Credit Union Lending Officers’ Training Manual
Version 01


Prepared by:
Global Sustainable Energy Islands Initiative & The St. Lucia Co-operative League Limited

St. Lucia faces unique challenges associated with the generation and use of electric energy. The island nation depends, almost exclusively, on the combustion of imported diesel fuel for the generation of electricity. A significant portion of the nation’s foreign exchange earnings are used to pay for such imported fossil fuels. This high level of dependence on imported fossil fuel, when combined with the economic rents extracted by the monopoly position held by the generation and distribution utility, result in a very high cost of electricity to residential consumers on the island. The average household in St. Lucia currently pays approximately EC$ 0.688 per kWh for electricity, which includes a base charge of EC$ 0.654 per kWh plus a fuel surcharge of EC$ 0.034 through which the electric utility is permitted to pass on increases in the price of fossil fuels directly to consumers. The structure of the fuel surcharge exposes island residents directly to the inherent volatility in the market price for fossil fuels. Turbulence in the Middle East and weather-related damages to the oil production capacity in the United States have recently led to a dramatic increase in the price of fossil fuels and therefore consumers of electricity in St. Lucia will most likely soon see a further increase in the unit price of electricity on the island. Many of the middle and low income households in St. Lucia who use hot water heating systems harness electric water heating elements or electric point heaters to meet their hot water requirements. Given an average hot water consumption of 20 gallons per person per day, these electric water heating methods can consume up to 6 kWh per day to heat water for a family of four. Heating water with electricity is a costly practice given the high rates per kWh paid by domestic consumers on the island. The market potential for solar hot water systems (SHWS) to replace electric point heaters in St. Lucia has been recognized in studies, and many wealthy residents and vacation home owners have purchased and installed SHWS. However, little has been done to make such systems available and affordable to low and middle income households on the island. One of the foremost barriers to increasing access to SHWS for the low and middle income segments of the population in St. Lucia is the high upfront costs of these systems. Although SHWS provide households with an economical alternative to meeting their hot water needs in the medium-term, as there is no fuel and few maintenance costs associated with these systems, the initial cost of a SHWS is high when compared to conventional heating alternatives. Companies supplying SHWS and banks on the island have periodically offered short-term credit options to finance the purchase of SHWS. However such credit packages have not been sufficient to defray the high upfront costs of these systems to the point that monthly repayment rates equal the installed and electric costs for conventional water heaters. In addition, such financing has not been made available through institutions trusted by target segments of society. Middle and low income customers require medium-term financing to make SHWS affordable and prefer to access such credit through their credit unions where they meet their other banking needs. The United Nations Industrial Development Organization (UNIDO), the Organization of American States (OAS), and the Energy and Security Group (ESG) – working in partnership with the St. Lucia Co-operative League Limited and the Sustainable Development & Environment Unit in the Ministry of Physical Development, Environment & Housing of the Government of St. Lucia – are implementing the Caribbean Solar Finance Programme (CSFP). CSFP is designed to increase access to SHWS for low and middle income households in the Eastern Caribbean by measurably reducing the constraints on, and increasing the capacity for financing of SHWS by

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the credit unions that service the credit needs of the target population while at the same time helping build awareness among the membership of the credit unions as to the benefits of SHWS. CSFP is executed through three program elements: a Training Course for Lending for SHWS for Officers in Credit Unions, a Wholesale Consumer Credit Facility offering a low-cost long-term loan facility to credit leagues for on-lending to members of constituent credit unions to support the purchase of SHWS, and a Consumer Awareness Campaign designed to raise awareness of the benefits of SHWS among the credit union members. The Training Course for Lending for SHWS for Officers in Credit Unions is a core element in CSFP. The Training Course is structured to train finance professionals in credit unions in the methods for analyzing and constructing loans for union members to purchase SHWS. Training in the Course includes a Familiarization Module designed to introduce lending officers to the technical and economic aspects of SHWS, a Finance Module that instructs the credit officers in the methods for lending for SHWS, and a Case Study Module that analyzes the financial viability of purchasing a SHWS versus expenses associated with electric hot water systems used by low and middle income households in St. Lucia. The goal of the CSFP Training Course is to make lending officers more comfortable with SHWS technologies and more confident in their abilities to assess related financing opportunities. The objective is to assist the lending officers in moving up the learning curve to the point that they begin asking the right questions and have a context for understanding the answers they receive. The CSFP Partnership is pleased to present this Training Manual on Lending for Solar Hot Water Systems in St. Lucia. This Manual is the textbook for the CSFP Training Course and has been prepared by the CSFP Partnership and a team of consulting experts. The Training Manual is not meant to serve as a stand-alone document but is rather designed as a reference tool that complements instruction in the CSFP training sessions and builds on the lending procedures developed by each credit union in response to the Wholesale Consumer Credit Facility offered under CSFP and on the demand for SHWS generated by the Consumer Awareness Campaign. On behalf of the CSFP Partnership, we hope this Training Manual and the associated training session may serve as valuable tools in the development of lending operations in the credit unions which open access to SHWS for low and middle income segments of the population in St. Lucia.

