More than Hot Air

In October 2007, John Delano was looking for ways to reduce his carbon footprint. Although his home in Troy, NY, was already greener than most — it has a solar photovoltaic system that converts the sun’s energy into electricity — he noticed it was costing him quite a bit of power to heat his water. So Delano, a professor at the University at Albany, decided to invest in a solar thermal system — panels that soak up the sun’s rays and use the energy to heat up water. “And it worked like a charm,” he says. Now, with both systems in place, there are about five months in the year when he only pays 10 dollars for electricity from a conventional power plant (although his bill is a little higher during the late fall and winter months). What surprised Delano was that the solar water heating turned out to be more cost-effective than the photovoltaic cells.

“They both generate or displace comparable amounts of electricity, but the solar thermal system costs a quarter of what [a photovoltaic] system costs; so it’s about four times more cost-effective,” he says. “I think if I had to do it over again, I would start with a thermal system.”

Solar thermal technology has been around for centuries. Although it lacks much of the high-tech feel of its cousin the photovoltaic panel, solar thermal panels produce about four times more energy per square foot, and they generally cost less to install than photovolatics. While the solar thermal industry went through a boom-and-bust period in the 1970s and 1980s, the return of federal tax incentives has started to revive the business, increasing the number of installations for hot water systems in the United States from about 8,000 per year in 2006 to about 25,000 in the past year. And thanks to money from the Obama Administration’s new stimulus package, the federal tax credit for a solar thermal system has changed from a $2,000 maximum to 30 percent of the entire cost of the installation. Since many states also offer tax credits that range from about 20 percent to 35 percent of the system’s total cost, the federal and state incentives combined can reduce the price tag by more than 50 percent. It’s too early to know whether the new incentives will be enough to spark a new boom in the technology, but those in the industry are optimistic.

Solar hot water technology is rather simple. When a solar thermal panel sits on a rooftop, the large, rectangular object is propped up at about a 45-degree angle, a prime position for catching solar energy. A shiny glass covering seals in a dark gray plate made of sheet metal. Like black asphalt on a summer’s day, the plate will absorb heat, and the glass traps it inside. Obscured by the dark paint, copper pipes carrying water run though the plate. As the water runs from the bottom of the panel towards the top, the sun’s energy is transferred from the plate to the water, and it heats up to about 120 degrees Fahrenheit. The water then heads to an insulated storage tank where it waits to be used by residents.

The simple system can still pull its weight in electricity savings. “The solar thermal system displaces about one-third of our total electricity, by the sun heating the water,” says Delano.

In New York, where many winter days can dip below freezing, homes require a more complicated system. To prevent water from freezing in the pipes, a different liquid, such as anti-freeze, flows through the system’s copper veins. In these cases, the heat is transferred from the anti-freeze to the water through a component known as a “heat exchanger,” such as a copper coil inside the tank.

Since solar thermal collectors absorb the full spectrum of solar radiation they are actually much more efficient at collecting energy than photovoltaic panels, says Pat Gallagher, a solar thermal systems installer in Warwick, NY. In a silicon photovoltaic cell, only a specific wavelength of light provides the right amount of energy to excite the electrons and allow a current to flow. On the other hand, solar thermal panels don’t need to worry about converting light to electricity, and their black surface allows them to absorb all the wavelengths of light. As a result, photovolatics can only convert about 15 to 18 percent of the sun’s energy into electricity, while solar thermal panels are able to transfer about 70 percent of the solar heat they absorb to the water.

While many homes still need electricity to pump water, and to heat water on cloudy days, people generally reduce their water-heating costs by about 70 percent, according to Gallagher. For a typical system, residential customers can recoup their initial payment via energy savings in five to ten years, says Ron Kamen, a founder of EarthKind Energy, a solar thermal systems installation company in NY.

Solar hot water is far from a new technology. A simpler version of what is around today was used in California and Florida in the early 1900s until cheap and plentiful oil made the industry virtually obsolete. But it started to make a comeback in the 1970s during the Arab oil embargo, and then boomed from 1979 to 1986, after President Jimmy Carter implemented a 40 percent federal tax credit for solar hot water systems.

All that changed on January 1, 1986, when the Reagan administration allowed the tax rebate to expire. The solar thermal industry came crashing down, says Gary Vliet, a professor of mechanical engineering at the University of Texas at Austin. “Within six months, it was dead. People went out of business.”

The industry went dormant until 2005 when the Congress restored the tax credit. Now, the solar thermal business is picking up again, although the development has been slower than it was during the Carter era. “We’ve seen a reemergence of the industry on a smaller but growing scale,” says Paul Denholm, an energy analyst at the National Renewable Energy Laboratory, a U.S. Department of Energy facility in Golden, Colorado. Past increases in oil prices, along with the new tax rebates from the stimulus package, have played a role in the current growth, he says.

