Financial return on a solar water heating systemLife of the solar power system

The expected life of a solar water heater system depends on many variables, including: construction quality of materials, water quality, temperature, pressure and solar water heater system installation and maintenance.

Available Solar Radiation (Irradiation)

The daily average for each month of solar radiation (MJ/m2) falling on the solar collectors is an important factor when determining the solar water heater system performance. This depends on latitude, local climate, tilt of the collectors from the horizontal and the orientation to the equator.

Patterns of Usage of Hot water

The pattern of usage of hot water affects the efficiency of the solar collectors and therefore the boosting energy required to provide sufficient hot water. This in turn affects the operating cost. For example, reheating overnight with auxiliary electric heaters can potentially reduce the efficiency of the solar collectors the next day, if this hot water is not used before the collectors started heating.

Effect of Tariffs

The structure of and tariffs for boosting energy from electricity can affect the cost-effectiveness of solar water heating systems.

Governmental Rebates

Governmental rebates are an incentive that encourages people to convert to solar power. In most cases, the rebate is in the form of a once off monetary payment towards the capital cost of the solar power system. It must be noted that to qualify for the relevant rebates certain terms and conditions have to be adhered to.

Monthly Cost Saving

Most customers would want to know their monthly saving if they were to convert to solar power. As mentioned previously numerous factors will affect the financial (monthly cost saving) return of the solar power system. The best method to determine a return is the nett present value method, which calculates the difference in the total present day values of each system, over the lifetime of the solar power system. This method accounts for inflation and interest rates, which change the value of money over time. It also accounts for replacement costs of alternative systems over the solar power system’s lifetime. A less complex method is the simple payback time method, which compares the difference between installed capital costs and annual operating costs.