I was a solar purist. My first solar water heater went up in the mid-1980s. It was monitored by the Oregon Department of Energy, so I know that it produced just over 60% of the energy needed for heating my water. It was a simple affair, essentially copper pipes inside a black box along with a 50-gallon tank. The sun heated the water in the pipes and the hot water waited in the tank until I used it. This thermosyphon system didn’t even need a pump to circulate the water. It was as simple as solar thermal systems get.
In those days, solar electric panels (photovoltaics) were extremely expensive. They were used only in the space program and in remote places like isolated telecommunications stations. I would have been crazy to use the wildly expensive solar electric panels to drive an electric water heater. Today that situation is reversed. For the last several years solar thermal systems have fallen out of favor for single-family homes in virtually all parts of the U.S. When I built my zero energy home in 2015, I never even asked for a bid on a solar thermal system.
It’s now more cost effective to use photovoltaic panels to drive an electric water heater than it is to heat water directly from the sun. It’s been quite a turn around and a bit disconcerting for this solar energy buff. How did this happen? The swift change from solar thermal to solar electric came about through dramatic changes in cost and technology.
The Cost Difference
The big difference is the cost of equipment. Flat-plate solar hot water collectors contain a lot of expensive copper pipe. And the pipes connecting the collectors to the house must also be copper to withstand the high temperatures. There is often a separate solar storage tank along with electronic controls. Installation is more difficult, as thermal collectors are a heavy lift to the roof and pipes must be routed through the attic. Once installed the system needs periodic maintenance, such as the replacement of the anti-freeze (glycol) collection fluid which breaks down over time. When I built my house in 2015, solar thermal water heaters were running between $7000 and $9000.
Water heating is one of the major energy uses in most homes. In zero energy homes, where space heating has been drastically reduced, water heating is now the largest energy use. An average house uses about 3,000 kWh per year for water heating. Standard electric water heaters are about 92% efficient. All the electricity that goes to the heating elements becomes hot water, although some heat is lost through the walls of the tank. Just about anywhere in the U.S., you would need a photovoltaic capacity of 2.4 KW to produce that much energy. Solar panel efficiency continues to improve, but today it would take eight 300W panels to provide that much power. The inverter would also have to be upgraded to process the additional power. Altogether the cost comes in around $3,000, including increasing inverter size, to heat water with a standard 50-gallon electric water heater. That’s much cheaper than a thermal system, but it gets even better.
Heat Pump Water Heaters
The real game changer has been the rapid commercialization of heat pump water heaters (HPWHs). Compared to the old standard water heaters, HPWHs operate at much higher efficiencies – between 200% and 350%. For each unit of electricity, they make between two and 3-1/2 units of heat. They do this by extracting heat from the air in the room where they are located. Because they also cool the surrounding air, care needs to be taken to locate them in a space that will tolerate lower temperatures.
A 50-gallon HPWH will cost close to $1000, although many areas have financial incentives that dramatically reduce that price. A HPWH consumes only about one-third of the energy needed by a standard electric water tank, which will significantly reduce the number of solar panels needed. The exact number of panels can be calculated using an energy model, but for this illustration, let’s say it’s 800W or three panels instead of eight. As of this writing, the cost for the photovoltaic equipment to power a HPWH is around $1100 with another $1000 for the HPWH itself. Grand total: $2100. That’s less than a third of the cost of today’s solar thermal system. It’s also lower than powering a standard hot water tank using additional solar PV panels.
Our example assumes no incentives or rebates. Anyone who pays income tax is eligible for the 30% federal tax credit on the installed solar cost and in many states rebates are available. In my case, the federal, state and utility incentives paid for 70% of the solar installation cost, plus the entire cost of the HPWH.
Flexibility
Cost is only one advantage to the solar electric approach. Solar thermal systems are sized to match the family they serve. My second solar thermal system was an active drainback system. It had about 64 square feet of collectors and worked perfectly for my four-person household. It was only a few years before both my children left the nest. The system that had been perfectly sized for four people was now way too big, and way too hot. During peak production in the summer, I was forced to cover a portion of the collectors to reduce overheating. Several times, I washed the car with hot water just to use it up! Not only was the excess heat useless, it could have damaged the equipment.
