Most of you, who know me will know that I am a tree hugging idealist which is rather ironic when one considers that I am presently employed by the largest contributor of carbon emissions in the world. Although I have tried to convince (and failed to convince) many people on why now is the time to invest in a solar water geyser, I have hypocritically (not until now that is) found the time to install one myself. I always found some excuse to delay the installation and honestly the cost of the installation was always a factor in the back of my mind. It is easy to go around talking green and using CFL globes at home but when it comes to actually making a R20 000 investment, excuses to delay are easy to come by.
Fate decided to force my hand when I awoke one morning to find my geyser with a minor leak. My insurance said they would pay for it to be replaced and I hastily made the decision to replace my geyser with a solar water geyser. The time just seemed right so with little shopping around I called a company I had made contact with previously and ordered my new solar water geyser. Since I was driving solo at the time, I started to think about my decision and whether it was the correct choice financially. A few simple assumptions and I was be able to dispel the myth (propagated by most plumbers), "That it is just too expensive and makes no financial sense".
Modern day solar water heaters are not an eyesore and the unit comes supplied with a geyser blanket for the tank and 8m of thermoflex piping which will insulate the first few metres of your hot water piping. The price quoted of R18 500 is all inclusive incl. the electrical installation and accompanying certificate of compliance. The keypad installed in your home allows you the opportunity to manually over-ride the system, set the minimum temperature required and observe both the temperature of the water in the geyser and the water in the exposed pipes. As may be observed, one can expect temperatures in excess of 60 degrees celsius on a hot Durban day.
In my calculations below I was very conservative, so in reality, I believe that the payback time will be even sooner than indicated by my calculations. I assumed a monthly electricity bill of R700 and a geyser consumption of 30% (which is the lower end of the range which goes up to 50% in some studies). I have also conservatively assumed that Eskom would be granted a 20% increase in MYPD3 (this is the agreement between Eskom and NERSA that determines the electricity price increase from 2013 to 2015). I believe this to be conservative because Eskom was granted a 25% increase during MYPD2 and this was before Eskom accepted a R1,5 Billion loan from abroad. Since Eskom earns revenue from electricity sales, tariff increases are the only viable means of repaying those debts in the future. If anybody deisagrees with my assumptions, I would love to hear form you as my aim here is to promote understanding and not sell solar water geysers.
In my calculations below I was very conservative, so in reality, I believe that the payback time will be even sooner than indicated by my calculations. I assumed a monthly electricity bill of R700 and a geyser consumption of 30% (which is the lower end of the range which goes up to 50% in some studies). I have also conservatively assumed that Eskom would be granted a 20% increase in MYPD3 (this is the agreement between Eskom and NERSA that determines the electricity price increase from 2013 to 2015). I believe this to be conservative because Eskom was granted a 25% increase during MYPD2 and this was before Eskom accepted a R1,5 Billion loan from abroad. Since Eskom earns revenue from electricity sales, tariff increases are the only viable means of repaying those debts in the future. If anybody deisagrees with my assumptions, I would love to hear form you as my aim here is to promote understanding and not sell solar water geysers.
I also understand and appreciate that this is not an entirely accurate financial justification because it did not for example take into account things like 'Future Value' and 'Net Present Value' but I hope that someone with a better understanding of these concepts than I have could rework these and let us know the results. All I know is that in a relative short period of time, I will be getting a return on investment. TAX FREE! The normal calculation is shown below. It shows that you should expect to start seeing a return on investment in around 3.5 years time.
| Total Cost | R 18,500.00 | |||
| Eskom Rebate | R 6,098.00 | |||
| Amount remaining | R 12,402.00 | |||
| Average Electricity Bill | R 700.00 | |||
| Percentage due to Water heating | 30 | |||
| Price increase MYPD2 | 25 | |||
| Assumed price increase MYPD3 | 20 | |||
| Year 1 | Year 2 | Year 3 | Year 4 | |
| Monthly savings | R 210 | R 263 | R 328 | R 394 |
| Annual Savings | R 2,520 | R 3,024 | R 3,938 | R 4,725 |
| Capital repayment | R 9,882 | R 6,858 | R 2,921 | R-1,805 |
The calculation below shows the return on investment period for a situation like mine, when you can also factor in the geyser replacement payment from the insurance company. I assumed an amount of R5000 for this payment as a typical geyser replacement would cost in the region of R6000 with an additional R1000 being deducted for a rebate. This shows that you would pay back your initial capital investment in about 2 and a half years.
| Total Cost | R 18,500 | ||
| Eskom Rebate | R 6,098 | ||
| Geyser replacement cost | R 5,000 | ||
| Amount remaining | R 7,402 | ||
| Average Electricity Bill | R 700 | ||
| Percentage due to Water heating | 30 | ||
| Price increase MYPD2 | 25 | ||
| Assumed price increase MYPD3 | 20 | ||
| Year 1 | Year 2 | Year 3 | |
| Monthly savings | R 210 | R 263 | R 328 |
| Annual Savings | R 2,520 | R 3,024 | R 3,938 |
| Capital repayment | R 4,882 | R 1,858 | R-2,080 |
I hope that these calculations give you the necessary clarity to wade through the bullshit next time you discuss this topic with anyone. I went with a company called SOLARIZE (031 579 2043) and I found them to be very efficient and professional even taking the time to help us with the rebate application. All that we effectively had to do was insert our details, affix a postage stamp and post. There are other companies registered with the Eskom rebate program and you can obtain the details for a regional supplier from www.eskom.co.za/dsm or call the solar programme help desk (011 800 4744).
