A national laboratory of the U.S. Department of Energy

Office of Energy Efficiency & Renewable Energy

National Renewable Energy Laboratory 

Innovation for Our Energy Future 

The Technical Potential of 

Solar Water Heating to 

Reduce Fossil Fuel Use and 

Greenhouse Gas Emissions 

in the United States 

P. Denholm

Technical Report 

NREL/TP-640-41157 

March 2007 

NREL is operated by Midwest Research Institute ● Battelle Contract No. DE-AC36-99-GO10337 
The Technical Potential of 

Solar Water Heating to 

Reduce Fossil Fuel Use and 

Greenhouse Gas Emissions 

in the United States 

P. Denholm

Prepared under Task No. SH07.9001 

Technical Report 

NREL/TP-640-41157 

March 2007 

National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393 

303-275-3000 • www.nrel.gov 

Operated for the U.S. Department of Energy 

Office of Energy Efficiency and Renewable Energy 

by Midwest Research Institute • Battelle 

Contract No. DE-AC36-99-GO10337
NOTICE

This report was prepared as an account of work sponsored by an agency of the United States government. 

Neither the United States government nor any agency thereof, nor any of their employees, makes any 

warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or 

usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not 

infringe privately owned rights. Reference herein to any specific commercial product, process, or service by 

trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, 

recommendation, or favoring by the United States government or any agency thereof. The views and 

opinions of authors expressed herein do not necessarily state or reflect those of the United States 

government or any agency thereof. 

Available electronically at http://www.osti.gov/bridge

Available for a processing fee to U.S. Department of Energy 

and its contractors, in paper, from: 

U.S. Department of Energy 

Office of Scientific and Technical Information 

P.O. Box 62 

Oak Ridge, TN 37831-0062 

phone: 865.576.8401 

fax: 865.576.5728 

email: mailto:reports@adonis.osti.gov

Available for sale to the public, in paper, from: 

U.S. Department of Commerce 

National Technical Information Service 

5285 Port Royal Road 

Springfield, VA 22161 

phone: 800.553.6847 

fax: 703.605.6900 

email: orders@ntis.fedworld.gov

online ordering: http://www.ntis.gov/ordering.htm

Printed on paper containing at least 50% wastepaper, including 20% postconsumer waste
Introduction 

Use of solar water heating (SWH) in the United States grew significantly in the late 

1970s and early 1980s, as a result of increasing energy prices and generous tax credits. 

Since 1985, however, expiration of federal tax credits and decreased energy prices have 

virtually eliminated the U.S. market for SWH.1

 More recently, increases in energy prices, 

concerns regarding emissions of greenhouse gases, and improvements in SWH systems 

have created new interest in the potential of this technology. SWH, which uses the sun to 

heat water directly or via a heat-transfer fluid in a collector, may be particularly 

important in its ability to reduce natural gas use. Dependence on natural gas as an energy 

resource in the United States has significantly increased in the past decade, along with 

increased prices, price volatility, and concerns about sustainability and security of supply. 

The U.S. Department of Energy (DOE) projects imports of liquefied natural gas (LNG) to 

increase by more than 500% from 2004 to 2020.2 One of the readily deployable 

technologies available to decrease use of natural gas is solar water heating. This report 

provides an overview of the technical potential of solar water heating to reduce fossil fuel 

consumption and associated greenhouse gas emissions in U.S. residential and commercial 

buildings. 

Water Heating Energy Use in the United States 

Energy used for water heating is a significant fraction of the total energy demand in the 

commercial and residential sectors. In 2004, water heating in the residential sector 

consumed about 23% of all residential natural gas use, 8% of all residential electricity 

use, and about 12% of total residential energy expenditures.3 Nationwide, about 8% of all 

end-use natural gas is used to heat water in commercial and residential buildings. 

In 2004, the total delivered energy related to commercial and residential water heating in 

the United States was approximately 2.4 quadrillion BTU (quads). A large fraction of this 

energy (~0.5 quads) was delivered electricity. Considering primary energy,4 water 

heating consumed about 3.5 quads or about 3.5% of total U.S. energy demand in 2004. 

Major fuels used for water heating include natural gas, electricity, oil, and liquefied 

petroleum gas (LPG.) Figure 1 provides an approximate distribution of fuels used for 

water heating.5 Electricity is measured by its primary fuel content, which is assumed to 

be equal to 10,280 BTU/kWh.6

 

1

 Much of the existing market for SWH is swimming pool heating and also domestic systems in Hawaii, 

which has state and utility incentives as well as the highest energy prices in the nation. 

2

 U.S. Department of Energy (2006). Annual Energy Outlook 2006, DOE/EIA-0383(2006), Energy 

Information Administration, Washington, D.C. 

