
I have observed many readers agonising over how large to make their system, and how much to spend on it. It seems to be difficult, but why?
Estimating the annual hot water output of any given system, in kWh per annum, is not difficult. I can get a collector, storage tank, booster system, and known pipe run with insulation of a known grade, pump water at a known flow rate and know the output temperature for a given Australian location. It is a model with known inputs, and known behaviour.
Yet the question of how large to make the system, and how to design it, is still incredibly challenging. It takes time, and much research on the part of the consumer, and their consultant.
So where is the difficulty?
It turns out the hardest part is discovering what YOU want, and what your needs are. How much hot water do you need? When do you need it? How much fossil energy do you wish to replace, and what is it worth to you?
Some people want 100% of their hot water from solar. Even with a six member household, the morning after a cold winter day. It is definitely possible.
Others just want to get the absolute quickest payback period on their investment. They know they have to store & boost, and they can easily achieve a 6 year payback period.
The question everyone is asking is this: is the fastest payback always the most cost-efficient investment? It turns out that it is.
Let’s compare two scenarios, where the payback is the same, but the outlay is different.
Scenario 1: Householder pays $2000 (additional cost over and above the cost of a non-solar replacement system). Say this system saves $800 per year. Note the payback is not 5 years, but 9 years, assuming an 8% cost of money. The net present value of those savings over a 20-year system life is $7854. Therefore the householder has saved $3854.
Scenario 2: Householder pays $6000 and saves $1000 per year. The payback is still 9 years. the net present value of those savings over the system life is now 9818. But we notice the householder has saved roughly the same $3818.
On the basis of these considerations, the householder should make the smaller investment.
Now we have gotten a little closer to a good decision. If I can calculate the system output, and calculate the cost savings, then I can calculate the payback period. The assumptions may not be perfect, but it’s fair to say that the shortest payback period wins anyway, no matter what the assumptions are. Much of this has to do with the fact that the future is uncertain, and the far future more so. People can and do, choose the system with the shortest payback period.
However not all people do that. Not even most of them. Not in this market anyway. The same way that not all people drive the smallest possible car, or live in the cheapest possible neighbourhood. Some people still opt for maximum self-reliance. Why?
The reason, as for what car to drive, and what suburb to live in, is that the calculus is far more complex. These factors should not be called intangibles, for they are tangible to anyone making a decision. They are just not consciously considered. So let’s call them subliminals. They are rationales which appear subliminally in people’s calculations, and are not apparent in most cost-benefit analyses, unless these are truly sophisticated.
These are the same subliminals which will have enthusiasts spend tens of thousands more for a HSV edition of their favourite Commodore. Or buy a Ferrari, or spend tens of thousands on their childrens’ private education.
Subliminals like the anticipated increase in the cost of energy. Uncertainty about the future generally. Less reliance on a faceless utility. The repeated satisfaction of getting a small hot water bill. The cash-flow benefits of buying a money-saving device when times are good, to insure against when times are bad. The satisfaction of self-reliance. Pride. Contemplation of, and marvel at, the technology. Being reminded of the sun’s abundance. These considerations get rapidly more specious and fanciful and I’d better stop here.
So, having ascertained that the smallest investment is the most cost-effective (at least when using an Excel spreadsheet with two inputs), let’s go to the other extreme.
Let’s consider a system so large that I don’t even need a booster. Technically feasible, even when you consider the regulatory requirement for the water store to be above 60C just before use, to destroy legionella. With the new evacuated tube collectors, I can triple my normal collector size, and boil my water on a 10C day in the middle of winter. Does this change my equation? Actually I think it does.
So to any given system I now add two more collectors at $1000 each, and subtract a $1000 instant gas booster. And subtract a complete gas bill altogether. I haven’t done my sums but I can see immediately that there are some people for whom this would make perfect economic sense. This makes even more sense when the extra hot water is used for space heating or airconditioning, but we are speculating here…