• Energy & Power

How much money will my solar thermal system save, and how much will it cost?

Your savings depend on how your solar system will be used, as well as the size and type of your system. Other factors can include the climate, the contractor, and the system rating. Your state may offer solar rebates or other incentives that will reduce costs.

Savings and costs for solar domestic water heating
Solar heating systems can save you money in the long run. FSEC studied the potential savings to Florida homeowners who use common water-heating systems, including solar, in comparison to electric water heaters. FSEC undertook this study because the initial installed cost of a solar is higher than that of a gas or electric . FSEC wanted to explore costs and savings over time, beyond the initial installation period. The study found that solar water heaters offered the greatest potential savings. Annual utility costs for solar water heaters were 50% to 85% lower than those for electric water heaters.

The cost and benefit of purchasing a solar water heater vary from region to region, so check costs in your area. Depending on the price of the conventional fuel, a solar water heater can be more economical over the life of the system than heating water with , fuel oil, propane, or even natural gas. That’s because the fuel—sunshine— is free.

However, at historically low prices for natural gas, the total cost of owning a solar water heater with a backup natural gas heater may be more expensive than owning a natural gas heater alone. Nevertheless, as natural gas becomes more costly and its availability more volatile, solar water heaters become more economical. Solar water heaters are often quite cost-competitive in new homes.

In many places in the , homebuilders choose electric water heaters because they are easy to install and relatively inexpensive. Research shows that the average household with an electric water heater spends about 25% of its home energy costs on heating water.

If you are building a new home or refinancing because of a major renovation, the economics are even more attractive. Including the price of a solar water heater in a new 30-year mortgage usually amounts to between $13 and $20 per month. The federal income tax deduction for mortgage interest attributable to the solar system reduces that by about $3 to $5 per month. So, if your fuel savings are more than $15 per month, the solar investment is profitable immediately. On a monthly basis, you are saving more than you are paying.

Savings and cost for solar swimming
A solar heating system for your pool usually costs between $3,000 and $4,000 to buy and install. This provides a payback of between 1.5 and 7 years, depending on the cost of the fossil fuel your system replaces. The actual cost and payback depends on your site, the type of system you choose, financing, and the length of the pool season.

Often, a payback cannot even be calculated, because many people choose not to their pool at all, given the extra $300 to $600 on their energy bill. A solar system allows these people to swim in a pool that was previously too costly to and too cold to use.

Savings and cost for solar space heating
The cost of a solar space-heating system depends on many factors, including the size of your house, how airtight it is, how much of your heat will be supplied with a conventional backup, the system you choose, and your site. In general, solar space-heating systems can provide 40% to 60% of your space-heating needs. These systems are most economical for consumers who would otherwise be heating with electricity, rather than with natural gas or other fuels.

But solar space heating is needed most when sunlight is least available, during the winter and at night—and needed least when sunlight is most available, during the summer and the daytime. So today’s solar technologies are not likely to be a cost-effective solution for active solar space heating in most homes. However, a good alternative is to simply to use passive solar building techniques. See the EERE Web site for more information.