My system uses an 80-gallon Bradford White solar storage tank with built-in heat exchanger and dual 4,500-watt heating elements. The thermostat for the bottom heating element is located at midlevel on the tank, higher than the bottom heating element. The bottom element thermostat can be set to a significantly lower temperature than the top element thermostat, allowing adequate amounts of warmed—but not hot—water to be quickly heated by the top element when necessary, while also allowing cold water at the bottom of the tank to capture solar heat when available.
A major decision was whether to use gas or electricity to heat the water when sunshine is inadequate. We have a new super-efficient gas furnace—so efficient that it exhausts through an ABS plastic vent directly through the wall. Since there was no longer waste heat from the furnace to add to the natural gas water heater exhaust, water vapor could condense in the chimney and cause deterioration—a $1,200 flu liner would be needed. Using an electric storage tank eliminated the need for any chimney, so I removed the portion above the roof, which also occasionally shaded part of my PV array. The chimney below the roof found new life as a chase for the SHW system’s PEX tubing.
During the estimated 20-year design life of any SHW system, the backup water heater may need to be replaced at least once—and maybe twice. The National Association of Home Builders says the life expectancy of a water heater is 10 to 13 years for gas and 14 years for electric. This replacement cost should be factored in when determining a SHW system’s actual cost (see “Determining the Age of Your Water Heater” sidebar). If you replace your existing hot water tank when you install a SHW system, the new tank and installation labor qualify for the federal tax credit and perhaps other incentives. If your water heater is now beyond its warranty, it is living on borrowed time. When doing your analysis, the $1,000 to $1,500 cost to replace a conventional water heater should be subtracted from the cost of a SHW system, as it is a cost you would occur whether you have a SHW system or not. I estimated that the existing gas water heater would have had to be replaced in about six years anyway, so to determine the system’s actual cost I deducted $750 from the gross system cost of the SHW system for a net cost of $1,780.
The system’s cost was $8,500, against which we took a 30% federal income tax credit of $2,550; received a District of Columbia incentive of $1,700 (before taxes); and sold 10 years of future solar renewable energy credits (SRECs) for $1,780 (presently only DC and Maryland provide for SRECs from solar thermal systems).
This system has simple payback of eight years; a net present value of $2,220 for a 20-year investment horizon (the system should last at least that long); and a return on investment of 20%. If I had kept the natural gas backup heater rather than switching to electricity as a backup heat source, these results would be less attractive—that is, if gas prices continue record lows for the next two decades, which is not likely. If one also factors in the avoided cost of not having to spend $1,200 to line the flue to continue to use gas, my mostly solar-generated electricity looks as good financially when compared to buying gas.
An Appraisal Journal article found “an incremental home value of $10 to around $25 for every $1 reduction in annual fuel bills,” so I estimate an increase in our home’s value of between $2,600 and $6,500.