Reference no: EM13954366

It is often said that one of the best things you can do to safe energy in a house is to install a solar water heater. "You pay back the investment in four to five years" is a common remark.

Another common assumption is that a geyser contributes about 40% to the energy consumption of a residential house in South Africa (assuming a house without a central heating system).

Calculate the payback time on a solar water heater based on the following assumptions. Cost of a new 200 liter system is R13,800. Monthly average electricity cost of R600. Geyser contributes 40% to the electricity bill. Neglect the effect of inflation.

After installing a solar water heater on your roof most the people in your street is very excited and start asking you questions. One man remarks that he has a holiday house in Stilbaai. The house is occupied for about 50 days a year. His annual electricity bill is R1200 of which R50 is a fixed connection fee. What would his payback time be assuming the geyser contributes 40 % to the electricity bill and a similar installation cost as above. Is it worth installing the solar water heater on a financial basis?