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The article presents a quick reference guide, with estimates of market sizes, prices, and key success factors, that can help would-be investors in renewable energy (e.g. solar water heater) strategize on a winning business model.

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        By: Ronald Manalastas, MBA
                                                Solar Water Heater Business Indicator      2

                             By: Ronald Manalastas, MBA


  1. Product Type

                              Solar Water Heating Systems

  2. System Description

  Solar Power System refers to the conversion of sunlight to produce electricity or
  heat (fluid or air). Using solar power to produce electricity is not the same as using
  solar to produce heat. Photovoltaic (PV) principles are used to produce electricity.
  Solar thermal principles are applied to produce hot fluids or air.

  Solar hot water refers to water heated by solar energy. Solar heating systems are
  generally composed of solar thermal collectors, a fluid system to move the heat from
  the collector to its point of usage, and a reservoir or tank for heat storage and
  subsequent use. The systems may be used to hear water for home or business use,
  for swimming pools, under-floor heating, or as an energy input for space heating
  and cooling and industrial applications.

  Solar hot water systems can be classified in different ways:

        Type of collector used
        Location of the collector --- roof-mount, ground-mount, wall-amount
        Location of the storage tank in relation to the collector
        Requirement for a pump --- active vs. passive
        Method of heat transfer --- open-loop or closed-lop (via heat exchanger)

  3. Solar Water Heating Advantages

        Federal and state incentives / rebates / tax credits
        Utility rebates/net metering credits (sells unused solar power to utility firm)
        30% reduction in actual electricity bill
        Environmental quality-compliant / go-green responsive

B. MARKETS: Solar Water Heaters

 1. Market Segment

 The major market segments of solar water heating systems, referring to
 applications, are as follows:

            Residential properties
            Small business structures
            Home builder businesses
            Large institutional facilities
                                                                 Solar Water Heater Business Indicator                3

    For the purpose of this study, residential, small business, and home builder market
    segment will be the key target markets, with California and Hawaii as the
    prospective priority areas of operation.

    2. Current Market Prices

     Local prices of solar water heater vary, depending on the system configuration as
     determined by the estimated power requirement of a particular household or small
     business. At current market prices, a solar water heater for typical household use
     can sell from $ 6,000 - $ 8,000 per unit.

    3. Market Size

                         Solar Water Heating System: California and Hawaii
                                      Estimated Market Size

            State                    Residential1              Business Sector2              Total Market3
           California                   7.40 M                      4.3 M                       11.7 M
            Hawaii                       0.24 M4                    0.1 M                         0.3 M
             Total                      7.64 M                      4.4 M                       12.0 M

    According to the Environmental and Energy Study Institute (EESI), there are 1.5
    million solar water heaters already in use in U.S. homes and businesses.

    4. Market Value

    The global solar power energy is an $11 Billion industry. The total US market for
    solar water heating systems could be around 38% or $4.2 Billion. The California
    market corners about 18% of total US market, while Hawaii shares less than 1%.

                              Solar Heating System: California and Hawaii
                                        Estimated Market Value

                                                     Estimated Market Value (US$ Million)
                                                   Low Price    Medium Price     High Price

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