Skip to content

Energy savings means financial savings - Calculating ROI & payback

Despite advertising claims that solar water heaters will save 40% of a home’s electricity bill, this is misleading.

It depends purely on what percentage of the home’s electricity bill is spent on heating water. It may be as low as 10% or as high as 60% of the total home electricity bill. The amount of electricity saved in heating water depends on the size and the efficiency of the solar water heater. A solar water heater can only save a percentage of the amount of electricity used in heating the volume of water in the tank.

Q factor

Taking the Q factor and dividing by 3,6 provides the equivalent electrical saving. Taking the current rate of electricity and multiplying by the kWh savings will provide the average financial saving daily.

For example – (using the same illustrative system as above):

Size of System (litres)

Cost Including Installation (Illustrative approx.)

Approximate Payback Period



3.4 years