Greenhouse - Solar Water Heating System

Once installed and operational, a solar water heating system will save you money on gas or electricity bills. However, an initial investment is required and you must wait a few years before the system pays back the outlay costs. A significant factor in calculating the payback time is the cost of other energy sources; coal, oil, gas and electricity. The environmental cost of fossil fuel based energy sources is significantly greater than the price we pay as consumers, this is likely to change in the near future as policy-makers are already talking of a carbon tax to encourage energy efficiency and renewable energy.

The Greenhouse previously used an electric system so the savings relate to the price per unit (kWh) of electricity used. The average domestic price at the time of publishing is 6.179 pence per unit (kWh), as provided by the Office of Gas and Electricity Markets¹². The table below shows a summary of the initial and annual costs of the Greenhouse solar water system. The annual financial saving, payback time and total saving over the lifetime of the system are also given.

INITIAL COSTS
Solar Collectors/Pressure Valves/Pumps/Data Collector	£3005.75
2 Cylinders (capacity 273 litres)	£391.93
Additional Pipework/Fittings/Fixtures	£1216.86
Installation & Labour	£2333.00
TOTAL	£6947.54

RUNNING COSTS (per year)
Maintenance (estimated)	£30.00
Electricity to power pumps/thermostat	£6.00
TOTAL	£36.00

ANNUAL SAVING on water heating costs*	£562.17

EXPECTED LIFETIME of the solar system	20 years

Initial price of electricity per kWh	£0.06179
Annual increase in the energy price**	3%

PAYBACK TIME	10.7 years

TOTAL SAVINGS after lifetime of system	£8150.00
* The annual saving shown represents the first year and it will increase as the cost of fuel rises. ** The increase in energy price is estimated with regards to expected changes in policy relating to climate change such as a carbon tax.
The figures in the table were calculated using a straightforward model where energy costs are subtracted and running costs are added each year from the outstanding total:
COST (at year 2) = COST (at year 1) – [Energy harnessed x Cost of energy] + Running Costs

After about 10½ years the Greenhouse will have paid off the cost of the solar water system and after 20 years the estimated savings made will amount to £8000. This total will be lower in a typical domestic set-up because only half the tubes are required.

The Greenhouse example shows that very significant financial savings can be made by investing in Solar Water Heating. Along with the environmental benefits, the technology represents an excellent mid-term investment for home-owners and commercial buildings.

*An Evaluation of the Greenhouse Solar Hot Water System.*	Previous	Contents	Next
5. FINANCIAL SAVINGS

COST (at year 1):	£6947.54
Energy harnessed:	9098 kWh
Cost of energy:	6.179 p/kWh
Running costs:	£36.00
\ COST (at year 2) = £6947.54 – [9098 kWh x 6.179 p/kWh] + £36.00
= £6385.37