California announces solar water heater subsidies

California regulators recently approved a $350 million plan to subsidize costs of replacing natural gas and electric hot water heaters with solar thermal power, which generally works by preheating the water before it gets to the tank. Solar heaters cut down on carbon emissions, save money and preserve natural resources. Under some scenarios, payback could be in as little as three years, if the owner qualifies for various utility and federal rebates.

There are several types of solar water heaters.  The US Department of Energy explains how they work and which would be best for your location.  Active systems have circulating pumps and controls, and they cost more than passive systems, which are not as efficient but can last longer.  In addition, some systems are better-suited for areas with below-freezing temperatures.

Individual homeowners will receive $1,010, apartment owners up to $500,000, and commercial buildings as much as $250,000. Funding is via extra charges on existing natural gas and electric users. While this does seem a bit like robbing Peter to pay Paul, mass adoption of solar heaters will drive everyone’s costs down. Why? With less demand for electricity and natural gas due to people using solar, those prices will drop too. Everyone wins. California hopes the plan will encourage installation of 200,000 solar heaters by 2017.

Goals of the subsidy program include:

1.  Achieving the installation of natural gas-displacing systems that displace 585 million therms

2.  Achieving the installation of electric-displacing SWH systems that displace 150 megawatts (MW) by the end of 2017

3.  Supporting reductions in the cost of SWH systems of at least 16% through a program that increases market size and encourages cost reductions through market efficiency and innovation

Awhile back, Germany implemented subsidies for home solar, which resulted in mass installation of solar. It is now the world’s largest market for solar installations. This means more clean energy and many new jobs, as well as a reduction in carbon emissions. Regardless of your views on climate change, creating your own power in a cost-effective manner is a worthy goal to work towards.

Why buy power from elsewhere if you don’t have to?  Let’s hope California reaches its goal of 200,000 solar hot water heater installations by 2017. It will create new jobs, cut costs, and help the environment.