New study finds Evacuated Tube solar hot water often pays for itself quicker than typical solar electricity systems
December 16, 2015 by Warwick Johnston 17 Comments
Prior to 2010, the word ‘solar’ referred more to Solar Hot Water (SHW) than to PV. While solar power was a cottage industry, there were tens of thousands of SHW units being installed every year. At its peak in 2009, the Australian SHW sector installed 200,000 solar water heaters (including air-sourced heat pumps), compared to just over 50,000 PV systems. This all changed in 2010 as PV overtook SHW to be the dominant solar technology in Australia.Over the same period that government subsidies for solar hot water were diminishing, PV enjoyed a substantial support from state and commonwealth governments. But now that subsidies for PV have been wound back, its worthwhile re-considering which technology produces the better financial outcome. SunWiz was contracted by Apricus to investigate the circumstances in which each technology is more favourable… and the results surprised us.How the technologies comparePV systems have the advantage of producing electricity, which can be used in any household appliance and excess generation can be exported to the grid. The disadvantage with PV is that electricity cannot be cheaply stored, and the electricity exported to the grid typically receives a feed-in tariff that is commonly less than one third the cost of grid-supplied electricity. By contrast, one of the significant advantages of SHW is that it comes with in-built energy storage. SHW also offsets what is typically a household's largest area of energy consumption, hot water supply. While a household cannot "export" excess solar hot water, a suitably sized system will only "waste" a very small % of the total energy produced by the system.When considering which technology produces the best financial outcome, the key factors to consider are price, energy generation and utilisation, the value of the energy generated, and the system lifetime.
ConsiderationsTo investigate the circumstances in which each technology is more favourable, SunWiz created a model comparing the financial outcome from an investment in PV to one in SHW. To account for the wide variances in householders’ individual circumstances, we modelled 9 different locations across the country, hot water boosting from both off-peak electricity and gas (natural gas in cities, LPG in rural areas), and two different electricity consumption profiles reflecting actual consumption from a household away in the daytime and one at home during daytime. We assumed optimal production from PV, whereas SHW energy yields were based upon STC calculations. Some of the factors we considered were:
FindingsEnergy consumption levels and daily consumption profile vary greatly from house to house. Even after concentrating only on typical consumption levels, there were so many combinations of location, consumption profile, system size, hot water boosting method that it is difficult to produce universally-applicable take-home messages. In part two of this article we will more closely examine individual outcomes. However, the following generalities apply across the board:
What we also will see in part 2 is that there is good reason to install both technologies. In order to minimise energy bills in a financially-optimal way, a good approach can be to first install a SHW unit, then fill the remaining roof space with PV panels. Part 2 of this article will also examine how the results vary by location.In part 1 of this article, we found that in most cases for a typical household, evacuated tube Solar Hot Water (SHW) has a quicker payback than PV. In part 2 we will more closely examine why this is the case. We’ll also see that combining both technologies can produce the best outcome for a household.Use both SHW & PV for combined benefitsThe most popular PV system size is now about 5kW, though 3kW systems are also popular. 1.5kW systems are no longer common. Consider that for about the same price as a 5kW system (~$7500), you could retrofit your hot water system and almost have enough change left over to buy a 1.5kW PV system. SunWiz's analysis showed that evacuated tube SHW was often more financially favourable than PV, but in circumstances where heating hot water was cheap due to low-priced off-peak electricity or natural gas, a small PV system would have better financial outcome than a solar hot water system.With this in mind, you may be best served by buying a SHW unit and filling up the rest of your roof (or your budget) with PV. In most cases, this would maximise the savings on your energy bill. To illustrate this point, the chart below compares the electricity savings from putting on a 5kW PV system to those of installing a 1.5kW system and converting your off-peak electric water heater to SHW. The chart illustrates that the savings are comparable.One key caveat applies to all of this however; While SHW has in-built storage, if you’re not using much hot water, most of the solar energy will be wasted. It is therefore important to choose a suitably sized solar hot water unit to match your usage. Likewise, if you’re a frugal electricity consumer, you might expect high export levels from even 3kW of solar power. Individual circumstances are the key, and we encourage you to either use SunWiz's free export calculator, or for tailored results PVsell allows you to tailor your advice to the homeowner and upload metered data or use a library of real load profiles.Detailed resultsAs mentioned, the study covered a large combination of inputs to help indicate outcomes for the wide range of individual circumstances. Later in this article we will provide summary analysis by location, combined with a complex chart that allows individual circumstances to be examined. First, the results are best introduced by way of example. We’ll use Sydney as our example. Referring to the table below, columns show the system price, bill saving in year 1, payback, and Internal Rate of Return (IRR) over 10 years; rows show the outcomes for a selected retrofit or replacement SHW unit compared to a range of PV system sizes for households with a consumption profile away during the day, or home during the day.From the table we can see for Sydney:
Extending these results to more locations, we encounter the complexity of displaying the myriad of combinations and permutations. For those of you who hate graphs and just want the easy summary, you can find it beneath. For those of you who love graphs, the chart below compares the 10-year IRR from a range of PV system sizes (lines representing different consumption patterns) with those of solar hot water (retrofit or replacing water heaters (large or small dots respectively) fuelled by electricity or gas (green or purple dots respectively). To interpret the graph, look for the combination that most closely represents your circumstances: first the location (horizontal panes), then investment timeframe (upper or lower pane), and then find the dot that matches your hot water situation (purple = gas, green=electricity; small dot = replacing a broken water heater, large dot = retrofitting solar to an existing hot water unit), and compare the IRR for SHW to the range of IRRs for different sized PV systems depending on your consumption profile (home during the days = blue line; away during daytime = orange line). Note that the Victorian results don't incorporate VEECs, which provide an additional discount that improves the financial outcome for SHW.Remembering individual circumstances may cause significant variation from the statements below, here are the take-home messages for typical households in each location:
Filed Under: SolarHow the technologies compare Price Energy generation Energy utilisation Value of energy generated Lifetime Considerations replaces retrofit Findings Use both SHW & PV for combined benefits Detailed results For those of you who hate graphs and just want the easy summary, you can find it beneath. NSW Metro NSW Regional QLD Metro QLD Regional SA Metro TAS Metro VIC Metro VIC Rural WA Metro