Solar Electricity & Solar Hot Water
Use the sunshine.
Understand the numbers.
Choose the right approach.
Solar can produce electricity or collect heat for hot water. Those are different systems, and their value depends on your property, energy use, and costs.
Terrell Electric, LLC welcomes solar project inquiries and consultation about electrical requirements, system goals, and the information needed to evaluate a proposed project.
Two Ways to Use Solar Energy
Electricity and hot water
are different opportunities.
Solar Photovoltaic: Electricity
Photovoltaic panels, commonly called PV panels, produce electricity. An inverter converts their output for use by the building and an approved grid-connected system.
The economics depend on production, installation cost, avoided electricity purchases, and the value of surplus energy.
Solar Thermal: Hot Water
Solar thermal collectors gather heat. A properly designed system transfers that heat into stored water rather than first producing electricity.
Its value depends on hot-water demand, collector performance, installation cost, and the fuel or electricity it replaces.
Efficiency: Reduce the Demand
Before sizing either system, consider the energy you can avoid using in the first place.
Compare conservation measures and efficient equipment alongside solar—not only after selecting a system size.
An Illustrative PV Cost
What does $3.00
per watt actually buy?
At an assumed installed price of $3.00 per watt of DC panel capacity, a 10,000-watt system costs $30,000.
That is an example price for PV equipment and installation labor, not a Terrell Electric quotation. The written proposal must identify the actual equipment and included work.
Batteries, roof repairs, unusual site work, service upgrades, or other project requirements can change the total. Confirm what is included before comparing dollars-per-watt figures.
Where the Financial Value Comes From
Avoiding a retail purchase
is different from selling surplus power.
The same kilowatt-hour can have a different financial value depending on when it is produced and how the utility tariff treats it.
Retail-Purchase Offset
Solar energy that replaces electricity you otherwise would buy can reduce the applicable variable charges.
The value must be calculated from the actual charges avoided, not from fixed charges that remain on the bill.
Net-Metering Treatment
An eligible utility tariff may net generation against usage within a defined billing arrangement.
The applicable billing interval and treatment of surplus production affect the financial result. Do not assume all exports receive full retail credit.
Surplus or Wholesale Purchases
Energy purchased under an avoided-cost or other approved purchase arrangement may be worth much less than retail electricity.
Oversizing a system to sell more energy does not automatically improve its payback.
A Transparent Financial Example
The same $30,000 system.
Very different results.
Assume a 10 kW DC system produces 13,000 kWh in its first year. Value energy that avoids retail purchases at 15 cents per kWh and surplus credited at a lower rate at 3.5 cents per kWh.
These are modeling assumptions, not a production guarantee or a statement of your utility rates. The percentages below describe the share receiving retail-offset value after applying the relevant tariff.
100% at Retail-Offset Value
First-year gross benefit: $1,950.
After a $340 annual maintenance and replacement reserve: $1,610.
Simple payback before reserve: 15.4 years. After reserve: 18.6 years.
75% Retail / 25% Surplus
First-year gross benefit: about $1,576.
After a $340 annual reserve: about $1,236.
Simple payback before reserve: 19.0 years. After reserve: 24.3 years.
50% Retail / 50% Surplus
First-year gross benefit: about $1,203.
After a $340 annual reserve: about $863.
Simple payback before reserve: 24.9 years. After reserve: 34.8 years.
If all 13,000 kWh were valued at only 3.5 cents, the gross annual value would be $455. Simple payback before expenses would be about 66 years—not an attractive result under these assumptions.
First-year benefit after the reserve equals approximately 5.4%, 4.1%, and 2.9% of the initial investment in the three examples above. These percentages are not investment yields or internal rates of return.
PURPA & Utility Purchases
There is no single
nationwide wholesale buyback rate.
PURPA provides a framework for qualifying generation facilities and utility purchase obligations. It does not promise the retail electricity price for every solar export.
Avoided cost generally refers to the utility’s cost of energy or capacity it otherwise would generate or purchase. Applicable rates, eligibility, agreements, and interconnection requirements must be reviewed.
A residential net-metering arrangement and a separate qualifying-facility wholesale sale are not interchangeable. Identify which arrangement applies before preparing a return-on-investment claim.
Solar Hot Water
Sometimes the goal
is heat—not electricity.
Water heating can be a substantial household energy expense. Solar thermal systems collect heat to reduce the energy needed from a conventional water heater.
If your water heater is electric, reducing its electricity use can reduce that portion of the electric bill. If it uses natural gas or propane, the savings mainly affect that fuel bill.
The same distinction applies to space heating. A household’s total heating energy use is not automatically part of its electric bill.
A Two-Tank System Concept
Solar storage, heat exchange,
and conventional backup.
One configuration to evaluate is an 80-gallon solar storage tank working with a heat exchanger and a 50-gallon domestic water heater. The exact piping, controls, and tank functions depend on the design.
Collect and Transfer Heat
Solar collectors gather heat. A heat exchanger transfers energy between the collector circuit and the storage or water-heating system.
Collector area and performance must match the intended load and climate.
Store Available Solar Energy
An 80-gallon tank can provide thermal storage as part of an appropriately sized design.
Tank volume is not a measure of daily heat production. Useful stored heat depends on temperature and operating limits.
Maintain Domestic Hot Water
A conventional 50-gallon heater can provide backup or finishing heat, depending on the arrangement.
Backup remains important during cloudy periods, high demand, and system maintenance.
This equipment combination does not guarantee all household hot water or a specified amount of space heating. Performance must be estimated from collector output, demand, temperatures, system losses, and local weather.
Can Solar Hot Water Help Heat the Home?
It can contribute—
if the complete system supports it.
A solar thermal design may provide supplemental space heat through a suitable hydronic system or a compatible heating coil.
The heating contribution depends on the building’s heat loss, collector size, winter solar availability, storage, and the temperatures required by the heating system.
An 80-gallon tank alone does not establish how much of a home can be heated. Domestic hot water and space heating also compete for the collected energy.
Solar Hot Water Economics
Compare the heat delivered
with the fuel it replaces.
Solar thermal needs its own cost-and-savings calculation. PV dollars per watt are not a solar hot-water price.
For illustration, assume existing water heating uses 3,000 kWh per year at 15 cents per kWh. That is $450 in annual electricity use for water heating.
If a proposed solar thermal system reduces that use by 50%, the gross energy savings are $225 per year—not $225 per month. Pumping energy and maintenance would reduce the net benefit.
Before Choosing a System
Start with bills, site conditions,
and a realistic objective.
Energy and Utility Review
Gather at least 12 months of electricity and heating-fuel use. Identify the utility tariff, export treatment, and charges solar can actually avoid.
Property and Equipment Review
Consider orientation, shading, roof condition, usable space, electrical equipment, and any proposed thermal storage or heating connections.
Proposal and Financial Review
Ask for the scope, production assumptions, equipment warranties, maintenance expectations, financing terms, and the basis of every savings projection.
Do not assume a federal tax credit is available. As of October 2026, the IRS states that the homeowner Residential Clean Energy Credit does not apply to property placed in service after December 31, 2025. Business and other ownership structures require separate review.
Standard grid-connected PV alone generally does not supply backup power during an outage. Backup operation requires a specifically designed system.
An Informed Solar Conversation
Let’s see what solar
could do for your property.
Bring your bills, project goals, and property information. We will discuss the proposed scope, required project participants, and next steps.
573-673-2522 tim@terrellelectric.com