Solar Water Heating Makes Sense for Multitenant Buildings

Long-term cost savings and readily available rebates add to value

In hotels, condos, apartments and dormitories, each shower, load of laundry and sink full of dishes adds to the property’s utility bills. Heating water is one of the highest operating costs for multitenant property owners.

To lower utility bills and achieve a reduced carbon footprint, multitenant property owners are increasingly turning to the sun for solar water heating, and in California the proposition has never been better.

State rebates and federal tax incentives are at all-time highs, making solar a perfect match for multitenant buildings that heat water with centralized systems and have large daily hot water loads. Virtually any housing facility with sufficient roof exposure to the sun can add solar to their existing water heater or boiler system and recover the investment within 3-10 years with an ongoing 60-80 percent reduction in natural gas costs for the next 20-25 years. The wide variation in payback is because nonprofit property owners are not able to take advantage of federal tax credit benefits.

Find out sooner than later

There’s urgency for property owners to consider installing solar water heating because the currently available state rebates and federal incentives are set to expire or be reduced over the next few years. That’s why it is important to get a project in the pipeline now.

The California Solar Initiative – Thermal Program offers commercial solar water heating rebates that knock off 30-40 percent of system costs (up to $800,000 per installation), and there is a 30 percent investment tax credit from the federal government as well as accelerated depreciation. The downside is that the federal tax credit will begin declining in 2020 and the state rebate is set to expire at the end of 2017, or sooner if funds are expended.

Breaking down the numbers

A 50-year-old, 38-unit apartment building in La Mesa, Calif., installed a $121,800 solar water heating system and received a $50,000 rebate, took accelerated depreciation and cut natural gas use by 42 percent, resulting in a nearly $6,000 a year utility savings. A hotel and resort in San Marcos, Calif., included solar in an extensive remodel and cut system costs in half with rebates and tax credits, resulting in a 75 percent savings on natural gas bills and a projected six-year return on investment.

As a side note, before signing with a solar contractor, property owners should obtain multiple bids to compare system installation costs.

Perceptions of solar water heating

So what keeps more multitenant property owners from considering solar water heating?

According to William Chen, chief operating officer at Adroit Energy, it’s likely they have heard stories about solar water heating from the 1980s when the systems often didn’t work very well and have not looked into newer technologies, adding “it’s one of the best investments a property owner can make.”

By lowering greenhouse gas emissions, solar water heating also adds appeal for property owners seeking to offer a more eco-friendly lifestyle to prospective tenants, according to Luciana Da Silva, Adroit’s marketing director. She said this is particularly true for millennials who list sustainability among the top five things they are looking for in an apartment.

Get more information

Commercial and multifamily property owners can get more information about solar water heating and the available CSI-Thermal rebates at the Center for Sustainable Energy’s Solar Water Heating for Your Business website. The center administers the program in the San Diego region. In other parts of the state, Pacific Gas and Electric and Southern California Gas are program administrators.

Other businesses ideal for solar water heating

  • Laundry facilities
  • Restaurants & cafeterias
  • Fitness centers & spas
  • Hotels & lodging
  • Water amusement parks
  • Wineries & breweries
  • Process heat for food
  • Process heat for industry

 

About Chuck Colgan

Senior Writer & PR Specialist
Chuck is a writer, editor and media specialist working on the Corporate Marketing team.