This blog explores changes in the energy industry from an insider’s perspective as it transitions from the old centralized utility model to the new paradigm of distributed generation.
This blog was previously called Inside the Housing Evolution and focused on energy efficient homes. Ultimately, it’s all linked. Soon, every building will have the potential to generate, store, and sell energy. Welcome to the era of the transactive grid – the greatest shift the electricity sector has seen in over 100 years!

March 29, 2011 No Comments

Solar Water Heaters – The Lonely Spinster Aunt of Energy Technologies

The conventional wisdom around marketing energy technologies has been that the only thing that purchasers care about is payback.  Certainly, that’s the first question that anyone asks.  The assumption is that the decision to purchase energy efficiency or renewable technologies is strictly financial, and if the technology can pass some internal hurdle rate in the purchaser’s mind, then you’ll make the sale.  From my experience over the last two years trying to promote Solar Water Heaters (SWH) as an upgrade in our homes, I believe that the decision whether or not to purchase is actually much more emotional.  The real factors that influence the decision are aesthetics, comfort with the technology, and an unquantifiable x-factor that I can only describe as sexiness.

About 2 years ago Urbandale entered into a partnership with Enbridge Gas (the local gas utility), Enerworks (a SWH manufacturer) and Bullfrog Power (a renewable energy provider) to promote Solar Water Heaters in Urbandale homes.  SWH is an established technology.  It’s been around for decades and it’s dead simple.  You pump a glycol solution up through panels on your roof.  The glycol gets heated from the sun and passes through a heat exchanger that pre-heats your water before it goes into your standard water heater tank.  SWH has a proven track record and has been studied to show that even in a cold climate such as Ottawa you can save around 50% on your water heating bills.

A typical SWH system will cost you around $10,000 installed.  Considering that the average Ontario family spends roughly $600 per year on water heating, this means that the typical payback is approximately 33 years – much too long for anyone to consider on strictly financial terms.  As part of our partnership, we were able to offer our purchaser these systems for only $7,000.  (We agreed to sell these systems with no mark-up in order to help promote the technology).  At $7,000 the payback dropped to only 23 years.  That’s still high, but if you consider that the cost of the system will be bundled with your mortgage, the amount you save on a monthly basis will be higher than the additional mortgage payments, so you’re actually saving money from day one!  ($25/month savings versus $23/month payments, assuming 5% interest and a 25-year amortization). We were really excited to be able to offer this system to our customers, and we told Enbridge that we expected to sell 20 systems in the first year of the program.

Unfortunately, the program did not go nearly as well as we expected.  In all we sold only three systems.  In fact, we were supplied with one system from Enbridge to give away for free, and we had difficulty even giving it away!  Purchasers felt that the systems were ugly, and they were worried about the risk of leaks (even though the systems have a very impressive track record).

The problem with SWH is that it’s just not sexy!  The systems look like a clunky afterthought, and it is more likely to bring to mind thoughts of the 1970s fuel crisis than visions of the future.  We know that customers aren’t just interested with payback because of the other upgrades they buy.  Granite countertops cost roughly the same amount and they have no payback at all.  For an energy technology to be popular, it either needs to be completely hidden and a pure financial investment (like superior insulation, high efficiency furnaces or Ground Source Heat Pumps), or it needs to be flashy and futuristic (like wind turbines and solar photovoltaics).  Solar water heaters on the other hand are just… meh.

I have been working on the best way to market energy technologies in Urbandale homes for some time now, and I feel strongly that builders need to come up with a complete package that makes sense financially and is also aesthetically pleasing.  The technologies need to be incorporated into the home right from the design stage, so that they add to the beauty of the home.  We will continue to offer Solar Water Heaters as an upgrade option, however I worry that they will never catch on in the mainstream.  They may make sense financially, but they would need to be redesigned and remarketed in order for them to capture purchasers emotionally, which is what’s necessary for the technology to be truly successful.

Posted by Matthew

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ABOUT THE AUTHOR:

Matthew Sachs

P. Eng. LEED AP

  • COO of Peak Power since July 2016
  • General Manager of Urbandale Construction (May 2008 – Oct 2014)
  • Vice-Chair R-2000 Renewal Committee
  • Member of Energy Star Technical Advisory Committee
  • Greater Ottawa Homebuilders Green Committee
  • Recipient of Canadian Homebuilder’s Association 2009 R-2000 Builder of the Year Award
  • Participant in Natural Resources Canada’s Technology Roadmap for Sustainable Housing
  • Energy Consultant with Marbek Resource Consultants (Feb 2002 – May 2006)

ABOUT PEAK POWER

Peak Power is a Microgrid project development company focused on delivering innovative solutions to offset the most expensive hours of electric demand. We specialize in optimizing the revenue streams from energy storage, advanced building automation, and renewable technologies for customer sited and utility scale projects. Please visit www.peakpowerenergy.com.