The Utility Value Of Solar Water Heating Systems In New York State

The Florida Solar Energy Center (FSEC), under contract to the New York State Energy Research and Development Authority, installed 12 solar domestic hot water (SDHW) systems in single-family residences in downstate New York and instrumented them to determine energy consumption and time-of-day electrical demand. Annual performance data was collected on both the SDHW systems and the original electric resistance water heaters and has been analyzed to determine energy efficiency, cost effectiveness, and the impact on electrical utility peak demand. During the summer months, a typical New York State SDHW system is able to reduce weekday electrical demand by 90 percent (when compared to the weekday demand of electric resistance water heaters) at times that coincide with utility system peak demand. Furthermore, a SDHW system was able to reduce coincident demand by 88 percent on the 1995 Long Island Lighting Company (LILCO) summer peak day and by 92 percent on the Consolidated Edison Company of New York summer peak day. In addition, SDHW systems do not adversely impact the utility system by decreasing the load factor for electric water heating, since the annual weekday load factor for both the SDHW systems and the electric resistance water heaters was 60 percent. The average New York SDHW system installed during this program also operated with approximately a 63 percent higher annual electrical energy efficiency than the average electric resistance water heater. The energy savings due to a New York SDHW system ranged from approximately 900 to 3,100 kWh per year, with a mean of 1,980 kWh per year -- based on an average electric resistance water heater usage of 4,623 kWh per year for the twelve original electric water heaters. Therefore, at the 1995 residential electricity rates of the three New York utilities - LILCO, Con Edison, and Orange & Rockland Utilities - in whose service areas the systems were installed, the average utility customer could save approximately $325 per year due to a typical SDHW system. The average installed cost for a SDHW system in this program was $3,850, so the average tax-free rate of return for the 12 SDHW systems was approximately 8 percent. However, if the utility owned the SDHW system and sold the hot water to the customer for a monthly fee, the after-tax internal rate of return to the utility for installing 1,550 SDHW systems over five years at an investment of approximately $4 million could be 11.8 percent per system. Therefore, it appears that the potential exists for a utility to generate revenue from a SDHW program without taking into account the ancillary benefits of good customer relations, environmental incentives, possible renewable energy credits, or the 90 percent reduction in summer peak demand