Thursday, June 9, 2011

U.S. Residential Solar Water Heating Report
Executive Summary: This paper examines the break-even cost for residential rooftop solar water heating (SWH) technology, defined as the point where the cost of the energy saved with a SWH system equals the cost of a conventional heating fuel purchased from the grid (either electricity or natural gas). We examine the break-even cost for the largest 1,000 electric and natural gas utilities serving residential customers in the United States as of 2008. Currently, the break-even cost of SWH in the United States varies by more than a factor of five for both electricity and natural gas (from less than $2,250/system to over $10,000/system for electric and from less than $1,000/system to approximately $5,000/system for natural gas, excluding Hawaii and Alaska), despite a much smaller variation in the amount of energy saved by the systems (a factor of approximately one and a half). The break-even price for natural gas is lower than that for electricity due to a lower fuel cost. It was found that for a $7,000 SWH system capital cost (electric auxiliary heater), break-even conditions currently exist in 73 electric utility service territories (serving 16% of all residential customers). To see similar economics for SWH systems with natural gas backup, the SWH system capital cost would have to drop to $2,500. We also consider the relationship between SWH price and solar fraction (percent of daily energy requirements supplied by the SWH system) and examine the key drivers behind break-even costs. Overall, the key drivers of the break-even cost of SWH are a combination of fuel price, local incentives, and technical factors including the solar resource location, system size, and hot water draw.
The full report is available free of charge at

by Hannah Cassard, Paul Denholm, and Sean Ong
National Renewable Energies Laboratory
March 8, 2011

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