3

 Ibid. 

4

 Primary energy considers the energy content of fuels used to make electricity. 

5

 U.S. Department of Energy (2006). Annual Energy Outlook 2006, DOE/EIA-0383(2006), Energy 

Information Administration, Washington, D.C. 

6

 Ibid. 

 1
On a regional basis, there is considerable variation in the fuels used for water heating. 

Much of the data used to estimate the potential national benefits of SWH deployment 

were derived from the Energy Information Administration’s Residential Energy 

Consumption Survey (RECS). 7 The data in this survey is aggregated to the “Census + 4” 

region level, consisting of U.S. census regions plus the four largest states. Figure 2

provides a regional breakdown of the fuels used for residential water heating in 2001.8 

Oil + LPG

7% Electricity 

(Primary 

Fuels)

44%

Natural 

Gas

49%

Figure 1: Approximate Distribution of Fuels Used for Water Heating in the United States 

 

7

 U.S. Department of Energy (2001). Residential Energy Consumption Survey 2001, Energy Information 

Administration, Washington, D.C. Via http://www.eia.doe.gov/emeu/recs/ 8

 Ibid. 

 2
New 

England

New York

South 

Atlantic

Texas

Mountain

East 

South 

Central

West 

North 

Central

East 

North 

Central

West South 

Central

Pacific

Middle 

Atlantic

Florida

California

Natural 

Gas Primary 

Electricity

Oil + LPG

U.S Average

New 

England

New York

South 

Atlantic

Texas

Mountain

East 

South 

Central

West 

North 

Central

East 

North 

Central

West South 

Central

Pacific

Middle 

Atlantic

Florida

California

Natural 

Gas Primary 

Electricity

Oil + LPG

U.S Average

Figure 2: Regional Distribution of Residential Water Heating Fuels 

In each region, the pie chart provides the fraction of primary fuel used for water heating. 

(It is not the fraction of homes that use a particular fuel.) There is significant regional 

variation, with heating performed largely by electricity in the warmer-climate areas, and 

with a significant contribution from oil in the New England region. It seems likely that 

the greater use of electric water heating in the South is partly due to the limited need for 

space heating, which results in a limited need for natural gas infrastructure. The use of oil 

in New England appears to be a historical artifact, because about 64% of homes using oil 

were constructed before 1960. 

Using data from the EIA’s 2006 Annual Energy Outlook, 2001 RECS, and 2003 

Commercial Building Energy Consumption Survey (CBECS),9

 we estimated the regional 

breakdown of delivered water heating energy use in the residential and commercial 

sectors. This data is provided in Table 1. End-use electricity is expressed in both thermal 

content (BTU) and more conventional units (kWh), where the energy content of 

electricity is 3,414 BTU/kWh. 

 

9

 U.S. Department of Energy (2001). Commercial Building Energy Consumption Survey 2003, Energy 

Information Administration, Washington, D.C. Via http://www.eia.doe.gov/emeu/cbecs/contents.html 

 3
Table 1: Estimated Regional End-Use Energy Consumption for Water Heating10

Natural Gas 

(Trillion BTU) 

Oil + LPG 

(Trillion BTU) 

Electricity (Trillion 

BTU/Billion kWh) 

Region Res. Com. Res. Com. Res. Com. 

New England 35 15 60 26 10 / 3 4 / 1 

Mid-Atlantic 81 35 28 12 20 / 6 9 / 3 

East No. Central 261 112 10 4 34 / 10 15 / 4 

West No. Central 91 39 14 6 20 / 6 9 / 3 

South Atlantic 113 49 7 3 75 / 22 32 / 9 

East So. Central 43 19 3 1 44 / 13 19 / 6 

West So. Central 54 23 0 0 14 / 4 6 / 2 

Mountain 83 36 4 2 17 / 5 7 / 2 

Pacific (w/o CA) 16 7 1 1 27 / 8 12 / 3 

New York 78 34 42 18 7 / 2 3 / 1 

California 180 78 6 2 14 / 4 6 / 2 

Texas 95 41 1 0 27 / 8 12 / 3 

Florida 18 8 0 0 44 / 13 19 / 6 

U.S. Total 1148 495 176 76 355 / 104 153 / 45 

 

10 There are two significant caveats in this data. There are likely large uncertainties in the data, because it is 

based on surveys and estimates, not systematic measurements of water heating energy consumption. In 

addition, the CBECS data does not provide a regional breakdown of water heating fuels used in the 

commercial sector. As a result, we assumed that the regional breakdown of fuel mixes in the commercial 

sector is equal to that in the residential sector. 

