHW, Solar Hot Water, solar thermal
Renewable energy as an investment
31 Jan 08 | General, Solar Hot WaterWith interest rates dropping like a lead balloon as the Fed tries to shore up the economy, it may be enlightening to do a little research into the investment aspects of a renewable energy systems. Assuming that one owns their own home (or if a business, their own commercial building) and were planning to stay at that location for the next 5-10 years, what would the payback for a solar system be? How much of that would be in increased property values realized during a re-sale?
Dave, at the Solar Power Rocks blog, pointed out that for every $1.00 saved in annual energy costs, the value of a property increased by $20.73. This is from the Appraisal Journal, Evidence of Rational Market Values for Home Energy Efficiency.
Two years ago, I added insulation to the house and replaced four old single pane windows with energy star replacement windows. Our heating oil use went from 630 gallons per year to 450 gallons, for a savings of 180 gallons, or at today’s prices $650.00 per year. The total cost of the project was around $2,000.00 dollars, but the increased value to the house is $13,474.50. That is a nice payback, and readers should note that increasing efficiency and reducing use is the first step in considering any renewable energy system.
Last year, I installed a Solar Hot Water system on my house. The total cost for that project was around $5,000.00. With federal and state tax rebates the final cost will be about $2,200.00 Since we have not operated the system over an entire year, it is hard to calculate exactly what the savings are for this system. I have, however, been able to project the savings based on the performance so far.
Before the solar system, our hot water was heated by electricity. Our electricity cost per kWh is creeping up, now somewhere around $0.14 or so. If the estimated reduced electrical use hold true, we should save around $560.00 per year, which translates to an increased property value of $11,608.80. It seems fantastic, but by my math, that is an 870% return.
We are not selling our house anytime soon, so the increased property value is dismissed for now, as completely irrelevant. A calculation of simple payback shows the following:
| Year | Expenses (US$) | Savings (US$)* (includes inflation) | Total savings minus expense (US$) | Return (percent) |
| 1 | 2,200.00** | 560.00 | (-1,640.00) | 0 |
| 2 | 0 | 572.80 | (-1,067.20) | 0 |
| 3 | 0 | 586.00 | (-481.20) | 0 |
| 4 | 0 | 599.50 | 118.30 | 5 |
| 5 | 0 | 613.29 | 731.59 | 33 |
| 6 | 0 | 627.39 | 1,358.98 | 61 |
| 7 | 0 | 641.82 | 2,000.80 | 91 |
| 8 | 0 | 656.58 | 2,657.38 | 121 |
| 9 | 0 | 671.68 | 3,328.50 | 151 |
| 10 | 600*** | 687.12 | 3,416.18 | 122 |
| 11 | 0 | 702.92 | 4,119.10 | 147 |
| 12 | 0 | 719.08 | 4,838.18 | 172 |
| 13 | 1,000**** | 735.61 | 4,573.79 | 120 |
| 14 | 0 | 752.52 | 5,326.31 | 140 |
| 15 | 0 | 769.82 | 6,096.13 | 160 |
| 16 | 0 | 787.52 | 6,883.65 | 181 |
| 17 | 0 | 805.63 | 7,689.28 | 202 |
| 18 | 0 | 824.15 | 8,513.43 | 224 |
| 19 | 0 | 843.10 | 9,356.53 | 246 |
| 20 | 1,000*** | 862.50 | 9,219.03 | 192 |
| 21 | 0 | 882.33 | 10,101.36 | 211 |
| 22 | 0 | 902.62 | 11,003.98 | 229 |
| 23 | 0 | 923.38 | 11,927.36 | 249 |
| 24 | 0 | 944.62 | 12,871.98 | 268 |
| Totals | 4,800 | 15,470.62 | 12,871.98 | 268 |
*Utility inflation calculated at 2.3 percent per year
**Initial system cost, less refunds and rebates
***Replacement of circulator pumps, expected life 10 years
****Replacement of storage tanks, expected life 12 years
Over the twenty four year life of the solar thermal collectors, a $12,871.98 savings will be realized, which leads to a net return of 268% on the initial investment. Oh, and by the way, the IRS has not figured out a way to tax people for saving money, so that is tax free, at least for now.
Also note; solar thermal collectors manufactured today could well last 35-50 years depending on the climate.
For the sake of argument, lets say in year 8 we sell our house and realize the property value increase stated above. Our return in investment would then be 991% (property value increase plus savings, or 870% plus 121%). Okay, that seems very unrealistic, so lets say we realize half of the property value increase noted above, or 556%. Geez, that is still too high so we only see a quarter of the property value increase, or 338%.
My 401K was (before the current stock market troubles) earning 16%. My CD’s are around 7%. Savings, 4.1%.
Ummm, 338% vs 7%? I am not an accountant or anything, but it seems to be like installing the solar system last year was a pretty good idea.
I am going to work an a “Solar as an Investment” page with a savings/property value increase calculator that can spit this out for anyone who wants to see what their return would be.




