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What’s Keeping Solar Hot Water From Going Main Stream? Some Thoughts and Solutions

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 our 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 hear at Free Hot Water, and talking with other solar thermal installers.

Got more challenges or solutions? By all means, please add to them here in the comments section below.

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13 Responses to What’s Keeping Solar Hot Water From Going Main Stream? Some Thoughts and Solutions

  1. nan says:

    Solar hot water was the best investment I ever made! The ROI was going to be about 6 years, and I’m 2/3 of the way through. Soon I will have free hot water! My gas bill is almost nil, and the system can be expanded. This is way more cost effective than PV.

  2. Solar Fred says:

    Glad to hear it, Nan! Of course, ROI is going to depend on a lot of factors, including usage, utility rates, type of back up (electric or gas), location, and size of the system, not to mention, retail price, rebates, and other incentives.

    All this is is to say is that the above residential comments is a generalization across 50 states and 100 million people! I’m glad to hear that it’s been such a great investment for you, and I hope it is and becomes one for others too! :)

    Thanks for commenting.

  3. nan says:

    True, there are lots of variables. I always tell people to cut back on their energy use before installing solar so they can make the most of it. My life is pretty simple, so my ROI was short and improved as 1) the price of gas went up, and 2) my daughters moved away. Each situation is different, so everyone should do a lot of number crunching. But I do hope solar hot water becomes more mainstream as the economy picks up!

  4. JIm says:

    I think the main problem with hot water is that systems available are too complicated and expensive. Many people could benefit from a simple system that preheats water before going to the normal water heater. In warm climates, where freezing is no problem, the system can be as simple as a black tank on the roof.

    Of course, the other side of the problem is that there is no penalty for pollution created by burning fossil fuels or nuclear reactors. We all suffer the effects, but there is no economic feedback for reducing pollution. Subsidies for solar and wind energy are inaccurate attempts to level the playing field.

  5. Solar Fred says:

    Good points, Jim! Thanks for your thoughts. Appreciate it.

  6. WB says:

    I’m a big believer in integrating solar hot water heating with hydronic radiant heat. Radiant heat provides more even warmth without the blowing air, which in turn creates a healthier indoor environment. Forced air heating dries the skin and sinuses and disperses dust & germs.

  7. Solar Fred says:

    I agree, WB. However, the up front costs for radiant heating must also come down to be competitive for consumers. Once again, I think innovative financing, such as PPAs and similar financial vehicles would go a long way to bringing solar hot water/solar thermal applications to the main stream. And forget solar air conditioning is also possible.

    By the way, if anyone is interested, our Free Hot Water engineering department can design both radiant heating and/or solar air conditioning for your clients. Please contact us for more information.

  8. Chuck Balcher says:

    Not enough qualified salespeople are out there strutting their stuff. This is a sales game. Ten presentations equals one sale. Make more sales calls.

  9. Paul Bostwick says:

    Your post was pointed to by a linked in discussion thread… here is what I wrote there:

    It really is the low hanging fruit – as it has long had the quickest payback. From and economic standpoint a householder should do consumption reduction first (almost free) then solar hot water then maybe PV.

    But to get to your question I think the ways most consumers interact with the energy supply in the home is highly mediated and thus hard to see. Certainly harder to see than it used to be. Not long a go you had to drag the fuel (whatever it was) up to the device and set it on fire. You knew how many lumps of coal or split logs would be required to do any given task. Today you turn on the hot water tap and some time next month you get a bill for energy costs all run together…

    Next up in my list of what stands in the way: you cannot, today, put a solar hot water system in the back of a plumber’s truck the way you can a couple of replacement tank hot water heaters. When your water heater dies – that is the time to consider a new system. But you did not plan to have it die. You are in a bad mood and solar is not a like for like swap the way you can with a regular hot water heater so the path of least resistance for everybody is to just slot in one as close to the original as possible. Bang, another customer lost for 10-15 years.

    Those are some the less visible market barriers I’ve noticed.

  10. Solar Fred says:

    Thanks for your thoughts, Paul!

  11. Bill says:

    I was involved with Solar Hot water systems in Phoenix , AZ. the solar capital of the world per sun days. What drove the industry in the early 80’s was the State and Federal Solar Tax credits. We also did some home heating and learned corrosion, freezing and the roof environment was a major chalenge. We marketed closed systems and found quality products and first class installations saved residential and commercial customers money monthly. But the tax credits drove the Bus. As the credits disapeared so did the business. Lets hope that better products, installs and tax credits can drive all the Solar Markets again.

  12. Marshall says:

    The unaware are very confused when it comes to Solar Water Heaters. One reason is that Solar thermal (A workable solution) and Solar PV (Questionable) are portrayed as being the same systems.

  13. Marshall says:

    Another reason Solar Water Heaters have not gone mainstream is due to the fact that many people (even those that should know better) refer to Solar Water Heater collectors as panels. We know that there is no such thing as a Solar Water Heater panel, they are collectors. This only further adds to the confution.