Marco Matteini United Nations Industrial Development Organization

John E.H. Ryan Energy and Security Group & e3V

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First and foremost acknowledgements and thanks are given to the Board of Directors and staff of the St. Lucia Co-operative League Limited for their willingness to undertake the Pioneer Phase of the Caribbean Solar Finance Programme (CSFP) and its constituent Training Course, Consumer Credit Facility, and Consumer Awareness Campaign. The League’s commitment to CSFP and their intellectual input in the crafting of the Training Course has been remarkable, without such a commitment CSFP would not be possible. Special recognition is given to Mr. Terrence Charlamagne and Ms. Geraldine Lendor for their leadership and wise counsel on all aspects of CSFP and to Mr. Alexander Joseph for his tireless work on behalf of the League in support of CSFP. Recognition and thanks are due to the United Nations Foundation for their financial support for CSFP. Thanks are also owed to the Organization of American States – especially to its Trust for the Americas and Office of Sustainable Development and Environment, and to the Sustainable Development and Environment Unit in the Ministry of Physical Development, Environment & Housing of the Government of St. Lucia for their assistance with the development of CSFP. Special acknowledgements are due to Ms. Ayesha Grewal who is a Managing Director of Environment Energy and Enterprise Ventures Plc. (e3V) and serves as the Training Advisor to the Energy and Security Group (ESG) in the development of CSFP. Ms. Grewal was the coordinator and editor of this Training Manual and is the author of its constituent Case Study Module. Acknowledgements are also due to each of the experts who authored the other modules in the Manual. Mr. Mark Thornbloom of the Florida Solar Energy Center created the Familiarization Module, Mr. Alexander Joseph of the League produced the Finance Training Module, and Mr. Flavien Rudolph, General Manager, Solar Dynamics (EC) Ltd. contributed significantly to Ms. Grewal’s construction of the Case Study Module. Thanks are also due to Dr. Marco Matteini, Program Officer, United Nations Industrial Development Organization (UNIDO) and Mr. John Ryan, a Director for ESG managing finance and policy operations and e3V’s Chairman and Managing Director, who together, working in close partnership with Ms. Lendor and Mr. Charlemagne, were the architects and are now the managers of CSFP and its constituent program elements. Dr. Matteini and Mr. Ryan also gave much appreciated guidance and constructive feedback on the design, development, and content of this Training Manual. Finally and most importantly, thanks are due to all the lending officers in the credit unions in St. Lucia who are participating in the Pioneer CSFP Training Course and will hopefully soon make loans for SHWS to low and middle income consumers in St. Lucia a reality.

