Solar water heating (SWH) is an efficient technology that can offset
utility bills significantly. For customers with significant hot water
demand and/or high energy costs, domestic solar hot water may be a
choice for saving energy and money, and reducing emissions. This article
explores the current market size of the SWH industry, explains state
and utility support for SWH, and introduces unique utility business
models for third-party ownership of SWH.
SWH systems have a lower upfront cost on average as compared to
typical-sized customer-sited solar PV installations. While installed
costs will vary widely depending on hot water demand and the type of
solar collector technology used, a residential SWH system might cost
between $3,000 and $6,000 to install.
On the other hand, a typical residential 4-kW PV system would cost
$20,000 (or $5/watt). Furthermore, the U.S. Department of Energy
estimates that a residential SWH system can save customers between 50%
and 80% on water heating bills.
These factors translate to quick payback periods for SWH. Yet despite
these benefits, installations in the United States have been somewhat
limited to date.
Market Information
The SWH industry is dwarfed by the solar photovoltaic (PV) industry
in the United States. According to the U.S. Energy Information
Administration (EIA), revenue from installed PV module systems was
nearly $1.15 B in 2009, while revenue from installed solar thermal
system shipments was $159 M.
Due to reporting gaps, the absolute number of SWH systems installed in
recent years is unknown; however, reporting companies accounted for
shipments of around 75,000 systems in 2009 and industry estimates are
twice this number.
One potential reason for the relative size of the markets is that SWH
is often installed only when the hot water heater asset needs to be
replaced.
The residential sector makes up a large portion of the domestic
market for solar thermal collectors. In 2009, of the 12.2 million square
feet of domestic shipments of solar thermal collectors, 84% were used
in residential applications. Additionally, a large percentage of end users (73%) are using the technology for swimming pool heating. The largest state markets for SWH in 2009 were Florida, California, Arizona, Hawaii, and Oregon.
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