How to Calculate Solar Heating Installation and Savings Costs
There’s no better feeling than hopping in a nice hot shower—except knowing that you aren’t paying a single cent to heat up that water. That’s what solar water heating is all about, and it’s why many people are switching to using solar heating instead of a traditional hot water heater. And while it makes sense to switch to solar in most all places around the world, it’s important to figure out first if it’s a wise choice for you financially—especially before committing to such a change.
We’ve broken down all the costs associated with a solar installation and maintenance so you can better decide if the costs versus potential savings are worth it for you financially.
Solar Heating System Costs
One of the main things that you’ll need to consider when determining the cost of a solar water heating system is the overall cost of the equipment that you’ll need to purchase. The bulk of your expense for your new system is likely to come from the solar collectors that you purchase and have installed on your home. The cost of the units will range widely depending on the type that you decide on.
A bulk collector is a more simplistic style that’s used in warmer climates and has ample sunlight for heating water. This type of solution—the most affordable and simplest to have installed—simply holds the water in the same tank that heats it. A bulk collector likely won’t cost more than $500 for most standard needs, and if you spend more than $500, you’ll be getting a larger than average setup and more hot water for when you need it in your home.
Flat plate collectors are a bit more affordable than evacuated tube collectors, but you should still expect to spend a minimum of $500 and closer to between $1,000 and $2,500 for a system that will provide all the heat needed for your home.
A single evacuated tube collector typically costs between $1,000 and $2,500 to purchase—which will sufficiently hold between 40 and 80 gallons of water. For more water than that, several collectors will have to be set up in a series and the price of the system will increase for each added system. If you’re just planning to use hot water heating for bathing or cooking, between one and three units is likely all that will be needed, bringing the price to between $1,000 and $7,500. For heating an entire home, as many as ten units could be necessary—which will raise the price much higher.
The Plumbing and Tanks
The plumbing and tanks for a solar hot water heater are pretty basic, but they still require help from a skilled plumber or solar technician who can attach all the piping and make it work with your existing lines. You’ll need an expansion tank, some valves, and piping going to and from your solar collectors and tying the backup tank to your existing water supply. All of this could cost you between $500 and $1,500 in actual parts, plus installation.
If you live in a northern climate you’ll need an indirect system with anti-freeze, which will raise the price. This requires more plumbing and a heat exchanger, making the system more complex.
The Backup System
If you aren’t adding a solar heater to a home with an existing heater setup, you’ll have to purchase a backup heating system as well. That means you must factor in the price of a gas or electric hot water heater to use when the sun isn’t shining. That could be $1,000 or more, depending on the setup that you choose. Even if you have a hot water heater that you intend on using, you’ll have to pay for the added plumbing to hook both systems together and to make sure they both function properly.
You’ll also likely need a switch mechanism to give you control over when your secondary heater turns on and off so it isn’t running all the time and therefore wasting energy. The backup or auxiliary heater usually has its own tank for water storage as well, but there are some setups that combine both systems into the same tank.
It’s common to pay around $70 an hour for the installation of a hot water heater system. With most systems taking several days to install, you should expect to pay a few thousand dollars to have it completed. The size of the system and its complexity also helps determine the cost. The best way to estimate the system cost is to have an expert help you figure out what kind of system you want and need, and then get estimates from contractors in your area to figure out what your price range is. It’s the most accurate way to find out what you’ll pay—and one of the easiest as well. Make sure that each estimate details all the work that will be done as well, so you know what you’re paying for and can compare different providers effectively.
Generally you don’t have many operational costs at all when running a solar hot water heater—which is one of the biggest benefits of this type of system. If you have an active circulation system there will be power cost to run the pump throughout the day, but this will only amount to about $50 a year. Other than those very minor operating costs, you simply have to factor in standard maintenance, which shouldn’t cost much at all during the 20 year expected lifespan of the system. If you have an indirect system you’ll have to replace the antifreeze solution. Depending on the size of your system, this can cost you a few hundred dollars every three to five years.
Both federal and state incentives exist around solar hot water heaters. Taking advantage of these as much as possible will allow you to cut your expenses dramatically and make your home into a more affordable one overall.
The Federal Solar Rebate
Until the end of 2016, residents and business owners have a very helpful federal rebate to take advantage of for water heating purposes. The government will provide a rebate of up to 30% of a water heating system’s cost when it’s professionally installed on a home. That means that you could cut the cost of a water heating system from $8,000 down to $5,600 using this one incentive alone. When combined with state incentives and tax credits, the system can become even more affordable.
The incentives available to you on the state level depend on where you live. Some states offer very lucrative incentives that further slash the price of the system further, or give a tax credit back at the end of the year, and others don’t offer much at all in the way of incentives. That’s why it’s important to check with your local utility companies to see what’s available in your area. For instance, in Arizona residents can receive a 25% tax credit on their system install up to $1,000, allowing them to drop the price of their system even further.
It’s important that you subtract the money that you’ll get from any incentives before deciding on the real benefit of a solar heating system. You’ll be surprised at how affordable it really is after removing money for the incentives available.
One of the main reasons to get a solar hot water heater in your home is the money you’ll save on electricity or gas throughout the year. Each gallon of water that the sun heats up is a gallon that you don’t have to heat through other means. That means you’ll slash your utility bill each and every year.
The median level of savings is about $160 a year on water heating costs, but that’s just with a 40 gallon heating system. If you live in a location with above-average utility costs—or you decide on a larger heating system—the savings can be larger than that overall. Make sure to match the potential savings of a system versus the equipment and installation costs, minus the incentives that you get. This will give help to decide if it makes financial sense for you to have the system installed in the first place.
Helping the Environment
Not only can the system potentially save you money throughout the time that it’s operational, but it can reduce harmful effects on the environment. Whether it’s taking the place of natural gas or electric heating applications, you’ll cut down on the number of fossil fuels being burnt to heat your water, resulting in cleaner, earth-friendly energy.
Increased Home Equity
If you’re planning to sell your home anytime soon, improved home equity is yet another benefit of a solar hot water system. Studies show that while standard hot water heaters don’t increase the value of a home, adding a solar heating system will increase your home’s value by 25%. This means you can recoup some of that money back from the system if you decide to sell early, and you’ll enjoy the savings each year until then. This makes solar hot water heaters attractive even for people who will only remain in their homes for a decade or less.
Is it Worth it?
After you take the time to get the estimates, price out solar equipment, and check for incentives, it’s time to decide if the system is worth it for you. Chances are good that the savings will more than pay for the system over the course of it 20 year expected lifespan, but it’s beneficial to calculate regardless.
In the United States the average cost of a solar installation ranges from $3,500 to $6,000. The average savings from a utility bill is about $280 for a family of four, according to Energy Star. An average installation cost—the median of the expected range—is $4,750. Subtracting the 30% federal tax credit—which amounts to $1425—drops the overall cost to $3,325.
If we assume that the system saves approximately $280 for the family each year, minus an expected operating cost of $80, you’ll enjoy $200 in savings each year, which amounts to about $4,000 over the lifetime of the system—and this would pay off by the time the system was ready for replacement. Of course, the system cost, maintenance, and overall savings will all vary depending on your water consumption, location, and what incentives you qualify for—but this cost breakdown is important if you have any financial concerns.
Taking your time to tally the installation costs and benefits will save you from any unexpected surprises down the road—and then you can fully soak up all the advantages of solar power!
Here are some other helpful articles to prepare you for your solar panel installation project.