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FAMILIARIZATION MODULE ........................................................................................................... 1 Purpose............................................................................................................................................ 1 Introduction .................................................................................................................................... 1 Solar Hot Water Systems .............................................................................................................. 1 Components of a Typical SHWS .................................................................................................. 2 Different Types of SHWS for Domestic Applications ................................................................. 3 Advantages and Limitations of SHWS ......................................................................................... 6 Technical Risks of Domestic SHWS ............................................................................................. 7 Frequently Asked Questions ....................................................................................................... 16 References and Notes ................................................................................................................... 19 FINANCE MODULE ............................................................................................................................ 20 Purpose.......................................................................................................................................... 20 General and Classification .......................................................................................................... 20 Unit Size and Cost ........................................................................................................................ 20 Eligibility ....................................................................................................................................... 21 Loan Proposal............................................................................................................................... 21 Quantum of Loan ......................................................................................................................... 22 Rate of Interest ............................................................................................................................. 22 Security ......................................................................................................................................... 22 Co-maker or Guarantor .............................................................................................................. 22 Service Charges ............................................................................................................................ 22 Repayment .................................................................................................................................... 22 Other Requirements .................................................................................................................... 22 Assessing the Borrower – Certain Common Check Points ...................................................... 23 Appraisal of a SHWS Proposal ................................................................................................... 24 Sanctioning Authority.................................................................................................................. 25 Disbursement ................................................................................................................................ 26 Checklist for SHWS ..................................................................................................................... 26 CASE STUDY MODULE ..................................................................................................................... 27 Purpose.......................................................................................................................................... 27 General .......................................................................................................................................... 27 Costs Associated with Electric Point Heaters ............................................................................ 27 Costs Associated with SHWS ...................................................................................................... 28 Comparing the Cost of Electric Point Heaters and SHWS ...................................................... 28 Conclusion .................................................................................................................................... 31

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PURPOSE The purpose of this Module is to provide lending officers in the credit unions with a general overview of the technological aspects of solar hot water systems (SHWS) and to introduce the officers to the technical specifications of the SHWS that will most likely be financed under the Caribbean Solar Finance Programme (CSFP). The Module is also designed to serve as a base level reference tool for the officers when confronted with technical issues in regards to lending in support of target consumer purchases of SHWS under CSFP. INTRODUCTION The idea of collecting the sun’s energy for mankind’s heating needs has been applied in perhaps every culture in history. Solar thermal technologies directly use the sun’s heat, typically in a concentrated form, towards various applications, such as heating water, generating electricity, heating and cooling indoor spaces, cooking, crop drying, and so on. Heating water using a Solar Hot Water System (SHWS) is one of the most common applications of the technology, and has been around for centuries. Clarence Kemp patented the first commercial solar water heater in the US in 18911. He used the integral collector storage (ICS) concept, a principle whose basic precepts are still in use today. William Bailey revolutionized the industry with the first flat plate collector in 1909. In the 1930’s market penetration in Miami was 50%, and 80% in new homes2. As electric and natural gas prices dropped and copper prices rose, solar water heating declined. Today, it constitutes only a small fraction of the water heating market in the US, but it is growing considerably in Europe and other parts of the world. While US sales dropped 2% in 20033 they grew 22% in Europe4, where some 15 million ft2 (1.4 million m2) were installed, then tapered off in 2004. Germany leads the world with over 8 million ft2 (750,000 m2) installed in 20045. Throughout the Caribbean, SHWS technologies have been well known for decades. Sunlight is a variable fuel resource. As seen in Figure 1, its intensity is impacted by time of day and time of year. This is because the sun’s rays must pass through more air mass in the morning and evening as compared to noontime. Further, because of the tilt of the earth’s axis in its orbit, our sun appears to be higher in the sky during summertime and lower in the winter. Other variables such as clouds, pollution, and dust will decrease the amount of solar energy reaching the earth’s surface.
Figure 1: Intensity of Sunlight as Impacted by Time of Day and Time of Year

Sunlight is a distributed fuel resource therefore, the larger the surface area that intercepts and absorbs the sun’s rays, the greater the amount of solar energy captured. Also, the more time a given flat surface can spend perpendicular to the sun’s rays, the greater the amount of solar energy captured. SOLAR HOT WATER SYSTEMS A SHWS heats water using the sun’s energy, rather than electricity or gas, as fuel. A typical SHWS includes a flat plate collector, a well-insulated storage tank, cold and hot water pipes, and other balance1

