Economic Feasibility of Solar Water and Space Heating

Abstract

The economic feasibility in 1977 and 1978 of solar water and combined water and space heating is analyzed for single-family detached residences and multi-family apartment buildings in four representative U.S. cities: Boston, Massachusetts; Washington, D.C.; Grand Junction, Colorado; and Los Angeles, California. Three economic decision criteria are utilized: payback period, years to recovery of down payment, and years to net positive cash flow. The cost competitiveness of the solar systems compared to heating systems based on electricity, fuel oil, and natural gas is then discussed for each city, and the impact of the federal tax credit for solar energy systems is assessed. It is found that even without federal incentives some solar water and space heating systems are competitive. Enactment of the solar tax credit, however, greatly enhances their competitiveness. The implications of these findings for government tax and energy pricing policies are discussed.