 4
Solar Water Heating System Performance 

Solar water heaters use the sun to heat water directly or via a heat-transfer fluid in a 

collector. Heated water is then held in the storage tank ready for use, with a conventional 

system providing additional heating as necessary.11 Figure 3 provides a simplified 

representation of an SWH system.12

Figure 3: Simplified SWH System Schematic 

An SWH system reduces, but does not eliminate, the need for electric or gas water 

heating. The performance of a SWH system may be defined by its solar fraction or the 

fraction of a building’s water heating energy demand met by the SWH system. A system 

with a 60% solar fraction reduces the water heating demand (and also the water heating 

energy costs) by 60%. Typical solar fractions in the United States are in the range of 40-

80%. 

The actual solar fraction of a SWH system depends on the quality of the solar resource, 

the technical characteristics of the individual system, and water-use patterns. Figure 4 

provides the results of a simulation of a “base” residential SWH system in 215 locations 

in the United States.13 This base system represents current technology, using a selective 

surface collector and glycol as the heat transfer fluid. The details of the SWH system, 

modeling methods, and results are described extensively in the referenced studies.14,15

 

11 U.S. Department of Energy (2007) Solar Water Heating for Buildings. Via 

http://www1.eere.energy.gov/solar/sh_basics_water.html 

12 U.S. Department of Energy (2003). Heat Your Water with the Sun, DOE/GO-102003-1824, Washington, 

D.C. 

13 While overall benefits of SWH could be estimated using a national average solar fraction, the use of 

regional performance data allows for incorporation of regional fuel use and variation in regional rooftop 

availability as discussed in the next section. 

14 Hillman, T., Cost and Benefit Analysis of Cold Climate Solar Water Heating Systems, M.S. Thesis, 

Architectural, Civil and Environmental Engineering Department, University of Colorado, Boulder, Colo.; 

2005. 

 5
Figure 4: Simulated Solar Fraction Using a “Base” (Current Technology) Residential SWH 

System 

A major goal of the U.S. DOE’s Solar Heating and Lighting Subprogram is to decrease 

the installed cost of SWH systems.16 This will be achieved with improved materials, 

design, and manufacturing techniques. Figure 5 provides a solar fraction map of a 

simulated reduced-cost system. Relative to the base system, the simulated reduced-cost 

system incurs a modest penalty in solar fraction. However, the overall levelized cost of 

energy from the lower-cost system should be significantly less than current systems, 

while still providing solar fractions that exceed 50% in much of the United States. 

 

15 Burch, J.; Hillman, T.; Salasovich, J. 2005. Cold-Climate Solar Domestic Hot Water Systems: 

Cost/Benefit Analysis and Opportunities for Improvement. NREL Report No. CP-550-37105. 16 U.S. Department of Energy (2006). Solar Energy Technologies Multi-Year Program Plan, 2007-2011. 

Washington, D.C. 

 6
Figure 5: Simulated Solar Fraction Using a Lower-Cost SWH System 

We picked a representative city in each of the 13 “Census +4” regions, and established 

the solar fraction for each city using the base and lower-cost SWH systems. This data is 

provided in Table 2. Unless otherwise stated, the results in this analysis use the solar 

fraction values from the lower-cost system. 

Table 2: Assumed Solar Fractions for the Base and Lower-Cost System in Each Region17

Region 

Representative 

City 

Base 

System 

Solar 

Fraction (%) 

Lower-Cost 

System 

Solar 

Fraction (%) 

New England Boston, MA 50 45 

Mid-Atlantic Harrisburg, PA 50 45 

East No. Central Chicago, IL 50 45 

West No. Central Des Moines, IA 55 45 

South Atlantic Raleigh, NC 65 55 

East So. Central Birmingham, AL 65 55 

West So. Central Little Rock, AR 65 60 

Mountain Denver, CO 65 60 

Pacific (w/o CA) Eugene, OR 50 45 

New York Albany 50 40 

California Sacramento 70 60 

Texas Fort Worth 75 65 

Florida Tampa 75 70 

U.S. Weighted Avg. 62 54 

 

17 The values in Table 2 are based on simulations of residential systems. We assume that the commercial 

systems would achieve the same solar fraction. 

 7
Regional Rooftop Availability 

The regional or national energy savings potential from SWH is a product of the solar 

fraction and the number of buildings that can utilize SWH systems. 

 

The number of homes that can use SWH systems is based on a combination of technical 

and nontechnical factors. Technical factors include roof orientation, minimum roof size, 

shading, and load-bearing capability. Nontechnical factors include economics, aesthetics, 

local building codes, and ordinances. Beyond standard economic metrics such as payback 

time or return on investment, there are a number of factors that may limit adoption of 

SWH. One significant factor is the fraction of buildings not occupied by the owners. For 

example, about 17% of residential water heating energy use occurs in apartment 

buildings. In addition, about 14% of all single-family homes are rented. In the 

commercial sector, about 45% of all buildings are leased. Buildings with low owneroccupied fractions include some building classes that can be expected to have significant 

demand for hot water, including food sales (58% leased), food service (73% leased), and 

lodging (61% leased). Deployment of SWH on rented or leased properties must address 

the limited incentive for the building owner to install equipment to reduce nonownerrelated expenses. 