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of-system components necessary to harness thermal energy from the sun to provide households with reliable, safe, and affordable hot water systems for domestic use. Although the sizes of the systems vary depending on hot water requirements, typically SHWS sizing assumes a usage of about 20 gallons per person per day for domestic applications. The optimum way to collect solar energy for domestic hot water use is either the ICS (Integral Collector Storage) collector or the glazed flat plate collector such as is shown in Figure 2. In a glazed flat plate collector, sunlight passes through the glass and is absorbed by a dark metal absorber sheet and converted into heat. The heat moves through the absorber sheet and into fluid in a pipe. As the sun heats the absorber and fluid, they can get much hotter than the surrounding air. However, insulation on the back and the sides keeps them from cooling too quickly. The glass also helps trap the heat inside during the day, similar to how a car will heat up if left in the sun all day. The heated fluid leaves the collector and goes to a well-insulated storage tank where it is stored until it is needed for use in the house. Then, the hot water leaves the storage tank and is replaced by cold water from the city or a well.

Figure 2: Cross-section of a glazed flat plate collector

COMPONENTS OF A TYPICAL SHWS Solar Collector The solar collector traps sunlight, converts it to heat, and conveys that heat to a working fluid such as water. Glass and insulation allow water temperatures to rise quite a bit above air temperatures. In an ICS collector, the storage tank doubles as the collector. Hot Water Tank The tank stores the solar heated water for later use. It has thick insulation to minimize heat losses and a metal jacket to protect the insulation from damage. Often, an electrical element will be added to provide backup to the solar heat.


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Piping Piping conveys the water between the different components. Due to the high temperatures experienced, only metal piping (usually copper, sometimes galvanized iron, but always the same material as is found in the collector) should be used between the collector and tank. Metal piping is also common between the tank and the home, although certain plastics are sometimes used. Pump Pumps are not found on thermosyphon or ICS systems, but are found on photovoltaic-pumped (PVpumped) active designs. The pump is used to push water around the collector loop. Other Valves and other components are necessary to safely and consistently provide solar heated water to the home. These are discussed elsewhere in this Module. DIFFERENT TYPES OF SHWS FOR DOMESTIC APPLICATIONS While SHWS are based all on the same principles, the design of systems differs depending on local climatic conditions, roof structures, costs, efficiency and size requirements of customers, etc. This section provides information on the typical SHWS installed for domestic applications in St. Lucia. The Thermosyphon Design One of the most common designs in the tropics is the thermosyphon design. It also is perhaps the most straight forward and elegant in its simplicity. It makes use of the buoyancy effect in natural convection to collect the sun’s heat and store it in an insulated tank for later use. The sun’s rays are absorbed by the metal plate, which heats the fluid inside the collector tubes. As the fluid is heated in the collector tubes, it becomes less dense and rises to the top of the tank. Relatively cool fluid from the tank drops down the outside pipe to the bottom of the collector to replace the rising heated fluid. This cycle continues as long as the sun is able to warm the fluid in the collector tubes to a temperature warmer than the fluid
Figure 3: A Typical Thermosyphon System

in the tank. When the sun sets and can no longer warm the collector, the cycle stops. Because the collector has only glass on one side, it cools quicker than the tank. The heavier cold fluid stays in the collector, and the lighter heated water stays stored in the tank. Insulation in the back and sides of the collector and the glazing in the collector front allow it to collect heat during the day at temperatures much higher than the surrounding ambient air. Insulation around the

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whole tank reduces heat loss so the solar heated water can be stored for long periods of time until it is needed. A 40 gallon (150 l) tank will weigh over 330 pounds (150 kg), while the weight of the collectors will be about 85 pounds (39 kg) for a single 21 square foot collector. The roof structure must be able to handle this weight.
Figure 4: Cut-away View of a Closed Loop Thermosyphon System

In order for the thermosyphon effect to work, the storage tank must always be physically above the collector. People have experimented for decades with different sized pipe, size ratios, vertical vs. horizontal tanks, etc. But in each, the tank is always above the collector. Some designs, like Figure 3, send water from the tank directly to the collector. This is a very efficient way to collect heat but exposes the small collector tubes to potentially aggressive city water. Others, like Figure 4, use a dedicated fluid in the collector and transfer heat to the tank via a heat exchanger. The collector loop uses a dedicated fluid and is a closed loop; that is, it is not exposed to the city water. While the heat exchanger means some loss of efficiency, the collector and piping are protected. The Integral Collector Storage (ICS) Design The ICS design is even simpler than the thermosyphon design. It might be considered a very large piece of pipe inserted into the hot water supply line. Figure 5 shows a cut-away view of an ICS design. This large pipe is placed in an insulated box with a window facing the sun, and acts as the solar absorber and the tank combined, or integrated into one unit. During the day, sunlight passes through the glass and is absorbed by the darkened metal tube, heating the water inside.
Figure 5: Cross-section of the Integral Collector Storage Design

