Many people still wonder what they can do to reduce their carbon footprint and make a real difference in their homes and businesses. Recent policies by the Australian Government to improve lighting efficiency and double the rebate for solar electricity have made it easier and more affordable for people to do their part in reducing energy consumption.

The PV policy, for example, has already seen a big rise in demand for grid-connected systems in urban environments and made it more financially viable for Australians to reduce their environmental impact. In effect, the initiative has reduced the payback period for a 1 kW system down from about 30 to 20 years.

What many people, however, may not yet have realised is that there is another “low-hanging fruit” in the fight against greenhouse gas emissions – solar hot water.

The low hanging fruit

With the issue of greenhouse gas emissions firmly on the agenda of Australian politics, businesses and homes, the practical solutions to deal with it are now easier to access than ever. Many people still wonder what they can do to reduce their carbon footprint and make a real difference in their homes and businesses. The recent Federal Government initiative to phase out conventional light bulbs and switch to energy efficient alternatives made it easy and affordable for all to do their part in reducing energy consumption.

What many people, however, may not yet have realised is that there is another low hanging fruit in the fight against greenhouse gas emissions – solar hot water.

While a conventional electric hot water system accounts for between 25 – 40 per cent of the energy consumption of an average household, a solar hot water system can provide up to 90 per cent of hot water requirements for a fraction of the electricity costs. Even the payback time on such a system is significantly shorter, meaning that it is something that most Australian households can afford with relative ease.

But there is not only the environmental impact. Solar hot water is an economical way to help home owners and home builders comply with BASIX (in NSW) and other energy efficiency rating systems for new homes around Australia. The Queensland Government recently recognised the viability for both the environment and the pocket by banning all electric hot water systems from 2010 onwards.

Many renewable energy companies have been approached by PV installers over the past months to run information seminars on solar hot water, because more and more businesses, while quite busy with PV as we speak, are looking at expanding into this area.

The repayment periods for solar hot water systems are excellent. For example, the Conergy 2504/O/36/2LC split 250 litre, two collector, electric boosted solar system with a Renewable Energy Certificate (REC) of 33 equates to an annual saving of 3,300 kWh. Calculated at a rate of 14 cents per kWh, the annual saving of this system would be $462.00.

This system retails at a cost of $3,035 with the Government REC incentive on this system being $792 (calculated at $24 per REC). The cost to the consumer, after REC incentive, is therefore $2,243. To find the time taken to repay this cost, we simply divide this figure by the annual saving in electricity cost - $462 – which equals 4.8 years until the system has paid itself off.

Further, taking the average 15-year life expectancy of the system into consideration, it can be said that the system has the potential to save its owner $4,712 – based on the $462 annual electricity cost saving multiplied by the 10.2 years of ownership during which the cost of the system has been paid for.

If you consider the cost that is also saved by not having to purchase a tank with an electric element or gas, at an approximate cost of $1,500, the savings are even greater.

When it comes to choosing a hot water system, the Federal Government has made it simple to determine a system’s efficiency by allocating a REC to all manufactured systems, regardless of the make and model. In essence, all hot water systems are placed on the same playing field to determine their effectiveness in reducing greenhouse gas emissions.

The REC number allocated to a system represents the number of megawatt hours (MWh) of energy that the system will save, when used under normal domestic conditions, over a period of 10 years. For example, a REC numbers of 33 represents a saving of 33 MWh over 10 years, or 3,300 kWh each year.

Not all systems are equal in their performance. When buying a system, the REC for performance is an important factor to check, so that an informed decision can be made based on the efficiency and life span of a system.

While electric and gas systems offer an initial cheaper purchase price, it’s clear that in the long run solar can offer excellent savings over the lifespan of a hot water system, while reducing the impact the owner has on our environment.