Taiwan is a leaf-shaped island straddling the Tropic of Cancer with abundant and reliable supply of solar energy. Under the individual circumstances (solar radiation, ambient temperature and hot water consumption pattern), solar heating could be economically competitive with conventional heating fuels (electricity, natural gas or liquefied petroleum gas). In this context, the market of residential solar water heaters (SWHs) in Taiwan has been highly developed with subsidy programs offered by the government of Taiwan so far. Next, the economic viability of residential SWHs is determined by the life-cycle savings. This study develops a procedure for estimating the payback period of residential SWHs in terms of operation cost and effective energy savings over conventional heating fuels. A case study in southern Taiwan indicates that the increase in daily load volume per area of solar collector installed has a beneficial effect. An end user should determine the economically optimal solar collector area of an SWH according to the hot water consumption pattern of each household. Payback period is shorter when the substituted conventional fuel is electricity. With the subsidy program, an SWH is in a favorable situation when compared with an electrical water heater. Findings of the present study would assist partially system design of residential SWHs and help accrue more monetary benefit to the end users.
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