The Economics of Solar Hot Water
The Federal Government recently showed its intent to actively encourage Australians to help reduce their carbon footprint by significantly increasing the rebate for installing solar electric power systems on homes and community buildings. This move has already seen a big increase in demand for grid connected systems in the past months and has made it easier and financially more viable for every Australian to join the worldwide movement of green power generation. In effect, the initiative has reduced the payback period for a 1kw system down from approximately 30 to 20 years.
The Low Hanging Fruit
With the issue of greenhouse gas emissions firmly on the agenda of Australian politics, businesses and homes, the practical solutions to deal with it are now easier to access than ever. Many people still wonder what they can do to reduce their carbon footprint and make a real difference in their homes and businesses. The recent Federal Government initiative to phase out conventional light bulbs and switch to energy efficient alternatives made it easy and affordable for all to do their part in reducing energy consumption.
What many people, however, may not yet have realised is that there is another low hanging fruit in the fight against greenhouse gas emissions – which is Solar Hot Water.
While a conventional electric hot water system accounts for between 25-40% of the energy consumption of an average household, a solar hot water system can provide up to 90% of hot water requirements for a fraction of the electricity costs. Even the payback time on such a system is significantly shorter, meaning that it is something that most Australian households can afford with relative ease!
But there is not only the environmental impact. Solar hot water is an economical way to help home owners and home builders comply with BASIX (in NSW) and other energy efficiency rating systems for new homes around Australia. The Queensland Government recently recognised the viability for both the environment and the pocket by banning all electric hot water systems from 2010 onwards.
Many renewable energy companies, such as Conergy, have been approached by PV installers over the past months to run information seminars on Solar Hot Water, because more and more businesses, while quite busy with PV as we speak, are looking at expanding into this area.
So when you look at the repayment periods for Solar Hot Water systems, they are out of this world – when compared to the 20 year plus repayment period for PV. Have a look at the following calculations and it is obvious that consumers in the long run will choose Solar Hot Water in ever increasing numbers.
Specific payback calculation
The Conergy (model 2504/O/36/2LC) Split 250litre, 2 collector, electric boosted solar system with a REC of 33 equates to an annual saving of 3,300 kWh.
- Calculated at a rate of 14cents per kWh the annual saving of this system would be $462.00;
- The system retails at a cost of $3,035.00 including GST;
- The Government REC incentive on this system is $792 (calculated at $24 per REC)
- The cost to the consumer (after REC incentive) of the 2504/O36/SLC model is therefore $2,243.00 (including GST)
The payback timing is based on annual saving of $462 in electricity cost. The system cost of $2,243.00 divided by $462 = 4.8 years till the system has paid itself off.
The average Conergy system has a warranty period equal to this payback period, therefore going solar is not costing the owner any additional servicing costs over and above the system purchase.
With an average life expectancy of 15 years the Conergy split solar system therefore will save the owner $4,712.40 being $462.00 p/a x 10.2 years.
Taking into account that even if the home owner is not going for solar he/she still has to purchase a tank with electric element/gas at an approximate cost of $1,500. So the true cost of going solar is the cost of the system $2,243.00 including GST - $1500 (cost of a conventional electric/ gas tank system) = $743.00.
When it comes to choosing your hot water system the Federal Government has made it simple for you to determine a system’s efficiency by allocating a REC (Renewable Energy Certificate) to all manufactured systems regardless of the make and model. In essence, all hot water systems are placed on the same playing field to determine their effectiveness in reducing greenhouse gas emissions.
The REC number allocated to a system represents the number of Megawatt hours of energy that the system will save, when used under normal domestic conditions, over a period of 10 years. For example a REC numbers of 33 represents a saving of 33 Megawatt hours over ten years, or 3,300 kWh each year. Conergy systems in general attract high REC rating.
Not all systems are equal in their performance. So when buying a system check the REC for performance so you can make an informed choice based on the efficiency and life span of a system, together with the true savings that solar can offer. While electric and gas systems offer an initial cheaper purchase price solar always saves you money over the lifespan of your hot water system.
For more information on Conergy's range click here. |