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Solar Water Heaters: What’s Keeping Solar Hot Water From Going Main Stream?

Solar Hot Water

Thanks to guest blogger Solar Fred for this thought-provoking article about the future of solar water heaters.


What is keeping solar hot water from going mainstream? I wish I had the exact answer to that question. All of the research regarding consumer attitudes toward solar is generally PV related, rather than solar hot water related. At the same time, solar hot water has some obvious challenges, especially in the residential space.

1) Solar hot water competes with dirty (and cheap) natural gas. With the exception of Hawaii, natural gas is currently fairly inexpensive right now. The amount of hot water that an average residential customer uses typically makes for a slower return on investment. Check out the solar hot water calculator, plug in the numbers for any state for residential, and you see for yourself.

Some solutions: Either home solar water heating systems have to become less expensive or natural gas prices have to rise. While the latter solution may appear to be a long shot, recent news about the environmental cost and abuse of hydraulic fracturing (fracking) may add more cost pressures on natural gas when stricter Federal regulations are enforced, but that remains to be seen.

2) There are fewer local and federal incentives for solar hot water. While California has just passed some generous rebates that make solar thermal very attractive for commercial customers, the incentives don’t apply to pool heating and take up perhaps 25% of the cost of residential systems. The 30% Federal investment tax credit can also help reduce up front costs, but only to non-pool heating applications. While that extra 30% is great, it generally benefits those who often owe taxes at the end of the year.

Some solutions: One solution would be to make the 30% tax credit refundable, so that you could get money back from the IRS if you were due a refund. As it stands now, the credit can be carried over for 5 years, but that’s a difficult sales case to make. In addition, governments could increase the rebate amounts for solar water heating systems, making a faster ROI. Finally, local and federal governments could allow the 30% Federal ITC to apply to pool heating, opening a huge opportunity for Western and Southern states, where pools are largely not being used due to cold weather and the high cost of heating them during the non-summer months.

3) Solar hot water has fewer marketing resources. While I genuinely appreciate the money and time that SEIA put into its solar generations videos and PSAs, solar water heating was barely mentioned throughout the series. Most of the images and statements were all PV related.

Some solutions: It would be great if SEIA and other solar organizations would dedicate a campaign or three or four to solar water heating for homes and businesses. In addition, it would be great if solar water heating manufacturers could increase their marketing budgets. Given the lukewarm demand in the residential sector, it’s understandable why manufacturers are tightly holding the purse strings for now.

4) More financing options for solar hot water. It’s wonderful how there are so many solar leasing and PPA (a.k.a. home solar agreement) options for solar PV today. The same cannot be said for solar thermal. These arrangements take the sting out of the upfront cost of solar PV and would do the same for solar hot water consumers.

Some solutions: Obviously, solar PPA companies and venture capitalists could design more programs for solar thermal, but banks and venture capitalists have to find the right financial formula. Reviving PACE programs could help, as well, but that appears to still be in recovery mode. Additionally, solar PV companies that currently only offer solar leases and solar PPA’s of PV could expand into solar water heating.

The good news is that even without high subsidies, solar water heating does make financial sense for large commercial applications, such as apartment buildings, hotels, hospitals, etc. The disconcerting news is that these venues are still largely unaware of solar hot water and solar thermal financial benefits. Even when they are aware of the cost savings, they must find the courage and the financing to move forward.

Those are my general observations. Admittedly, they’re not based on hardcore market research data, but just my experience at Free Hot Water, and talking with other solar thermal installers.

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