This study represents a purely technical analysis and assumes favorable economics for 

SWH for virtually all buildings in the residential and commercial sectors. The major 

limitation of SWH deployment under this assumption is rooftop availability. There are no 

well-documented studies of rooftop availability for SWH known to the author. A few 

published studies provide estimates for roof area available for photovoltaics (PV). One 

study estimates that 22% and 65% of total roof area is available on residential and 

commercial buildings respectively.18 Other studies estimate between 30% and 45% of all 

residential buildings are suitable for PV deployment.19 A major limitation of these studies 

is that they are national estimates only, and provide no regional breakdown. In addition, it 

is expected that the much smaller size of SWH systems would allow a greater fraction of 

buildings to deploy SWH as compared to PV. A typical residential SWH system occupies 

about 40-64 ft2

 of roof space, while a typical residential PV system occupies around 250-

400 ft2

.

20 

To provide a baseline estimate for SWH potential, we used the assumptions in Table 3, 

the fraction of buildings in each census region that has sufficient roof area and orientation 

to deploy SWH. Also provided is a national average value, weighted by the number of 

buildings in each census region. 

 

18 Chaudhari, M.; Frantzis, L.; Hoff, T.E. PV Grid Connected Market Potential in 2010 under a Cost 

Breakthrough Scenario, prepared by Navigant Consulting for The Energy Foundation, March 2005. 19 Frantzis, L ; Friedman, D.; Hill, S.; Teagan, P.; Strong S.; Strong, M. Building-Integrated Photovoltaics 

(BI-PV)—Analysis and U.S. Market Potential, prepared by Arthur D. Little Inc. for the U.S. Department of 

Energy Office of Building Technologies, NREL/TP-472-7850, DE95004055, February 1995. 

20 Assuming a 2.5-4 kW PV system and PV rating of 10 watts peak/square foot. 

 8
Table 3: Assumed Building Rooftop Availability 

Fraction of Buildings with 

Roofs Available for SWH 

Region Residential Commercial 

New England 35 50 

Mid-Atlantic 40 60 

East No. Central 40 60 

West No. Central 50 70 

South Atlantic 40 60 

East So. Central 40 60 

West So. Central 40 60 

Mountain 55 65 

Pacific (w/o CA) 55 65 

New York 40 60 

California 65 75 

Texas 60 70 

Florida 60 70 

U.S. Weighted Avg. 50 67 

Results: U.S. SWH Potential 

The technical potential of SWH was evaluated in terms of end-use energy reduction, 

primary energy reduction, and CO2 emissions reduction. End-use energy reduction 

describes the benefits to consumers, primarily through reduced fuel costs and reduced 

exposure to volatile fuel prices. Primary energy reduction reflects the overall benefit to 

the nation of reduced fossil fuel use, including reduced dependence on natural gas, which 

is increasingly derived from imported LNG. The reduction in fossil fuel use also provides 

environmental benefits, one of which is reduced emissions of greenhouse gases. 

End-Use Energy Savings Potential 

In each region, the potential energy reduction from SWH was calculated by multiplying 

the rooftop availability by the solar fraction. These factors were then multiplied by total 

water heating energy consumption to derive the technical potential. Table 4 provides a 

regional estimate of the SWH savings potential by fuel type. 

 9
Table 4: Regional End-Use Energy Savings Potential of SWH 

Technical End-Use Energy Savings Potential 

Region 

Natural Gas 

(Trillion BTU) 

Oil + LPG 

(Trillion BTU) 

Electricity (Trillion 

BTU/Billion kWh) 

New England 9 15 3 / 0.8 

Mid-Atlantic 24 8 6 / 1.8 

East No. Central 77 3 10 / 3.0 

West No. Central 31 5 7 / 2.0 

South Atlantic 41 2.4 27 / 8.0 

East So. Central 16 1 16 / 4.7 

West So. Central 19 0 5 / 1.4 

Mountain 42 2 9 / 2.5 

Pacific (w/o CA) 6 1 10 / 3.0 

New York 21 11 2 / 0.5 

California 105 3 8 / 2.3 

Texas 56 1 16 / 4.7 

Florida 11 0 28 / 8.2 

U.S. Total 457 53 147 / 42.9 

The total end-use fuel savings potential exceeds 0.5 quads of delivered liquid and gaseous 

fuels plus electricity, which is roughly equal to the continuous output of five large 

(1 GW) power plants—about equal to the annual electric consumption of the state of 

Oregon. 

