Prior to 2010, the word ‘solar’ referred more to Solar Hot Water (SHW) than to PV. While solar power was a cottage industry, there were tens of thousands of SHW units being installed every year. At its peak in 2009, the Australian SHW sector installed 200, 000 solar water heaters (including air-sourced heat pumps), compared to just over 50, 000 PV systems. This all changed in 2010 as PV overtook SHW to be the dominant solar technology in Australia.
Considerations:
PV systems have the advantage of producing electricity, which can be used in any household appliance and excess generation can be exported to the grid. The disadvantage with PV is that electricity cannot be cheaply stored, and the electricity exported to the grid typically receives a feed-in tariff that is commonly less than one third the cost of grid-supplied electricity. By contrast, one of the significant advantages of SHW is that it comes with in-built energy storage. SHW also offsets what is typically a household’s largest area of energy consumption, hot water supply. While a household cannot “export” excess solar hot water, a suitably sized system will only “waste” a very small % of the total energy produced by the system.
Whereas PV is a discretionary purchase and SHW can be a discretionary upgrade, SHW can be considered part of an essential service when an existing hot water unit has failed and needs replacing. In that case, the owner is faced with a choice between a conventional electric or gas storage tank (costing ~$1200) or upgrading to a solar hot water system. As such, a solar hot water system that replaces a failed boiler has a marginal cost that is $1200 lower than a discretionary retrofit solar hot water system, even if they both have the same ticket price.
The payback period of both technologies depends heavily on the utilisation of the received solar energy, which varies by daytime energy consumption profile and showering habits.
Findings:
Energy consumption levels and daily consumption profile vary greatly from house to house. Even after concentrating only on typical consumption levels, there were so many combinations of location, consumption profile, system size, hot water boosting method that it is difficult to produce universally-applicable take-home messages. However, the following generalities apply across the board:
If you use gas boosting for your hot water, then solar hot water can often produce greater financial returns than PV, especially if your existing hot water service has reached the end of its life.
In some cases, a small (1. 5kW) PV system has better financial return than a solar hot water system, but the increased amount of energy export from a large (5kW) PV system can mean its payback is worse than Solar Hot Water.
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