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Top 5 Payback States for Home Solar Hot Water Systems

In celebration of our 12 new SCRCC-approved OG-300 solar water heating systems, we decided to use Free Hot Water’s handy-dandy solar hot water cost calculator and find out which states provided the fastest payback time for residential solar water heating.

We used the calculator and went through every state. For each state, we assumed the same type of roof installation and a closed loop OG-300 retail price for a family of four with a gas heat backup.

Before you glance down at the list, some caveats:

  • I have to say that I was surprised that Hawaii was not at the top of the list. Hawaii had a 14 year ROI, which is surprising, since Hawaii imports virtually ever drop of oil, coal, gas, and propane. As a result, fossil fuel energy prices are extremely high there and so are utility rates.  My guess is that our engineers have input a national price for gas, which is relatively low. So, it appears we need update the calculator’s rates for Hawaii’s typically high gas prices.
  • Second, though not listed below, South Dakota came in at number 1 with an ROI of just 1.3 years! I found this extremely surprising. Searching the DSIRE database, I couldn’t find the South Dakota inventive program that corresponds to the generous rebate indicated in our calculator.  So, I’m guessing this is a glitch and we have to update our database.
  • The map above reflects the insolation potential (amount of yearly sunlight) for each state, but does not reflect payback, which incorporates many factors beyond hours in the day.

Other things to keep in mind:

  • Remember that all homes qualify for the 30% Federal Investment Tax Credit. More on how that’s calculated here. However, except in the U.S. territory of Puerto Rico, pool solar water heating systems do not qualify for the 30% tax credit.
  • Also remember that our calculator automatically inputs retail prices, so if you’re a Free Hot Water certified installer reading this, expect that our calculator’s price will be discounted for you.
  • Finally, state and utility rebates come and go very quickly. We’ve noted that for Connecticut’s rebate, which is technically still in effect, but is now awaiting refunding for the state or the Feds.
  • This list doesn’t take into account the brand new SREC program for Maryland, which may actually push it into this contender list.

With all of the above in mind, we give you our top 5 states (or territories) for the fastest ROI for residential solar water heating,

Residential Solar Hot Water ROI Payback in Years

State                           ROI (years)    Notes

1. Connecticut            7.96                Program awaiting new funding

2. Massachusetts       8.77

3. Puerto Rico            10.42

4. Louisiana               10.72

5. Arizona                   10.85

Typically, residential systems last for 20 to 25 years. The majority of states in our calculator’s estimates came in at around 13 to 15 years, so no matter how you slice it, residents will still recoup their investment. If gas prices rise more sharply in the next few years, then the years to payback will be even shorter for all states. Naturally, new or expiring incentives will also affect rankings. In short, this is only a snapshot for residential ROI. In the future, we’ll try to keep you updated about any new incentives that come along.  Thanks for reading.

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