These consumption values can be multiplied by the end-use energy prices for the various 

fuels. In 2004, the national average price of delivered natural gas was $8.3 per million 

BTU for commercial customers and $9.4 per million BTU for residential customers. The 

average price of electricity was $23.9 and $26.1 per million BTU for commercial 

customers and residential customers, respectively.21 Using these values (plus values for 

oil and LPG), we derive an estimated potential annual SWH savings value of $8.4 billion 

per year. This value does not include any additional benefits of SWH to mitigate fuel 

price volatility or projected fuel price escalation. 

Primary Energy Potential 

To estimate the “real” (primary) energy savings, the results from Table 4 must be 

adjusted, primarily to consider the amount of fuel required to deliver electricity for water 

heating. In addition, it is also useful to consider some of the upstream requirements for 

delivering natural gas and electricity, particularly when considering natural gas security 

issues as well as greenhouse gas emission impacts. 

To convert delivered electricity to primary energy (the energy content in the fuel required 

to make one unit of electricity) we must know the power plant conversion efficiency. 

Previously, we used a value of 10,280 BTU/kWh to estimate the total primary energy 

 

21 U.S. Department of Energy (2006). Annual Energy Outlook 2006, DOE/EIA-0383(2006), Energy 

Information Administration, Washington, D.C. 

 10
associated with electric water heating, based on the U.S. fleet average power plant 

efficiency.22 This overall average value does not reflect the “marginal” units, or the units 

that would actually be used less if electricity were offset by SWH systems. In addition, 

this value does not provide any indication of what fuel type is actually used in the 

marginal unit—this is important if we want to understand the potential of SWH to reduce 

the use of natural gas (and associated reliance on foreign sources of LNG) or coal (and 

associated greenhouse gas and other emissions.) 

Marginal analysis is difficult, partly because the marginal fuels vary on an hourly and 

seasonal basis, and by region. However, there are generalities that can be stated. First, 

with few exceptions, fossil fuels are “on the margin” at all times and in all locations. As a 

result, any reduction in consumption at nearly every hour in every location will result in 

reduced output of a fossil unit, whether it is a thermal steam plant or a gas turbine. 

Second, recent growth in electricity demand in much of the United States has been met 

with gas-fired generators. As a result, gas is now on the margin for many hours of the 

year in many locations. Table 5 provides a number of estimates of the fraction of time 

natural gas is the marginal fuel source for various regions in the United States. 

 

22 The EIA uses 10,280 BTU/kWh as its conversion from primary energy to electricity, representing an 

efficiency of 33.2%. U.S. Department of Energy (2006). Annual Energy Outlook 2006, DOE/EIA0383(2006), Energy Information Administration, Washington, D.C. 

 11
Table 5: Estimates for Fraction of Hours Natural Gas Provides Marginal Electricity 

Estimated Fraction of Time Natural Gas Provides 

Marginal Electricity 

Energy and 

Environmental 

Analysis 

2006

Global Energy 

2005 23 24 25 Region TXU 2006

New England 80 

Mid-Atlantic 40 (PJM) >20 (PJM) “most of the 

time” 

West No. Central 47 (SPP) “most of the 

time” (parts) 

South Atlantic 27 (VACAR) 

West So. Central 58 (Entergy) 

Mountain 80 (All of West) ~85 (Colorado) 

Pacific (w/o CA) 80 (All of West) “most of the 

time” (NW) 

California 80 (All of West) >90 “most of the 

time” 

Texas >90 >95 “most of the 

time” 

Florida ~92 ~45 (fuel oil is ~ 

30) 

If and when gas is on the margin, it may be used in thermal steam plants, simple-cycle 

combustion turbines, or combined-cycle gas turbines. The heat rate of these plants ranges 

from about 6,800 BTU/kWh to more than 10,000 BTU/kWh. The higher heat rates are for 

the simple-cycle and steam plants, used largely for peaking. Overall, gas-fired generators 

typically have lower heat rates than coal-fired plants. 

Besides the need to estimate the primary energy content of delivered electricity, there is 

an additional consideration for end-use energy technologies such as SWH. Each unit of 

natural gas displaced by a SWH unit reduces the amount of required natural gas 

production by more than 1 unit. Depending on how far upstream natural gas processing is 

examined, the combined inherent loss rate and parasitic losses can be significant. In 2004, 

about 3% of natural gas actually produced was used as pipeline fuel, with another 5% 

used in well and field operations and natural gas processing plants.26 When considering 

delivered electricity, about 7% of electricity actually generated is lost in transmission and 

 

23 Wilder, C.J. TXU. Merrill Lynch Power & Gas Leaders Conference. September 26, 2006. Via 

www.txucorp.com/pdf/092606MerrillLynchDeck_TXUCorp_FINAL.pdf 24 Global Energy. Coal: America’s Energy Security Insurance. Global Energy Monthly Briefing, March 

2005. Via http://www.globalenergy.com/BR05/BR05-coal-americas.pdf 25 Bluesten, J. Natural Gas, Electricity and CHP. April 6, 2006. Energy and Environmental Analysis, Inc. 