As the water sits in the tube, it slowly heats up over the day. The insulated box allows it to reach temperatures much higher than the surrounding ambient air. When there is a demand for hot water, the solar heated water leaves the top of the collector/tank and flows to the shower or sink. Cold water comes in at the bottom, replacing the hot water. A filled 40 gallon (150 l) ICS system could easily weigh over 550 pounds (253 kg), with a relatively small footprint. Although this improves the odds that it will stay put in a hurricane, it also means that the roof structure must be able to hold all the weight through out its lifetime. Because there is only a sheet of glass between the tank and the night sky, these tanks are not as well insulated as thermosyphon tanks. Hence, they tend to lose heat quicker than the thermosyphon tank does. This heat loss is a problem in northern climates so this design is not very effective where the night skies get very cool or if there is a significant morning load. However, in the tropics, the ICS design is quite effective. It is best used in


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applications where hot water use is in the evenings. Further, its simplicity means that there are fewer things to go wrong, so these designs are very durable in areas with non-aggressive water. The PV-pumped Design This design allows you to place the tank at some location other than the roof. As seen in Figure 6, this design requires a pump to circulate the water from the tank to the collector and back again. As the sun rises in the morning, it heats the water in the collector. It also shines on the photovoltaic (PV) panel next to the collector. The PV panel converts the sun’s energy into electricity, and is sized so that when there is enough electric energy to start spinning the pump, then there is enough solar energy to heat the water in the collector. The pump sends relatively cool water up to the collector, pushing the warmed water out of the collector and down to the tank. This continues as long as there is sufficient sunlight to energize the PV panel. When the sun sets and the pump can not run, the solar collector also cools down. This design allows only the collector to be visible on the roof. Some feel that this is more aesthetically pleasing.
Figure 6: PV-pumped Design

As the pump is only circulating water, rather than lifting it, a small pump may be specified which helps reduce cost. An air vent is necessary at the collector outlet and at any other high points in the plumbing, since any air pockets might overwhelm the pump. The pump and PV panel must be properly matched or the system will not work as intended. Most designs use city water directly in the collector loop. In areas with aggressive water, the same design could be used with a heat exchanger between the collector and the tank. Other Solar Water Heating Designs Both the thermosyphon and the ICS design are described as “passive”, since there is no mechanical pump, while the photovoltaic-pumped design is considered “active”. All three designs could be “direct”. That is, water enters directly into the collector. The thermosyphon and the PV-pumped system could also be

