Payback Charts of Solar Water Heating Systems

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.


While coal is still cheap compared to LPG and electricity, it is becoming costlier. However considering the present rates of coal and ignoring future price rise, it is estimated that the payback point of a solar water heating system is reached after 5 years.


Like coal wood is also cheap but only a die hard enemy of environment and ecology would continue using wood. In this chart the payback of a solar water heating system is reached after 4 years. Of course we have ignored the cost to environment and future of the earth while calculating the payback because in that case use of wood as fuel would have to be banned universally!


Furnace oil is used mainly by industries to heat water for process use and considering the ever increasing costs of petro products and pollution effects, the payback period of 3 years makes investment in a solar water heating system viable and a better alternative.


Compared to LPG costs the payback of a solar water heating system is 3-3.5 years and here again investment in a solar system is viable.


Electricity is the most efficient and also the most expensive and supply is also projected to be more erratic in the future. In the first year of operation itself, a 1000 lpd solar water heating system pays back 40% to 45% of its cost compared to savings in cost of electricity bills. Payback is at 1.5-2 years maximum.