April 6, 2006. Via http://www.chpcentermw.org/presentations/050518-IL/050518_Bluestein.pdf 26 U.S. Department of Energy (2006). Annual Energy Outlook 2006, DOE/EIA-0383(2006), Energy 

Information Administration, Washington, D.C. 

 12
distribution. Accounting for these factors provides a more realistic consideration of the 

reduction in primary fuel production that could result from deployment of SWH.27 

Considering these various factors, we can estimate the technical potential of SWH in 

terms of total primary energy displacement. Figure 6 illustrates the total potential as a 

function of the marginal electricity fuel. The total SWH energy potential is the sum of the 

four primary energy sources of water heating: gas and oil used directly, and coal and gas 

used for electric water heating. The total primary energy savings associated with direct 

use is constant, based on our previous assumptions for the regional distribution of fuel 

use, solar fraction, rooftop potential, and upstream processing loss rates. However, the 

primary fuel savings associated with electric water heating depends on the power plant 

efficiency (heat rate), which varies as a function of the marginal fuel. In this figure, we 

consider scenarios where gas is at the margin from 0-100% of the time, and assume the 

average heat rate for a marginal gas plant is 8,000 BTU/kWh. All electricity not derived 

from gas is assumed to be derived from coal, with an assumed heat rate of 10,218 

BTU/kWh. We also assumed a 7% electricity loss rate and a 5% parasitic loss rate for 

delivered natural gas. 

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0% 25% 50% 75% 100%

Fraction of Marginal Electricity Met by Gas

Potential SWH Displaced Energy 

(Quads)

Coal for Electricity

Gas for Electricity

Direct Gas

Direct Oil

Figure 6: Technical Potential of SWH to Reduce Primary Energy Consumption Considering 

Sources of Electric Water Heating 

In Figure 6, total natural gas displacement is the sum of the direct-use gas and gas used 

for electric water heating, and represents the majority of energy displaced by SWH, 

especially when considering the high probability that electric water heating is produced 

 

27 There are many other “life-cycle” factors, including the energy and emissions related to extraction and 

transport of coal and oil. These factors were not considered in this analysis. 

 13
28 from gas-fired generators. Table 6 provides two estimates for the reduced natural gas 

production that would result from full deployment of SWH. Two cases are provided, 

using two estimates for gas loss rates and the marginal fuel used for electricity. 

Table 6: Impact of SWH on Gas Production Requirements, Considering Losses and 

Electricity Generation from Gas 

Gas Production (Quads) 

Low Case1 High Case2

Estimated Gas Produced for 

Gas Water Heating 1.7 1.8 

Estimated Gas Produced for 

Electric Water Heating3 0.3 1.0 

Estimated Total Gas 

Production for Water Heating 2.0 2.8 

Potential Gas Production Met 

by SWH 0.6 0.9 

Fraction of Total U.S. Gas 

Production Replaced by 

SWH (%) 2.6 4.1 

1. Assumes 2.5% gas loss rate, gas provides 25% of marginal electric fuel. 

Previously stated assumptions for solar fraction and rooftop availability. 

2. Assumes 8% gas loss rate, gas provides 75% marginal electric fuel. 

Previously stated assumptions for rooftop availability, but solar fraction 

equal to higher “base” technology 

3. Average heat rate for gas generators is 8,000 BTU/kWh with a T&D loss 

rate of 7%. 

If a major goal of SWH deployment is to maximize natural gas savings, it is useful to 

consider the relative use of primary fuels in an individual water heater. An electric water 

heater is more efficient when considering end-use energy, but much less efficient when 

considering primary energy (due to the relatively low efficiency of converting primary 

fuels to electricity). Figure 7 illustrates the relationship between electric water heating 

and direct gas water heating in terms of total natural gas use. In this figure, the range of 

gas water heating efficiency (energy factor) is 55-85%, based on delivered energy, where 

an electric water heater is assumed to have an efficiency of 94%. The left y-axis 

determines the fraction of time gas must be at the margin for gas use in electric and water 

heaters to be equal, assuming an 8,000 BTU/kWh heat rate, a 5% gas loss rate and a 7% 

electricity loss rate. The right y-axis is similar, but expresses the equivalence in gas use in 

terms of the natural gas energy content of the average generated unit of electricity. 