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configured as “indirect”. In the indirect system, there is a heat exchanger that separates the water from the fluid that is in the collector. It is possible that systems with pumps using alternating current (AC) be seen in this loan program. These designs use a pump powered by conventional 110VAC or 220VAC electricity, rather than PV. An advantage of these designs is that the AC pump typically cost less than the PV panel and pump. However, they will not run if there is a power outage, and they do consume costly electricity. This parasitic power reduces the overall energy efficiency of the system as a whole. AC-pumped systems may operate on a differential controller or with a simple timer. The controller is more reliable than a timer, but requires sensor wiring up to the collector, and introduces increased complexity over the simpler systems described above. There are several solar water heating designs that won’t be seen in this loan program, primarily because they deal with freeze protection. One is the antifreeze system that circulates a glycol in the collector loop. Another is a drain-back system that only pumps water into the collector when there is sufficient sunlight to heat it. Both protect the collector fluid from freezing, which is not an issue in the islands. ADVANTAGES AND LIMITATIONS OF SHWS SHWS are successfully meeting the hot water requirements of millions of households around the world. However, SHWS may not always be the optimal technology in delivering hot water. It is important to consider both the advantages and limitations of SHWS before selecting it to meet the hot water requirements of a particular application. Experience has shown that when users have unrealistic expectations of their SHWS, they are likely to operate it improperly or simply stop using it altogether. The following discussion summarizes the basic advantages and limitations of SHWS to help you know when it is the right choice. Advantages of SHWS SHWS offer households a reliable, safe, and affordable alternative to meet their hot water requirements for domestic applications. These systems have various benefits over conventional methods of heating water for home use. Cost Effective: While the initial capital cost of purchasing a SHWS is almost always higher than an equivalent sized electric or gas heater, there are no related fuel costs and maintenance costs are typically negligible. In the medium-term, SHWS are usually cost effective in displacing the electric heating of water when the price of electricity is very high such as in small island nations like St. Lucia with generation systems based on imported fossil fuels and common use of inefficient electric appliances such as electric point heaters to meet domestic hot water requirements. In addition, SHWS for St. Lucia is clearly one of the most effective energy conservation programs in the country as it conserves costly conventional power that could be used for other purposes. For instance, one would draw approximately 6 kWh of electricity from the grid per day to provide a family of four with hot water. Most, if not all of this energy would be saved by installing a SHWS, depending on the size installed. Free, Abundant Fuel: Heat from the sun, the fuel source for SHWS, is a widely available, inexhaustible, reliable, and free energy source. Hence, these systems have no monthly fuel bills. Like electric or gas water heaters, there may be minimal costs associated with maintenance or fee-for-service installations. Locally Generated Power: SHWS make use of a locally-available resource – the sun. This provides greater energy security and control of access to hot water. It also reduces potential hazards associated with transporting fossil fuels or the use of electricity in a water heating system.

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Environmentally Benign: The use of the sun’s energy to heat water using a SHWS produces no gaseous or other emissions during operation and offers an environmentally benign alternative to fossil and nuclear sources of energy. Further, the system operates silently and may offer a more visually pleasing alternative to power conduits strung across the landscape. Effect on National Economy: A large part of export earnings of St. Lucia are used to pay for imported oil and gas. Installing and using SHWS could substitute the use of fossil fuel-based heating systems, and reduce related expenditures. In addition, capital saved by not building additional large power plants can be used for investment in health, education, economic development, and industry. Expanding the application of SHWS to meet the hot water requirements of households creates jobs and business opportunities based on an appropriate technology in a decentralized marketplace. Limitations of SHWS High Initial Cost: Although residents of St. Lucia pay high prices for grid-based electricity, this cost is spread over time. The high initial cost of SHWS acts as a barrier for their dissemination across the country. Financing is needed to spread this high initial cost of SHWS over a longer period, thereby making them accessible to low and middle income households in St. Lucia. System Maintenance: While SHWS require relatively little maintenance and up-keep, end-user training in system usage and limitations is essential to ensure effective operation of a complete SHWS. This factor is mitigated by the fact that a maintenance contract is typically included with the purchase of the system. However, any required training could easily be provided by the installer of the SHWS at the time of installation. Sun Dependent: Just as a gas-powered water heater will not run without gas, a SHWS will not operate without energy from the sun. Energy from the sun is a diffuse fuel source. Factors such as clouds blocking the sun or shadows cast by vegetation and structures will diminish the system’s output as will incorrect installation; however related limitations can be mitigated by appropriate system sizing and placing. TECHNICAL RISKS OF DOMESTIC SHWS Introduction This section is meant to define and discuss some of the technical risks associated with SHWS. The term “Risk” here refers to the potential of where and when the system might fail to deliver what it is designed to deliver: hot water. This would relate to the system’s ability to perform according to design, as well as its ability to deliver over the years, or its reliability. As with any appliance, there are also some safety risks that should be understood. Related issues are divided into the following three subsections: Performance, Safety, and Reliability. There will be some overlap among these topics and subsections. The best guarantee of performance is certification of the SHWS. While there are many high quality noncertified systems on the market, a certified SHWS will have been tested and inspected by a third party to measure performance under specific test conditions. A performance rating is given that allows the model to be compared to other models certified to the same protocols. In addition, the system is evaluated for various safety, durability, and reliability issues. There are a number of solar thermal certification entities available. In the US and Canada, jurisdictions will specify either the Solar Rating Certification Corporation (SRCC) or the Florida Solar Energy Center (FSEC) Certification. In Europe, many governments require certification following the European norms

