Solar Hot Water vs Natural Gas Hot Water

By Jeff Ivany on May 31, 2009

Natural Gas FlameToday we will do a cost comparison of solar hot water and natural gas hot water. This is the third part of the Should I Install Solar Hot Water? series. Yesterday we looked at Solar Hot Water vs Electric Hot Water.

Background

Currently in eastern Ontario, you can have a solar hot water system installed for about $4000-$4500 after all of the rebates and incentives. While this is a huge discount from the roughly $9000 regular cost, does a solar hot water system actually make sense financially?

The Numbers

The typical solar hot water system (EnerWorks 2 panel system) we have been using in this series can produce about 2800 kWh/year of hot water here in eastern Ontario. This of course is when it’s installed in an ideal location/orientation.

According to the ACEEE, a high efficiency natural gas water tank is 65% efficient at converting natural gas into heat.

The current combined price of natural gas in Ontario is approximately $0.3022/m3. That’s $0.2354/m3 for the gas with a price adjustment of -$0.0616/m3 plus delivery of $0.1285/m3.

Now, price per cubic meter is fine and dandy but we need to convert to kWh to make this easier. A quick Google search tells me that 1 m3 of natural gas is roughly equivalent 10.5 kWh (it varies but we need a number to work with).

This is a little more difficult than the electric hot water example so I’ll show the steps so I don’t screw anything up and so you can check my math. :)

Our example 65% efficient natural gas hot water heater needs to consume 4300 kWh to produce the equivalent 2800 kWh/year that the solar hot water system can produce.

2800 kWh / 0.65 = 4300 kWh

4300 kWh is approximately 410m3

4300 kWh / 10.5 kWh per m3  = 410m3

And 410 m3 costs about $124 at current market prices in eastern Ontario.

410 m3 * $0.3022/m3 = $124

Therefore, if you are reducing your natural gas bill by $124/year, it will take you between 32.24 to 36.29 years to recover the costs ($4000 – $4500) of the solar hot water system and start saving real money.

Over 30 years to recover the initial investment? The lifespan of a solar hot water system is only “over 20 years” which means you could easily still be paying for the thing after it’s been replaced.

Of course, that is using current natural gas pricing which is extremely low. It dropped more than $0.10/m3 as of April 1, 2009 and the summer prices are usually much lower.

When would it make sense to install solar hot water with a natural gas system?

Using the examples above, the combined natural gas price would have to reach almost $1.00/m3 before a solar hot water system could pay for itself in 9 years. $0.50/m3 is definitely a possibility in the near future (if I remember correctly, last winter was just shy of $0.40/m3) so the payback period starts to get closer to what it currently is with electric hot water heating.

Now, for my particular house, I’ll don’t think I’ll ever install a solar hot water system for domestic hot water. We have a Polaris high efficiency gas hot water tank that we use for both our domestic hot water and for heating the house. That puppy is 95% efficient. At today’s natural gas prices, it would take about 50 years to recover the initial investment in a solar hot water system.

In a future post, I’ll explore the difficulty of designing a solar hot water system to augment a combined natural gas heating system like we have.

Image Credit- ARRG.ch

This post is part of the Should I Install Solar Hot Water? series.

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Solar Hot Water vs Electric Hot Water

By Jeff Ivany on May 30, 2009

Solar ElectricToday we will do a cost comparison of solar hot water and electric hot water in eastern Ontario. This is the second part of the Should I Install Solar Hot Water? series.

Background

Currently in eastern Ontario, you can have a solar hot water system installed for about $4000-$4500 after all of the rebates and incentives. While this is a huge discount from the roughly $9000 regular cost, does a solar hot water system actually make sense financially?

The Numbers

On average, 25% of your total household heating costs are for heating water. In eastern Ontario, solar hot water systems can produce an average of 50-60% of your household hot water needs.

The typical solar hot water system (EnerWorks 2 panel system) we have been using in this discussion can produce about 2800 kWh/year of hot water here in eastern Ontario. This of course is when it’s installed in an ideal location/orientation.

According to the ACEEE, an electric hot water tank is 95% efficient at converting electricity into heat.

The current combined price of electricity in Ontario is approximately $0.095/kWh. This price is the base $0.055/kWh plus all of the other charges that are billed on a per kWh basis.

Therefore, the 2800 kWh of hot water that the solar system can produce will replace approximately 2950 kWh of electricity per year. At $0.095/kWh that is a grand total of $280.25/year in potential savings over a typical electric hot water tank. If you are reducing your electric bill by $280.25/year, it will take you between 14.27 to 16.1 years to recover the costs ($4000 – $4500) of the solar hot water system and start saving real money.

Of course, that is using current electricity pricing which is extremely low.

So, should I never install solar hot water?

Hell no! I’m all for solar hot water and I’m still a little sad that it doesn’t make economic sense given the current market pricing. Now, if the combined electricity price jumped to $0.15/kWh then we would get the approximately $444/year savings required for a 9 year payback of a $4000 investment. Will the prices get to that level? I’m willing to bet it’s going to happen, just not this year. Probably not next year either.

Electricity costs are going to rise. At the same time, as electricity costs rise and more people start to demand solar hot water system, the initial cost of a solar hot water system will likely drop.

Would you install a solar hot water heater if electricity prices went over $0.15/kWh?