 

28 Water heating is a nearly ideal source of controllable load. If water heating were “dispatched” by the 

utility, it would substantially increase the probability of water heating electricity being derived from lowercost coal-based generation. Current water heating load programs only curtail heating during peak hours to 

reduce capacity requirements, but not to make dispatch more economic. 

 14
40%

45%

50%

55%

60%

65%

70%

75%

55% 60% 65% 70% 75% 80% 85%

Gas Heater Efficiency (%)

Fraction of Marginal Electricity 

Produced by Natural Gas

3400

3900

4400

4900

5400

5900

6400

Gas Content of Generated 

Electric Water Heating Uses

Electricity (BTU/kWh)

Less Natural Gas than 

Direct Gas Water Heating

Electric Water Heating Uses 

More Natural Gas than 

Direct Gas Water Heating

Figure 7: Natural Gas Use “Breakeven” for Electric and Direct Gas Water Heating 

This graph can be compared to the estimates in Table 5 for regional fuel mixes—in 

places where gas is at the margin most of the time (western states, Texas, etc.), it is 

expected that electric water heating uses more natural gas than direct gas heating. In 

locations where gas is at the margin less often (potentially certain southern states) electric 

water heating may use less gas than direct water heating. This may provide additional 

insight when targeting SWH systems for maximum benefit in reducing natural gas use. 

CO2 Emissions Reduction Potential 

The fossil energy savings produced by SWH can be directly translated into CO2

emissions reductions. This is illustrated in Figure 8, which is similar to Figure 6, but with 

displaced energy replaced by CO2 emissions, again as a function of marginal fuel for 

electric heat. We assumed a CO2 emission rate of 93.0 kg/MMBTU for coal, 53.5 

kg/MMBTU for natural gas, and 72.1 kg/MMBTU for fuel oil.29

 

29 U.S. EPA. 1996 ”Compilation of Air Pollutant Emission Factors, AP-42,” Fifth Edition, Volume I: 

Stationary Point and Area Sources. U.S. Environmental Protection, Agency. Via 

http://www.epa.gov/ttn/chief/ap42/

 15
0

10

20

30

40

50

60

70

80

0% 25% 50% 75% 100%

Fraction of Marginal Electricity Met by Gas

Potential Annual GHG Emissions 

Reduction (Million Metric Tons CO 2)

Coal for Electricity

Gas for Electricity

Direct Gas

Direct Oil

Figure 8: Technical Potential of SWH to Reduce CO2 Emissions Considering Sources of 

Electric Water Heating 

Table 7 provides a regional breakdown of potential emissions reductions by source. The 

assumptions used in Table 7 are identical to those used for Figure 8, where the “low” 

case assumes all electricity is derived from natural gas, and the “high” case assumes all 

electricity is derived from coal. 

For comparison, the total U.S. CO2 emissions in 2004 were about 5,900 million metric 

tons. As a result, SWH represents a total emissions reduction potential of about 1% of 

total annual emissions. Within the residential and commercial building sectors (about 

2,230 MMT in 2004), SWH could reduce CO2 emissions by 2-3%.

 16
Table 7: Regional CO2 Emissions Reduction Potential of SWH 

Technical CO2 Emissions Reduction Potential 

(Million Metric Tons) 

Natural Gas Oil + LPG Electricity 

(low / high) 

Total 

Region (low / high) 

New England 0.5 1.1 0.4 / 0.8 2.0 / 2.4 

Mid-Atlantic 1.4 0.6 0.9 / 1.9 2.8 / 3.8 

East No. 

Central 4.4 0.2 1.4 / 3.1 6.0 / 7.6 

West No. 

Central 1.7 0.4 1.0 / 2.1 3.1 / 4.2 

South Atlantic 2.3 0.2 3.9 / 8.4 6.4 / 10.8 

East So. 

Central 0.9 0.1 2.3 / 4.9. 3.3 / 5.9 

West So. 

Central 1.1 0.0 0.7 / 1.5 1.8 / 2.6 

Mountain 2.3 0.2 1.2 / 2.6 3.7 / 5.1 

Pacific (w/o 

CA) 0.3 0.0 1.5 / 3.1 1.8 / 3.5 

New York 1.2 0.8 0.3 / 0.6 2.2 / 2.5 

California 5.9 0.2 1.1 / 2.5 7.3 / 8.6 

Texas 3.1 0.0 2.3 / 4.9 5.4 / 8.0 

Florida 0.6 0.0 4.0 / 8.6 4.6 / 9.2 

U.S. Total 25.8 3.8 20.9 / 45.0 50.4 / 74.6

Conclusions 

The current technical potential of solar water heating in the United States is estimated at 

about 1 quad of primary energy savings per year, equivalent to an annual CO2 emissions 

reduction potential of about 50-75 million metric tons. For consumers, this savings 

translates into more than $8 billion per year in retail energy costs, while protecting 

against fuel price escalation. A large fraction of water heating energy is derived from 

natural gas, either from direct use, or from electric water heating, where natural gas is the 

marginal fuel for much of the year. As a result, SWH represents a significant opportunity 

to reduce natural gas use in the building sector. 