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or ISO (International Standards Organization) standards. Other countries are also active: Brazil has an active testing and certification program and Mexico is considering a testing lab and collaborating with the US and Canada to certify solar systems. Performance Orientation: Selection of the tilt and azimuth (or the orientation relative to south) of a solar collector has historically been decided based on the optimum orientation for maximum solar energy collection. However, in recent years tilt and azimuth have often been chosen on the basis of aesthetics or even wind load resistance characteristics. As detailed above, SHWS are designed to heat water by using sunlight as the fuel, rather than electricity, propane, or natural gas. Solar energy is a distributed energy resource. This means that it is evenly distributed over an area and must be collected into one central place (the tank) in order to be useful. The greater the amount of sunlight the solar collector can intercept, the more heat it will collect and deliver to the tank. It can be shown that the best orientation for a fixed, non-tracking flat plate solar collector to collect the most energy over a year is to be oriented toward the equator and at a tilt equal to the latitude of the location. The discussion here will relate to the northern hemisphere. Thus, with St. Lucia being at 13-14 degrees latitude in the northern hemisphere, a solar collector will collect the most energy if it is pointing south and tilted at an angle of 13-14 degrees off horizontal. This would correspond to a roof pitch of just under 3 in 12. If a relatively large winter load is expected, then the optimum direction is still south, but the optimum installation angle is as much as ten to fifteen degrees greater than latitude. As can be seen from Figure 7 for Orlando Florida (latitude 28 degrees), the higher tilt will allow the collector to collect more energy in the winter when the sun is lower in the sky.
Figure 7: Optimal Angle for a Solar Collector in Orlando

An example of a large winter load might be a school kitchen or gym showers that would have no load in the summer, or a hotel that hosts only winter tourists. In St. Lucia, optimum winter-based tilt angles would be between 23 and 29 degrees off horizontal. If a relatively large summer load is expected, then the optimum tilt for St. Lucia would be 10 degrees. In general, most collectors should be tilted at least ten degrees off horizontal so that rain will not puddle on the glass. Also, most thermosyphon systems will require a minimum slope of the collector as specified by the manufacturer. This minimum slope ensures that the thermosyphon effect will function properly. A large summer load might be seen in a vacation home, or a summer camp.


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Rack mounting might be used to tilt the collector to the correct angle. Most manufacturers provide rack mounts designed for their system. This type of mount is necessary if one is installing on a flat roof as seen in Figure 8. However, it might also be used to tilt a system on a sloped roof as well. Rack mounting might be necessary if the system must be placed on the north roof, as seen in Figure 9, or if the roof slope is too great to justify a stand-off mounting.
Figure 8: Rack Mounted Solar Collectors on a Flat Roof

Although tilting the collector to latitude provides the optimum energy collection, many installers and homeowners opt to take a slight performance penalty and mount the collector parallel to the roof plane. A performance penalty of 6% is taken for tilts offoptimum by as much as 20 degrees. This loss of performance might be recovered by specifying a system with a slightly larger (for example 6% larger) collector.
Figure 9: Rack Mounted Solar Collectors on a Slanting Roof

In the interest of aesthetics and sometimes even for better wind resistance, collectors may be mounted just off the roof surface in a stand-off mounting as seen in Figure 10. A stand-off mount should have at least two inches (five centimeters) of clearance between the bottom of the collector and the roof. This will keep leaves and debris from building up in between the collector and roof surface. Some installations are even integrally mounted with the roof. These collectors become part of the waterproof roof membrane. Integrally mounted collectors must be properly flashed to the surrounding roof material or they will allow damaging leaks. If they are properly installed on structurally sound roofs, integrally mounted solar systems are both aesthetically pleasing and could be more wind-resistant relative to a stand-off mount or rack mount. However, with proper design and installation, all mountings discussed will in principle withstand hurricane-force winds up to specified design wind speeds.
Figure 10: Stand-off Mounted Solar Collectors on a Slanting Roof

