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Andrew Pollard
Is Solar Water Heating worth the investment?
Blog, Solar Hot Water

As the summer continues, many solar water heating (SWH) systems will be peaking in their annual energy performance. But as we move into winter the performance of SWH systems will drop. Is it worthwhile to invest in solar given the lowered winter performance, as cautioned by last year’s Parliamentary Commissioner for the Environment’s (PCE’s) report?

The headline in the Herald when the PCE’s report was released was ‘Solar Water Heating may not be worth the investment’. The interesting question is ‘who is doing the investing?’  From the PCE report they talk about solar water heating not be able to supply power at times of high network demand (cold cloudy winter’s day) so perhaps they are thinking about the centralised energy and network companies.

Are energy or network companies interested in doing any investing that reduces how much electricity they can sell? Perhaps not.

Should homeowners, who could potentially displace over 70% of their water heating energy with solar consider it? Definitely.

There are multiple benefits from installing SWH, here’s some of them:

  • Save money
  • Reduce household CO2 emissions
  • Isolate against rising energy prices
  • Good feeling you are doing something good for environment
  • Visible display that you are doing something (the Prius effect)
  • Increase value of property
  • Support local industries

As well as some negatives;

  • Higher costs
  • Output depends on the weather (less output in winter)
  • Greater maintenance requirements
  • Aesthetics may be an issue
  • Longer installation
  • Needs correct orientation and alignment

The overwhelming majority of households examined in the BRANZ SWH performance study (BRANZ Study Report 188) gave saving money as a primary reason for installing their systems. The big negative issue is the higher cost of these systems.

SWH is different from many other energy efficiency improvements in that the stakes are much higher. As an example, the price of a hot water cylinder wrap is quite low so that the initial investment is not as much of a barrier despite the fact that the cylinder wrap will only provide small savings.

So is the answer to calculate the payback period for the various options?


Payback is somewhat of a misleading measure, especially for more expensive options. Payback period can give the false impression that this is the period you must wait before the investment is worthwhile. SWH systems deliver savings from the day they are installed. Saying that a SWH system has a payback of 9 years can be a turn-off while the saying that the same system delivers a return on investment of over 11% may be received much more favourably.  Return on investment is the interest rate that an investment would need to return to provide the same level of returns as the energy savings from the SWH system.

As we upgrade our energy efficiency interventions to bigger and better things we must also upgrade our financial assessments to more than simple payback calculations. It is preferable to use a wide range of measures to better appreciate the differences between options. As an example of some of the different types of financial calculations, see the end of my presentation to last years NZGBC Master Class on water heating ( )  and Ian Page’s paper at SB10 provided a range of measures for a variety of energy efficient options.

Making the judgement as to whether SWH is a worthwhile investment needs careful assessment.  Firstly by identifying who you are considering (it should be the homeowners) and secondly by looking at a range of assessment criteria including a range of financial measures.



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