Water heating accounts for approximately 30 per cent of an average household’s total energy use; using solar energy to heat water can greatly reduce a household’s carbon footprint, producing no greenhouse gas emissions. While solar hot water systems still have the capacity to provide between 50 and 90 per cent of total household hot water requirements, depending on the climate and the model of heater. When sunlight is insufficient, an electric, gas or solid fuel booster is used to heat the household water.

Solar water heaters are an energy efficient and reliable means for providing hot water in all parts of Australia. Homeowners are increasingly taking advantage of government rebates for solar hot water installation, which includes heat pumps in most cases.

The federal scheme

From 26 February 2009, the Australian Government is providing a rebate of $1,600 to eligible home-owners who replace electric hot water systems in existing homes with solar and heat pump hot water systems.

To be eligible for the rebate, a hot water system must replace an electric storage hot water system; be a solar or heat pump hot water system that is eligible for at least 20 Renewable Energy Certificates (RECs); and, be installed by a suitably qualified person.

Solar water heaters and RECs

RECs are currently created through the Mandatory Renewable Energy Target (MRET), creating a market-based certificate trading scheme. Each REC represents the equivalent of one megawatt hour (MWh) of electricity generation from an accredited renewable energy source. For solar water heaters (SWH), each REC represents the displacement of one MWh of electricity generation by solar energy.

Under the legislation, the calculated REC values for each solar water heater or air-sourced heat pump system are deemed to represent the number of MWh displaced by the over the life of the system.

The design of the Government’s proposed expanded RET will maintain the same eligibility criteria as the current MRET scheme – solar water heaters will remain eligible with a ten-year deeming period through to the end of the scheme.

An industry heating up

Manufacturers and retailers of hot water systems have said that the uptake of solar hot water systems has increased over the last year, attributing boosted sales to federal and state government incentives, and an increased level of awareness of environmental issues by consumers, plumbers, builders and retailers alike.

Hills Solar Product Manager Dominic Beshara says the renewable energy hot water market has grown considerably over the last twelve months, moving from 7 per cent to almost 10 per cent of the total hot water market nationally. “One of the supporting factors is federal and state regulation, which aims to increase the uptake of renewable energy hot water products and high efficiency gas in both new homes and existing homes,” he says.

Mr Beshara believes that major initiatives needed to increase the uptake rate of solar water heater technology would be a consistent national framework in terms of legislation, regulations, incentives and rebates for both new and existing homes.

“Currently there are different regulations and incentives within each state and nationally, which is confusing to customers. This needs to be simplified and streamlined without being means tested to ensure ease of understanding,” he says.

Rinnai has said that its sales of gas-boosted solar hot water systems have increased by well over 100 per cent since 2007, due to the introduction both of building regulations that require ‘greenhouse friendly’ water heater systems, and federal and state government rebates.

Steve Linton from Dux Hot Water commented that further regulation of the industry looks set to continue reducing the installation of electric storage systems.

“There are proposed federal electric storage bans for 2012, and even earlier in some states, which means that solar and heat pump systems will become mandatory in a lot of installations. For areas with access to natural gas it looks as though there will still be the option of installing a five star or greater rated product,” he says.

Alan Black from Solar-Mio applauds the governments for their desire to help improve the uptake of solar hot water through incentives and says this has led to an enormous increase in sales of solar hot water systems, especially for new homes.

“The real pity with the current system is the exclusion of incentives for retrofit solar systems,” says Mr Black. “The current requirement forcing home owners to replace their existing hot water storage tank to receive a subsidy also fails to take into account the additional unnecessary carbon footprint created by insisting that home owners discard their existing working hot water service in order to gain a rebate.”

Mr Black says this requirement cannot be justified, as an average retrofit will, in practice, give the same solar gain as an equivalent new system. Research commissioned by Solar-Mio and conducted throughout central New South Wales in 2007–08 has confirmed that if worthwhile subsidies were made available by the federal or state government on retrofit systems, the take-up of solar hot water in existing homes could be as high as 50 per cent.

Legislating for a greener future

Future regulation of the industry looks set to continue reducing the installation of electric storage systems. Mr Linton says that in order to increase the uptake of solar hot water and heat pump systems these regulations need to be enforced and rebates need to remain in place to help consumers overcome the increased cost of moving to these new and innovative products.