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Comparing Costs and Determining Payback

Once you know the purchase and annual operating costs of the solar water heating systems you want to compare, you can find the costs associated with conventional water heating systems and compare the two.

Use the table and calculations below to compare two solar water heating systems and determine the cost savings and payback of the more energy-efficient system model.

System Models

System Price

SEF

Estimated Annual Operating Cost

System Model A

 

 

 

System Model B (higher SEF)

 

 

 

Additional cost of more efficient system model
(Model B)

 

 

Price of System Model B - Price of System Model A = $Additional Cost of Model B

Estimated annual operating cost savings (System Model B)

 

 

System Model B Annual Operating Cost - System Model A Annual Operating Cost = $Model B's Cost Savings Per Year

Payback period for Model B

 

 

$Additional Cost of Model B/$Model B's Cost Savings Per Year = Payback period/years

Example:

Comparison of two solar water heating system models with electric backup systems and electricity costs of $0.08/kWh.

System Models

System Price

SEF

Estimated Annual Operating Cost

System Model A

$1,060

2.0

$176

System Model B

$1,145

2.9

$121

Additional cost of more efficient model
(Model B)

 

 

$1,145-$1,060 = $85

Estimated annual operating cost savings (Model B)

 

 

$176-$120 = $56 per year

Payback period for Model B

 

 

$85/$56 per year = 1.5 years