In contrast, the energy produced by a solar electric system can be used anywhere in the house or in an electric vehicle. In grid-tied systems, you are usually credited for any excess energy and it is transferred to other utility customers. One way or another all the power gets used, even when you go on vacation or the number of household occupants changes.
Applications Where Solar Thermal Makes Sense
While solar thermal water heating may be antiquated for single-family homes, there are still many good applications. Multifamily, commercial and institutional buildings with large hot water requirements or hydronic space heating can make good use of the direct thermal heat and often find it more cost-effective than using PV panels to supply electricity to standard hot water heaters or to HPHW heaters.
Today, unless you are providing hot water for a large multi-family or commercial building, solar electric panels plus a heat pump water heater is the most cost-effective way to provide hot water. Beyond that, it offers a flexible solution that adapts to changing situations without wasting any valuable energy. Even a solar purist like me can get behind that.
Tom Fullam says:
With the elimination of net metering will the cost benifit still remain?
Bruce Sullivan says:
Changing net metering policies will definitely change the benefits. However, solar owners have methods of capturing the full retail value of the electricity they produce by using it within their homes. HPWHs and on-site storage offer good opportunities.
John Miranda says:
This is fascinating. Thank you. I live in upstate, NY, Syracuse. My 2.65 kW PV system generates an average of $355 of electricity per year, not all that much. However, I couldn’t see the value of selling excess electricity to National Grid for $0.04 and paying $0.14 when I needed it. therefore I never go into the net metering mode, for that reason.
My 1-story (plus full basement) SIP-construction house is 1,400 sq’ and is heated by 3 zones of radiant heating. We moved into it new in 2010. Before we moved in, I painted the basement walls and floor slab with a specially thermally-insulating, reflective aluminized paint. I also managed to have radiant barrier installed under the basement slab, even though there is no heating system in the basement. Turns out, I didn’t need one. We keep the main floor at 67F. The basement remains 6 degrees warmer. This year we raised the main floor (for the first time in 6 years) to 72F. Sure enough the basement went to 78F – passively. The utility tracks our usage and compares our house to the closest 100 neighbors with the same sq. footage. For 6 years in a row, we consistently use 50% less gas to heat our home than our neighbors. That amounts to $700 yr savings. That would require about $1,000 income.
The question is: if I only produce $355 worth of electricity and that is in the summer when I don’t need hot water for heating, would the installation of a HPHW @ approximately $2,200 have enough sunshine in the 8th cloudiest city in the US to be cost effective enough to provide hot water for the winter, when the solar panels often produce nothing? I don’t earn enough for the 30% tax write off 9retired) but a 70% cost offset might make it worthwhile. That said, this is NY, not exactly “sustainability-friendly,” and with the new regime in DC, I don’t see anything renewable with a very bright future.
Bruce Sullivan says:
John, I’m sorry that your utility’s net metering policy pays you less than 30% of the retail electric rate for your clean energy. This means that you would have a lot to gain by using everything you produce in your own home in order to capture the full value of the electricity you produce on your rooftop. A HPWH is one way to do that, and it will capture some of the “extra” heat from your basement if you can locate it down there.
David Solaz says:
Great number crunching in this article! How would all the cost dynamics changes and panel count change if you were to utilize a 5 GPM / $500 on demand tankless electric water heater in place of, or in conjunction with the HPWH?
I’d also be interested to hear what you think it would take in panel count and today’s dollars to heat and cool your superbly constructed SIP house if the radiant heating system was all electric.
Bruce Sullivan says:
A tankless electric water heater would use about the same amount of electric energy as a tank. While the tankless doesn’t have losses through the tank insulation, it might have more pipe losses, since most tankless systems also include a recirculation pump. There are a few variables, but overall the numbers would be roughly similar to the electric resistance example in the post above. There is another issue with tankless electric water heaters. They draw considerably more power (18-25kw) than a tank-style electric water heater (4.5 kw). This places a high “demand” burden on the electric utility, which must have the capacity to supply that large thrust of power whenever you draw hot water. Currently, residential customers don’t pay demand charges (commercial customers do), but that is likely to change in the future as utilities modernize their rate structures.
What is the wattage of your electric tankless