A simplified approach to economic analysis of solar heating and hot water systems and conservation measures

Using a new manipulation of standard relationships, the economic optimization and analysis of solar heating and hot water systems has been simplified. A payback ratio is defined as the reciprocal of the capital recovery factor and used to calculate the minimum or marginal annual thermal return per unit area acceptable for the system. Selecting the point at which the slope of a plot of solar fraction versus area (expressed as area per unit annual demand) equals the marginal annual thermal return per unit area optimizes the system. The ratio of coordinates at that point is the overall annual thermal return per unit collector area. This may be easily transformed into the return on investment, net worth, and payback time of the system. A new equivalent life-cycle payback time is defined that is derived from life-cycle analysis.The analysis is then extended to optimization of conservation measures. A closed formula for optimal insulation thickness is developed and illustrated.