What’s the Return on Investment on Solar Thermal?

I just received this terse question from a reader: “What’s the ROI (return on investment) on solar thermal?”

I responded, hoping to prompt more discussion: “That’s an interesting but impossible question to answer. What is the nature of your interest in the subject, if I may ask?”

I post this brief conversation because it’s indicative of two much larger and incredibly important issues:

1) Computing the ROI for investors in new technologies like these is impossible, as no one can pick the winners from the losers at this point. Personally, I’m betting on solar thermal, and, though many agree, there are far greater minds than mine that don’t see it this way.

2) Not to get too flippant, but what’s the ROI on saving our civilization from destruction? According to Lester Brown, whom the Washington Post calls “one of the world’s most influential thinkers,”

Ice is melting so fast that even climate scientists are scrambling to keep up with the shrinkage of ice sheets and glaciers. The melting of the earth’s largest ice sheets—Greenland and West Antarctica—would raise sea level dramatically. If the Greenland ice sheet were to melt entirely, it would raise sea level 23 feet. Melting of the West Antarctic ice sheet, the most vulnerable portion of the Antarctic ice because of its exposure to both warming air and warming ocean water, would eventually raise sea level 16 feet. Many of the world’s coastal cities would be under water; over 600 million coastal dwellers would be forced to move.

Solar thermal holds the single greatest promise of clean, abundant, inexpensive energy — in the absence of which mankind will be unable to make its way across these next critical 50 years.

I’m sure this latter point was not contemplated in the reader’s question, but some folks may find it worth considering.

Have any Question or Comment?

4 comments on “What’s the Return on Investment on Solar Thermal?

Miles McDonald

I don’t disagree with your observations but most people still need to see the economic benefits return to them personally. So, in that vein, the ROI will depend on the inputs. What is the cost of the fuel that the solar thermal is replacing? What is the cost of the solar thermal system, including installation? What are the local climate attributes? Solar thermal systems work better in hotter sunnier climates. So the very basic logic is that producing lots of heat for less capital and thereby reducing the use of expensive fuel gives a better ROI.

Having said all that, I get the very distinct feeling that I’m preaching to the converted…

Captain Obvious

I just show the neighbors the comparison between our gas bills and tell them I’ve been saving this much for the last 20 years.

david dunn

Solar thermal is the poor relation in the alternative energy field but yet remains as the most easily applied to domestic properties and has the quickest payback of any with the least subsidies and grants from the taxpayer!

Every house should have them for hot water and maybe for heat storage either daily or seasonal.

There are main types passive and active and based on water and air.

House builders should be made to make houses be free of most heating costs as a prerequisite to obtain planning consent, This would ensure that house design and layout would always take into consideration the suns position and to maximize its effect on solar gain within the house.

We seem to have forgotten the orientation of buildings and the effects that has on man well being , of having plenty of light in the house and garden.

Tribes and our ancestors often made best use of the sun to obtain the free heat provided, have we learnt nothing in recent times about this to work alongside all the new technologies we have?

We have not even started to be serious about thermal solar yet, it has always been on the edge of alternative energy, and if governments really were serious about climate change then they would have spent the PV FITs money on solar thermal first to obtain the maximum benefit of ROI.

David Dewis

A legitimate response would have been – What is the assumed cost of money?

Although in reality it is complicated by incentives, FIT’s and PPA’s, the cost of financing and the time lag from investment to revenue have a strong influence on the LCOE.

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