The Math on Solar Hot Water in Hawaii

I got a question from a PV salesperson about SHW, went to energy code trainings and SHW came up, and have been reminded a lot lately that SHW is a viable option. I had to write it down to organize it before it all went away. Here in Hawaii, passive solar systems are prevalent because we don't have to worry about freezing so much. We also have $0.34/kWh electricity on the Big Island.

link to blog:

http://www.terrawatthome.com/news/2018/04/30/math-solar-hot-water-h...

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I see the ads.  Go solar!  Save up to 40%!

I have friends.  They say it’s cheap!  It’s the most energy you can get from the sun!

The government says it’s a good idea.  Such a good idea that since 2010, Hawaii has REQUIRED a solar hot water (SHW) system on every new hom....  (There is an exception for on-demand water heaters but that’s a topic for another day.)

But advertisements aren’t facts, my friends live on the mainland, and the government is well-intentioned but that law is more than eight years old.  I have opinions, but I don’t know everything and love/hate to be proven wrong.  So let’s dive in.

You own a house and need a new water heater.  You could go buy a standard 50-gallon electric tank and want to install it yourself (if we don’t try to account for labor costs it makes the math easier).  It costs $410 + tax = $427 and in one year will use 3500 kWh according to the sticker.  At current electric rates ($0.342/kWh) it will cost $1197 to operate for one year.  (Don't believe the "Estimated Yearly Energy Cost" on the yellow sticker, it uses mainland prices for energy.)

Another option is to buy a heat pump water heater.  It’s an electric tank with a heat pump on top, just like what’s in refrigerators, AC units, and dehumidifiers.  So it’s not new technology, but there are moving parts that can break.  It costs $1139 + tax =  $1186 BUT if you fill out a form from Hawai‘i Energy they’ll give you $300, so your cost is $886. You might also get a federal tax credit of $300, which could make your cost $586.  In one year it will use 950 kWh, at a cost of $325.

The “total cost” of the standard electric tank (the unit, plus the electricity to run it), for one year, is $1624.  The total cost of the heat pump water heater is $911.  Even WITHOUT the rebate and credit, the heat pump water heater is cheaper.  After that, you’d save another $870 every year in lower operating costs.  That’s almost $2.40 per day!

Solar hot water is more complicated.  The sun doesn’t shine at night, and sometimes you need hot water at night, so a SHW system is connected to an electric booster tank.  You might not get all your hot water from the sun.  A “passive” system is piped so your water is preheated on your roof before it goes to the tank.  There are no pumps and no moving parts.  (An “active” system costs more and has pumps that can break.)  A professional needs to install it.

Using numbers I got from a local reputable installer (and a Hawai‘i Energy Clean Energy Ally, like me), a run-of-the-mill system costs $6900 + tax = $7187 and it’s reasonable to expect that it could cut your hot water energy usage by up to 85%.  Some people have 100% of their hot water covered, and there’s no real formula because there are too many variables.  But 85% is more-than-halfway-between “half” and “all” and feels fair to the solar hot water folks so we’ll use it.

Hawai‘i Energy gives you $500, there’s a 30% Federal tax credit, a 35% Hawaii tax credit, final price to you is $2199 and costs $180 to operate for one year.

But it’s silly to only look at one year.  Water heaters last a long time.  What about ten years?

Huh.  I didn’t expect that.  The SHW and heat pump are neck-and-neck.  Instead of getting SHW, you could get a heat pump and throw some more panels on your PV system with your extra roof space.

The heat pump isn’t perfect.  It has a fan and compressor (like a fridge) that make noise, so it’s nice to put it in a garage.  If it’s inside it can be bothersome.  Only the 50-gallon models are eligible for credits.  We didn’t account for installation costs or future increases in the cost of electricity.  The math is based on “a family of three;” the larger your family, or the higher your hot water use, the less benefit you’d get from a heat pump.  After a decade, the solar hot water starts pulling ahead.

The SHW isn’t perfect either.  Its economics depend on tax credits, and those are shrinking – they also assume your tax bill’s big enough to get a credit.  What if you have low taxes because you don’t make very much?  It could take years for the tax credits to carry over until they’re used up.  So there’s a higher upfront cost to a SHW system, but there’s 0% financing so that’s not really a problem unless you don't like borrowing.  They can have an 80-gallon tank though.

But whatever you do…DON'T BUY THE CHEAP TANK.  It’ll cost you THOUSANDS more.

Need help figuring out a system that's right for you?  Get in touch.

Resources:

https://www.energy.gov/energysaver/estimating-cost-and-energy-effic...

https://www.hawaiielectriclight.com/billing-and-payment/rates-and-r...

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