Payback period is an important factor while deciding about purchase of a solar water heating system. Payback period is commonly defined as the time it will take to recover the investment in a typical solar water heating system, by way of savings in fuel costs.
We present below charts of payback period of a typical solar water heating system of 1000 lpd/60 deg.C. capacity as compared to the cost of various fuels like coal, wood, LPG, furnace oil and electricity.
While preparing this chart we have opted to make it simple and understandable even by a non-techno-commercial person and hence, for the sake of simplicity, in this calculation we have not taken into consideration various factors such as :
Income-tax and other financial benefits available on solar water heating systems (including subsidy, etc) and discounted cash flows, interest loss/loss of profits on investment, etc. etc.
Maintenance cost of solar water heating system is very negligible and hence we have decided to offset this cost against cost of equipment using conventional fuels. Hence this is not factored into the payback chart. Of course the immense benefit to environment and humanity in the coming years also is not given a value and factored in!
While carrying out calculations a 1000 lpd/60 deg. C. solar water heating system has been taken as the base and the price is considered at Rs. 125000. In the first year of operation the cost of conventional fuel saved by a solar heating system has been deducted from its value. Every year thereafter we have deducted cost of the fuel saved per annum (without considering rise in costs of conventional fuels). Likewise the fuel cost graph shows the amount it would cost to heat 1000 litres of water to 60 deg. C. every year. While we have not considered interest loss and other factors we have also not taken into consideration the immeasurable benefits to environment which are not calculable.
These charts are by no means accurate or perfect but are intended only as a guide.