Wednesday, November 24, 2010

Theory of Economic Relativity: The Cost of Putting Your Money Where Your Mouth Is

Over the last few weeks, our hot water heater has started acting up.  Some mornings we get water so hot you could cook an egg in the shower on the cool setting.  Other mornings, it's on the lukewarm side at best.

So this week we'll have someone out to look at it.  Could be just a sensor, could be the whole thing is on it's last legs.

I like to be proactive about these things, and not wait until it dies, which will inevitably be on a morning when I'm midway through the shower, with shampoo suds running down my back, and I'm going to be late to a meeting. They say that Alfred Hitchcock turned the water to freezing cold without warning Janet Leigh during the shower scene of Psycho in order to get the appropriate reaction from her, although Leigh denied it.  Still, I've no doubt it would be effective.  There's nothing like an icy blast of water to elicit a shriek.

Water heaters are pricey, but in the realm of home repair, not that big of a deal. Traditional heaters run about $600 plus installation.  Tankless heaters are more expensive, running about $1000 + installation, but much more energy efficient.  If you can afford it, tankless is the way to roll.

But then there is the commitment we made to 'go solar' the minute it became feasible.  A grid-tied solar heating system is really costly, and low on the priority list right now, as it falls behind other big projects that are a tad more urgent, like insulating and residing the house.  But solar hot water is another story.

Solar hot water systems are more expensive than traditional systems.  We haven't yet gotten a quote on one, but let's give a safe estimate of maybe $3000-$3500 to install.  Which is a bunch more than $1000 for a tankless heater.  Still, a recent post on my sister's blog put this into perspective - and I'll quote her quoting her friend:

My friend Pat Meadows, a very, very smart woman, has a wonderful idea she calls “The Theory of Anyway.” What it entails is this – she argues that 95% of what is needed to resolve the coming crises in energy depletion, or climate change, or most other global crises are the same sort of efforts. When in doubt about how to change, we should change our lives to reflect what we should be doing “Anyway.” Living more simply, more frugally, using less, leaving reserves for others, reconnecting with our food and our community, these are things we should be doing because they are the right thing to do on many levels. That they also have the potential to save our lives is merely a side benefit (a big one, though).

So in other words, if solar is the moral choice in our opinion - and it is - we have an obligation to look at implementing it.

Still, the difference (for argument's sake, let's go with a $3200 estimate) in cost is big.  If a tankless heater is $1000 + installation - let's call it $1500, and a solar system is $3200 + installation - let's call it $4k, then that's a $2500 difference in cost. 

Let's say we take advantage of the 30% tax credit that we'd get early next year when we file our taxes.  That brings the cost down to $2700.  Then lets say it saves us $30 on our electric bill for the next 10 years.  That means that at the end of 2020, we've come up with a net profit of $900. 

It's a long haul investment, to be sure.  And it's a bunch of dough out of the gate.  But it has the result of being both the 'anyway' choice and being an economic benefit over many years.  It is one of those places where our morals and our pocketbook get to come together, which is what I call 'economic relativity'. 

What will we do?  Not sure yet.  But I like the fit.

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