The total cost of a solar thermal system depends on many factors, including where you live and what system you have. But for many customers, the new 30 percent tax credit should provide a bigger incentive than the previous $2,000 cap because the systems can cost more than $6,000. For example, a typical installation in the New York region costs between $8,000 and $12,000. But the federal incentive, along with the 25 percent state tax credit brings the cost down to about $3,600 to $5,400.

Dollar for dollar, a solar thermal system is a lot cheaper than a photovoltaic system. Photovoltaics can cost between $30,000 and $40,000, not counting incentives and tax credits. And while photovoltaics provide electricity for the whole house, not just water, they produce less energy per dollar than a solar thermal system because photovoltaics are less efficient. “A $5,000 solar water heating system makes the same amount of energy as a $35,000 photovoltaic system,” says Les Nelson, chair of the solar thermal division of the Solar Energy Industries Association, a trade organization for the solar energy industry in the U.S., and president of Western Renewables Group, a renewable energy consulting company.

The lower cost and faster payback time sometimes makes solar thermal a more practical choice than photovolatics for consumers looking to cut down on their energy use. “If you compare both those systems and you look at what the systems cost, and you look at how fast they pay back, solar thermal for domestic hot water heating is the better deal,” says Betsy Ferris Wyman, vice president of sales for SunDog Solar, a solar installation company in Chatham, NY, that installs both photovoltaic and solar thermal systems.

However, consumers should not simply dismiss photovolatics because of its higher price-tag. “There’s no kind of universal rule of thumb as to whether or not [photovolatics] or solar water heating makes sense; it depends on a huge number of factors,” says Denholm, of the National Renewable Energy Laboratory. For example, single-person households are good candidates for photovoltaic systems. These homes often do not use much hot water, so they would not see a large economic benefit from a solar hot water system. “When you make a tank of hot water, you either use it, or you lose it,” says Ferris Wyman. “So it doesn’t really make much sense to create a system for domestic hot water that will create 80 gallons of hot water for one person who’s only going to use 20 gallons a day.” On the other hand, a large family would benefit, she says.

Despite its cost effectiveness, solar hot water has received a lot less political and business attention than have photovoltaics. “Solar thermal’s seen by a lot of people as kind of the orphan step child of the industry just because it’s not as attractive politically as PV,” says Denholm. And this lack of attention has meant less investment from consumers. “If you go all around the country … what you find is that people are putting in PV first, and don’t even think about solar water heating; it’s really sort of crazy,” says Vliet, the mechanical engineer.

Some feel that solar thermal’s simplicity may be its downfall. “Photovoltaics kind of has some excitement, some kind of high-techness about it that seems to be a lot more attractive than solar water heating,” says Denholm.

Another reason photovoltaic systems may be more desirable than solar hot water systems is that “photovolatics make the meter spin backwards,” says Nelson of the Solar Energy Industries Association. If you have an electric meter on your house, and you create more energy than you use, you will put energy back into the grid and turn back the dial on your meter, he says. “People like that a lot.”

Also, more businesses may have focused on installing photovoltaic systems because they are easier to set up than solar hot water systems, says Jeffery Wolfe, co-founder of GroSolar, a solar hot water and photovoltaic installation company. Hot water systems require pipes to be put in that carry water to the right places, whereas photovoltaic systems can provide electricity to a house through wire connections.

While solar water heating has not been a hot technology in the United States, it has been expanding in other parts of the world. There are 42 million solar thermal systems installed worldwide, says Kamen, the founder of EarthKind Energy. And in Europe, many countries saw the industry grow from about 500 installations per year per country to more than 20,000 over a short period after they started focusing on the technology, he says. Since New York state currently has about 500 installations per year, Kamen feels that solar thermal power could take off in many states if they follow the European model.

Many of the same factors that led to the rise of the solar thermal industry in Europe are now present in the United States. “[U.S. citizens] now have all the framework conditions,” says Kamen. Environmental concerns along with unease about future energy prices and the financial benefits of the recent tax incentives will help the industry grow in the U.S., he says.

Wolfe is also optimistic about solar thermal’s future. “[Solar hot water] should be right up there with solar PV. And I think that in another ten years, we’ll find that it probably is,” he says.

If solar water heating is applied on a larger scale, it could help lower the amount of energy used in the United States. In 2007, Denholm conducted a study that looked at the amount of energy that would be saved in the U.S. if everyone who could take advantage of solar hot water technology did so. He found that solar hot water systems could save about one percent of the total U.S. energy per year, “which doesn’t sound like a lot, but one percent of an extremely large number is still a very large number,” he says. “We use an awful lot of energy in this country to heat water, and there’s no doubt that solar water heating can provide a significant benefit.”

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