Greater understanding of the potential of SWH would result from further analysis of 

availability of roofs in the residential sector, as well as potentially significant 

opportunities in the industrial sector. Even applying conservative assumptions for rooftop 

availability, there are clearly significant opportunities for SWH in both new and retrofit 

markets. The relatively short life of conventional electric and gas water heaters (10-15 

years) provides significant opportunities for ongoing end-of-life retrofits with SWH units. 

The actual potential of SWH depends largely on economic and market barriers to the 

deployment of current and future SWH systems. 

 17
F1146-E(12/2004) 

REPORT DOCUMENTATION PAGE Form Approved 

OMB No. 0704-0188

The public reporting burden for this collection of information is estimated to average 1 hour per response, including the time for reviewing instructions, searching existing data sources, 

gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this 

collection of information, including suggestions for reducing the burden, to Department of Defense, Executive Services and Communications Directorate (0704-0188). Respondents 

should be aware that notwithstanding any other provision of law, no person shall be subject to any penalty for failing to comply with a collection of information if it does not display a 

currently valid OMB control number. 

PLEASE DO NOT RETURN YOUR FORM TO THE ABOVE ORGANIZATION.

1. REPORT DATE (DD-MM-YYYY)

April 2007 

2. REPORT TYPE

Technical Report 

3. DATES COVERED (From - To)

 

5a. CONTRACT NUMBER

DE-AC36-99-GO10337 

5b. GRANT NUMBER

4. TITLE AND SUBTITLE

The Technical Potential of Solar Water Heating to Reduce Fossil 

Fuel Use and Greenhouse Gas Emissions in the United States 

5c. PROGRAM ELEMENT NUMBER

5d. PROJECT NUMBER

NREL/TP-640-41157 

5e. TASK NUMBER

SHO7.9001 

6. AUTHOR(S)

P. Denholm 

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

National Renewable Energy Laboratory 

1617 Cole Blvd. 

Golden, CO 80401-3393 

8. PERFORMING ORGANIZATION 

REPORT NUMBER

NREL/TP-640-41157 

10. SPONSOR/MONITOR'S ACRONYM(S)

NREL 

9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES)

11. SPONSORING/MONITORING 

AGENCY REPORT NUMBER

12. DISTRIBUTION AVAILABILITY STATEMENT

National Technical Information Service 

U.S. Department of Commerce 

5285 Port Royal Road 

Springfield, VA 22161 

13. SUPPLEMENTARY NOTES

14. ABSTRACT (Maximum 200 Words)

Use of solar water heating (SWH) in the United States grew significantly in the late 1970s and early 1980s, as a 

result of increasing energy prices and generous tax credits. Since 1985, however, expiration of federal tax credits 

and decreased energy prices have virtually eliminated the U.S. market for SWH. More recently, increases in energy 

prices, concerns regarding emissions of greenhouse gases, and improvements in SWH systems have created new 

interest in the potential of this technology. SWH, which uses the sun to heat water directly or via a heat-transfer fluid 

in a collector, may be particularly important in its ability to reduce natural gas use. Dependence on natural gas as an 

energy resource in the United States has significantly increased in the past decade, along with increased prices, 

price volatility, and concerns about sustainability and security of supply. One of the readily deployable technologies 

available to decrease use of natural gas is solar water heating. This report provides an overview of the technical 

potential of solar water heating to reduce fossil fuel consumption and associated greenhouse gas emissions in U.S. 

residential and commercial buildings. 

15. SUBJECT TERMS

NREL; solar; solar water heating; greenhouse gas emissions; SWH; fossil fuel; Residential Energy Consumption 

Survey; Commercial Building Energy Consumption Survey; building energy use; Paul Denholm; rooftop; energy 

savings; 

16. SECURITY CLASSIFICATION OF: 19a. NAME OF RESPONSIBLE PERSON 

a. REPORT 

Unclassified 

b. ABSTRACT 

Unclassified

c. THIS PAGE 

Unclassified

17. LIMITATION 

OF ABSTRACT

UL 

18. NUMBER 

OF PAGES 

19b. TELEPHONE NUMBER (Include area code)

Standard Form 298 (Rev. 8/98) 

Prescribed by ANSI Std. Z39.18