How to Calculate Your Solar Water Heater Payback Period

Before investing in a solar water heater, every buyer wants to know one thing: how long before it pays for itself? The answer depends on three variables — your current energy cost, your daily hot water usage, and the system cost.

Step 1 — Estimate your hot water energy consumption

The formula: Q = m × Cp × ΔT / 3600 kWh, where m is litres per day, Cp is 4.18 kJ/kg°C, and ΔT is temperature rise (typically 35–45°C depending on your climate and incoming water temperature).

For a family of 4 using 150 litres/day with a 40°C rise: Q = 150 × 4.18 × 40 / 3600 = 6.97 kWh/day ≈ 209 kWh/month.

Step 2 — Apply solar fraction

Most sunny and temperate regions suitable for solar water heating receive 4–6 peak sun hours per day annually. Accounting for seasonal cloud cover and system losses, a well-installed ETC system replaces approximately 80% of your water heating energy (solar fraction = 0.80). Effective monthly energy saving: 209 × 0.80 = 167 kWh/month.

Step 3 — Calculate monthly savings by fuel type

Fuel replaced	Monthly energy saving (150 L/day)	How to calculate your saving
Electric geyser	~80–100 kWh replaced	Multiply by your local electricity tariff per kWh
LPG geyser	~10–14 kg LPG replaced	Multiply by your local LPG price per kg
Diesel boiler	~9–12 litres diesel replaced	Multiply by your local diesel price per litre

Step 4 — Calculate payback

Payback (years) = System cost ÷ Annual savings. The formula works in any currency. Typical payback ranges:

• Replacing electric geyser: 3.5–5 years
• Replacing LPG geyser: 2.5–4 years
• Replacing diesel boiler: 2–3 years

After payback, the system generates free hot water for another 15–20 years.

Use Kaldor's interactive calculator

Rather than doing this manually, use our Savings Calculator on the main site — input your capacity, fuel type, rate, and system cost and it calculates payback, monthly savings, annual savings, CO₂ avoided, and 10-year net profit instantly.