The best option for the planet—and maybe your pocketbook
Electricity is often a more expensive choice in places where natural gas is available. Whenever gasoline is less than about $3.50 a gallon, propane and fuel oil are normally less expensive, too. This varies across North America but it is the rule rather than the exception.
With today’s increasing electricity rates, households with electric water heaters can make a stronger economic case for solar water heating systems—although pairing a solar preheating system with a gas-fired system can also offer financial savings.
Solar water heaters are available in five different configurations (see Access). Very simple batch-type water heaters and thermosyphon systems (integrated collector and storage systems) are very effective in mild climates such as the southern tier of states and Mexico. Simple direct forced-circulation systems are popular in Hawaii and other climates where freezing isn’t an issue. In most of the United States and all of Canada, two types of freeze-protected systems are used: closed-loop antifreeze and drainback. Drainback systems are favored by installers in mild to moderate climates, while antifreeze systems are popular for colder climates.
The return on investment (ROI) of a solar water heater depends upon the solar resource, local incentives, and to a lesser extent, the climate. Solar water heaters work best in areas with mild climates and lots of sunshine. They will work in cold, cloudy climates but the ROI is not as attractive. Many states and utilities have instituted incentive programs in addition to the 30% federal tax credit. For most locations in the United States, any combination of incentives that total 50% to 60% of system costs will cut the payback period of a solar water heater to less than 10 years.