Rising Energy Costs & the Economics of Solar Hydronic Heating

A Feasibility Study for OMNI Development Corp.

Christian O’Mara

B.A. Brown University

May 2006

Abstract

The costs of natural gas and oil have gone up significantly in the last five years due to increased demand and declining spare capacity. In the first decade of the 21^st century many of the world’s largest oil and gas fields are showing signs of peak production, causing significant speculation that the price of these fuels will continue rising.

At this same point advances in alternative energy systems have made tremendous progress in efficiency and affordability. Of all the major energy consuming sectors buildings offer the greatest opportunity to reduce demand. Heating and hot water in particular consume the most energy within buildings, averaging 56% of total annual demand. A new solar thermal system offers developers and building owners the opportunity to substantially reduce conventional energy use for these two applications in a cost-effective manner. The system combines radiant floor heating, solar thermal collectors, and phase change thermal energy storage material.

This thesis assesses the status of today’s energy market and the additional up front costs, government incentives, and payback period that would apply to this new system’s installation at 1 Mashapaug St, Providence, RI. OMNI Development Corp. is considering redeveloping this property into low-income veteran housing. Currently it is an unoccupied 14,240 sq. foot mill building in poor condition. According to Bill Thomas, the design engineer of the solar system, the building meets all the criteria to be fully redeveloped with this technology.

A cost and performance analysis shows the system will offset roughly 37.5% of the building’s total heating and hot water load on an annual basis. At $1.82 per Therm of natural gas, the price in December 2005, the system will pay for itself within 12.7 years through energy cost savings. However, natural gas prices are expected to continue rising, making the payback of this investment even quicker.