Solar Costs/Payback

Posted by admin | | Sunday 15 February 2009 8:33 pm

Here is an example of a typical Payback Period Calculation in mid-country, for a Standard Domestic Solar Hot Water System:


Complete Solar Domestic Hot Water System, Family of Three

One SM-30 Panel, Tank, Pump,  Controller, equipment, shipping. $5,175.00
8,700,000+, btu’s solar heat produced per year Estimated Installation/Balance $1,552.00
Installed Cost, Before Tax Credits
Federal Incentives:
Solar Hot Water Tax Credit 30% -$2,018.00

(Your Own State Tax Incentives to be determined)

Total Out of Pocket, Complete $4,708.00
Estimated Annual Savings: $600.00
Budgeted Annual Maintenance about $40 per year. Payback in 6.1 years (over $17,000 saved in 10 years with historical 10% fossil fuel price increases and inflation.
Payback Period Calculation Chart:
Year Annual Fuel Savings(with 10% fossil fuel price increases)
Remaining System Cost
Year 1 $600.00 $4,108.00
Year 2 $660.00 $3,448.00
Year3 $726.00 $2,722.00
Year 4 $798.00 $1,924.00
Year 5

Year 6





After the 6th year, the original $600 you were saving is now over $ 1,000 per year saved on your DHW heating bills.

You will have doubled your original investment in year 9.

In 16 years you will have saved over $ 17,000.

  • Protection from future price increases

There is no question, or debate – utility and fuel prices will continue to rise year after year for as long as any of us live.  That is just a natural fact of the life that we live these days.  But, while the average person will have their budget constricted further and further at the whim of these price increases, those who invest in a Solar Hot Water Heater will find that no matter how high natural gas or electric prices go, most of their domestic hot water will continue to be solar heated for free, after the payback period, each and every year for the 25-35 year expected lifetime of their Solar Hot Water Heater.

  • Solar Hot Water Pays for Itself – and Then Some

Like all solar energy products, Solar Hot Water Heaters are designed and intended to pay for themselves in just a matter of years.  In fact, when taking into account the cost of materials, the cost of installation, and maintenance costs, a typical SunMaxx Solar Hot Water Heater will completely pay for itself within 4 – 6 years or less.  And, after that time, when the system has completely paid for itself, you are still generating free energy to heat your hot water.  For example:

  • SunMaxx System Life:     25-35 Years (estimated)
  • Payback Period:              4-6 Years (estimated)
  • Free Energy (Free Money):      22-30 Years
  • 80% – 90%:  Percentage of domestic hot water heating expenses a typical homeowner can save by switching from their electric, natural gas, or propane hot water heater to a solar hot water heater
  • 50% – 60% –  Average annual saving for home or business, floor or baseboard heating
  • Electrical rates have increased over 12% a year over the last 35 years
  • Price of Propane, Heating Oil and Natural Gas has doubled in the last 7 years
  • Solar House or Business Heating, such as baseboard or in-floor heating

This example above was just DHW heating. Solar House Heating will save at least 50% on your house or business heating bills. It is less than the 80-90% savings on DHW heating due to the high temps needed for house heat and short winter days. But, the return on your solar investment is greater due to the high costs of non-solar heating with a payback in about 4 years on the average.