Return on Investment for Solar Water Heating System
I would like to address something that I am asked fairly often now that we here at Innerline Plumbing are installing solar water heating systems.
Homeowners want to know how soon they can expect for the system to pay for itself. What is their return on investment?
Let me break this down so you can see the true cost of the installed system.
First, there is Oncor’s Take A Load Off, Texas Solar Water Heating Program rebate.
Innerline Plumbing is a participating Service Provider in Oncor’s Take A Load Off, Texas Solar Water Heating Program. Through this program, we are able to install residential solar water heating systems at a reduced cost to our customers.
Through the Oncor program, a qualified homeowner or tenant can receive a rebate ranging from $600 to $1500 for the purchase and installation of an approved solar water heating system. To qualify, you must have an Oncor meter and have an electric water heater.
The system that Innerline Plumbing is installing, the FAFCO Sungrabber, qualifies for a rebate of approximately $900 when installed under optimum conditions. Optimum conditions mean a roof pitch between 15-40% and the collector panel location facing within 30% or so of due south.
For those that qualify for a low income installation through the Oncor program, the rebate is 95% of up to a $4000 installed cost, $3800.
A typical Sungrabber installation runs in the neighborhood of $4500 plus or minus, depending mainly on the condition of the existing electric water heater and any code issues with the existing water heater.
A $4500 installation minus the $900 Oncor rebate, leaves an installed cost of $3600.
The Residential Renewable Energy Tax Credit of 30% is applicable to the balance of the installed cost of $3600. That’s an additional tax refund of $1080 when you receive your tax refund.
Now the cost of the installed system is down to nearly $2500.
Now how long will it take to realize that amount of savings in your electric bill to pay for the system?
In the article that was published in the Mansfield News Mirror detailing the installation performed by Innerline Plumbing of a FAFCO Sungrabber solar water heating system, some of these things were mentioned.
Even more telling was the testimonial of that homeowner, a single mother, who shared the following with us at Innerline Plumbing:
The unit had only been installed for about 2 1/2 weeks on my June electric bill and I was surprised that it had actually dropped about 500 kilowatts versus my last years June bill. I owe most of that savings to the solar water heater unit.Michelle E.
Joshua, TX
500 kilowatts savings on her monthly bill and the system was only installed for a little over half of the billing cycle?!
That’s some real savings!
I’ll share the fine print from my electric bill this month:
The average price you paid for electric service this month was 15.69 cents per kWh excluding taxes and non-recurring charges or credits.TXU Energy
At that rate, the savings on my electric bill would have been $78.45, not including the taxes I would have paid on that $78.45.
Even using a conservative figure of $50.00 in monthly electricity savings, now how long would it take for the FAFCO Sungrabber system to pay for itself?
Don’t answer yet, because I’m going to throw another variable into the equation.
I want to share with you, the informed consumer, the following information I came across today. From the Solar Oregon website:
According to The Appraisal Journal, home value increases by $20 for every $1 reduction in annual utility bills. So a solar energy system that saves $200 per year would add $4,000 to the value of the home.
Investments in energy efficient home features, such as solar energy systems, have historically been valued based on how quickly the investment pays for itself. But such investments are home improvement projects that add value to the home, which can be recovered when the house is sold.
For residential solar electric systems, this added value is often half of the homeowner’s out-of-pocket investment after claiming all incentives and tax credits.
For solar water heating systems, this added value is often equal to or greater than the out-of-pocket investment, resulting in immediate positive cash flow for the homeowner if the investment amount had been added to the mortgage.
Read the articles:
More Evidence of Rational Market Values for Home Energy Efficiency, The Appraisal Journal, October 1999Solar Oregon
Taking our hypothetical $50 monthly savings we get an annual savings of $600. Using the equation above, that could mean an increase in home value of $12,000!
It looks like the return on investment after factoring in energy savings and the increase in home value pays for the solar water heater system pretty quickly!