Save Money With Renewable Energy
Part One - Solar Energy Systems
This article is from the Energy Saver Section of Energy.gov website
For homeowners who are just starting to look for ways to save money by saving energy, it’s essential to start with the low-hanging fruit such as performing energy audits, installing programmable thermostats and sealing air leaks. But if you are one of the many homeowners who have already taken the first steps to lowering your energy bills and you’re looking for ways to do more, it might be time to explore renewable energy options for your home. That’s why this month, we asked you to share your renewable energy questions.
To answer them, we reached out to Sarah Widder, a research engineer at the Energy Department’s Pacific Northwest National Lab who focuses on improving the energy efficiency of our nation’s buildings. Widder also contributes to research at PNNL’s Lab Homes -- a project designed to evaluate how new building technologies work and calculate their energy savings for the typical American family.
Q - What's the average payback of home thermal solar projects vs. photovoltaic solar? Why isn't thermal solar mentioned more?
A - Sarah Widder: Before comparing the costs of solar thermal and photovoltaic (PV) systems, it’s important to understand the differences between the systems.
Solar thermal systems (sometimes called solar water heaters) use the sun to heat water for domestic hot water use -- and potentially space heating if you have a heating system that uses water, like radiant slab or radiators. These systems are typically 50-75 percent efficient and cannot feed any excess solar thermal energy collected back to the electric grid. That means that in some cases, the systems can produce more energy than a household can use, reducing the system’s efficiency further.
Conversely, PV panels convert the sun’s energy to electricity at an efficiency of approximately 15 percent and can be used to directly power any application in your home that uses electricity, including heat pumps for space heating, water heaters, appliances, lighting and other miscellaneous electrical loads. Plus, with some utilities, homeowners can sell the excess energy back to the grid, helping to contribute to even lower energy bills.
Because of these differences, it can be hard to compare solar thermal and PV systems. In addition, the costs of both solar thermal and PV systems depend on a number of factors, such as the solar resource available in your specific location, installation costs in your area, the size of the system you need, your local electricity prices and any available incentives.
Given all these elements -- plus factoring in the average electricity rate in the U.S. -- the typical payback period for a residential PV solar system is around 10 years. But keep in mind, your specific payback period could be different depending on the electricity rate you pay and whether your state offers tax credits or your power company offers a rebate for installing solar panels on your home. The National Renewable Energy Lab’s PVWatts tool can help you estimate the electricity production and associated payback for a given solar PV system.
While solar thermal systems typically cost less up front to install than PV systems, their payback period is similar to PV systems because there are fewer incentives and tax credits for solar thermal. Depending on your home’s location, water use and energy costs, a solar thermal system’s payback is usually around 7-10 years. In some warmer locations where you can use lower-cost solar thermal systems -- such as integral collector storage (ICS), thermosyphon and direct forced-circulation systems -- installation costs are lower, translating into a shorter payback period.
In the end, your energy needs and the characteristics of your home will determine which type of solar system is the most cost effective for you.
You can see this entire article on Energy.gov here