No. Unfortunately (well, fortunately) I don’t heat my water with electricity. I use natural gas. Using natural gas to heat is quite a bit cheaper than electricity and that makes the payback period even longer.

Next we are going to look at solar hot water vs natural gas hot water.

Image Credit – Yellow.Cat

This post is part of the Should I Install Solar Hot Water? series.

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Should I Install Solar Hot Water?

By Jeff Ivany on May 29, 2009

Solar PanelsShould I install solar hot water? This is a question I have been asking myself for almost 4 years now. Basically, as soon as we purchased the house I started wondering if it made sense to install a solar hot water system. The biggest reason was due to the fact we heat with hot water. I’ve spent many days and nights reading information on the internet and researching what the best options would be. I was thinking we might be able to get some added benefit out of heating with the sun. So, should I install solar hot water?

The short answer is – No.

This is the first post in a series. I’m trying to break up the information into more relevant chunks as I’m going to look at comparisons with natural gas and with electric hot water.

The Sales Pitch

You can read a lot about solar hot water online. Usually there will be claims of saving over 50% of you hot water heating costs. With the dollar savings mentioned, there is usually some great graphics about how much you are going to reduce your green house gas emissions. By using the ecoEnergy program in Canada, and with the 2009 Home Renovation Tax Credit, you can actually save $5000 (or more) off the cost of installing a solar hot water system.

But, you’re still looking at shelling out around $4000 for a “typical” solar hot water system.

What is a “typical” solar hot water system?

Here in eastern Ontario, a typical system would be something like the EnerWorks 2 panel flat plate collector system. You can get this system installed for about $9000 but with the current rebates and incentives, that gets down to $4000-$4500. This is suitable for a typical family of 4 that consume an average of 240L of hot water per day.

In this typical configuration in eastern Ontario, the EnerWorks 2 panel system can produce about 2800kWh/year of heat energy when installed in the optimal configuration (proper pitch and direction, minimal shading, etc.). This should provide an average of 60% of your household hot water needs.

But solar hot water is good for the environment!

Uh, it might be time for you to stop reading now. I’m not really concerned with the “green” aspects of solar heating. I’m not an environmentalist and I’ll never claim to be. I am cheap though and sometimes being cheap has “green” side effects.

How much will I save with solar hot water?

This is what I’m interested in. I want to know how much money I will potentially save by installing a solar hot water system. The first number I want to know is the monthly savings but the real number I want to know is how long will it take for the solar hot water system to pay for itself. What is the payback period?

The lifespan of an EnerWorks 2 panel system is “over 20 years”. Well, that means we need to have the thing paid off well before the 20th year. Ideally, you want your money back in 9 years or less. Why 9 years? Well, we want the investment in a solar hot water system to payback at a decent rate. If the payback period is to large, we would have been better off putting our initial investment into a regular mutual fund, bonds, etc.

The rule of 72 tells me that an investment at 8% will double in 9 years. 8% interest is pretty easy to average with decent mutual funds.

So, our initial investment of $4000-$4500 in a mutual fund at 8% would be worth $8000-$9000 in 9 years. We need our solar hot water system to payback in the same time or less. If it doesn’t, we’re not making our money work for us in the best possible way.

Remember, I’m looking at this from the purely financial point of view.

In the simplest view, take that $4000-$4500 initial cost and divide it by 9. That gives us approximately $444 – $500/year. Therefore we need a solar hot water system to save us at least $444 – $500/year or $37-$42/month.

Tomorrow we’re going to look at how solar hot water compares to electric hot water.

This post is part of the Should I Install Solar Hot Water? series.

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Beer prices across Canada

By Jeff Ivany on May 26, 2009

BeerI stumbled across a link on the CBC website where a reporter from Calgary had called a number of liquor stores across Canada to find out the price of a dozen Labatt Blue. The Beer Facts indicates that the price in Ottawa is among the lowest (Yippee!). It’s sort of surprising to see that Ottawa came in with the third lowest price for a dozen Labatt Blue. Around here many people will make the short drive across the river to La Belle Provence to pick up a couple cases from the local dépanneur. I hear the King of Beer (Le Roi des Bières) in Aylmer is the place to go. ;)

If I remember correctly, Blue is considered a “local” brand across Canada so it doesn’t get nailed with the “premium” beer costs. Beers like Keith’s (my personal favorite) cost more here in Ottawa as it’s classified as an import since it’s trucked in from Nova Scotia.

Now, it strikes me as odd that the reporter would call a bunch of stores in different provinces yet leave out 2 provinces and 2 territories. Why not make those extra 4 phone calls and have a sample of pricing from each province and territory?

Image credit – DeusXFlorida

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Squirrel blamed for massive P.E.I. blackout

By Jeff Ivany on May 25, 2009

Squirrel PowerLate in April there was a power outage that affected almost a third of the people on Prince Edward Island. It turns out that the cause was a squirrel chewing on the wires inside of a substation which lead to a fire.

We had our own problems with squirrels and I’ve seen the damage they can do.

Squirrel blamed for massive P.E.I. blackout

What had me laughing was the following paragraph from the CBC article:

Maritime Electric was able to confirm the squirrel caused the blackout when it recovered the animal’s remains. The condition of the remains was described as “not good.”

I’ll bet the little bugger was “not good”.

Image Credit – cupcakes2

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