What if an installer were to put a solar system on an east-facing or west-facing roof? Just as with tilt, any variation in azimuth that is not south will result in a slight performance penalty. A solar system on a west roof will be exposed to less sunlight throughout the day, as compared to an equivalent south-facing system. So, it will collect less heat over the year. Studies have shown that there is a 40% decrease in performance for azimuths of 90 degrees off-south as shown in Figure 11. Again, this orientation-related collectable energy loss could be compensated for by an increase in the collector size. Some argue that placing a collector on the west roof is better than on an east roof, since the solar energy is collected in the afternoon when the air temperature is warmer, and since the rate of heat lost from the collector decreases as the difference between collector temperature and air temperature decreases. Warmer outside air allows less loss from a heated collector. This argument may be true; however, if an area is prone to afternoon storms, then the west roof is not preferred over east or south. North facing collectors are not recommended. While this is not as great an issue as one approaches the equator from northern latitudes, north-facing collectors do not collect a significant amount of solar energy

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even in St. Lucia. If a collector must be placed on a north-facing roof, then it must be rack mounted so that it faces south as seen in Figure 9. Some customers may insist that their system be placed on the north roof facing north. In this situation, one manufacturer requires that the customer sign a waiver stating that performance is no longer guaranteed.
Figure 11: Change in Performance Based on Azimuths

Shading: Since a solar system collects the sun’s energy, it needs to have access to that energy. As such, shading of the collector should be minimized. Shading may occur from nearby buildings, other solar systems or equipment on the roof, or trees. When evaluating a site, remember that trees grow. A tree that is a small sapling when the solar system is installed may grow to shade the system over its 15 to 20-year lifetime. The solar system may need to be moved or the tree trimmed, to maintain performance. System Sizing: Sizing hot water storage to a given load requires a bit of knowledge about the consumer. The FSEC sizing procedure is based on either the number of people or the number of bedrooms. It assumes a usage of about 20 gallons per person per day, or about 22 to 25 gallons (83 to 95 l) per bedroom per day, which ever is larger. It assumes a hot water delivery temperature of 122°F (50°C). Jacuzzis or hot tubs would require additional storage. Helioakmi assumes a very cool delivery temperature of 113°F (45°C) and a lower consumption of 9.25 to 21.15 gallons (35 to 80 l) per person per day, but they consider clothes washing and dishwashing separately. Most manufacturers have already determined correct collector/storage ratios for their markets. General rules of thumb for the Caribbean are 1.5 to 2 gallons of storage for each square foot of collector, or a 2:1 ratio. For example, an 80-gallon (303 l) tank would be well-matched with a 40 ft2 (3.7 m2) collector. Or, some US contractors assume 20 square feet (2 m2) each for the first two people in the house, and 8 ft2 (0.7 m2) for each additional person. However, most established manufacturers have determined by trial and error the correct ratio that keeps a customer happy. One very successful model in St. Lucia has a ratio of 2.4:1. What if the solar system is undersized? In theory, the solar system will operate more efficiently, since all of the solar energy collected is being used, and less is being lost during storage. However, the electric or gas backup will be used more. The customer will see less of a reduction in his electric (or gas) bill. If the backup is shut off, the customer may experience hot water outages. This will certainly result in complaints to the solar company about not enough hot water. What if the solar system is oversized? In theory, one would have paid for more solar equipment than needed. The system will tend to reach stagnation temperatures more often. Most systems are designed to withstand stagnation temperatures indefinitely. However, the pressure-temperature relief valve may start to open regularly, causing a nuisance. Or, the water exiting from the relief valve might be misinterpreted to be a leak. Very high water temperatures in an oversized system could result in dangerous scalding problems at the fixture, if proper anti-scalding measures are not taken. See below for the importance of anti-scalding measures. However, over-sizing assures that the customer will have sufficient hot water,

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even with the back-up heater turned off. It allows the customer to increase loads in the future, perhaps if more family comes to stay. Experience has shown that many customers do increase their hot water use after installing a solar water heater when they know it is “free” solar heated water that they are using. Note that most US sizing calculations including FSEC assume an annual solar fraction of 50-75%. That is, the solar system contributes 50-75% of the load over the year. A 75% annual solar fraction implies that the solar system meets 100% of the load in the summer and 50% in the winter. Historically, this has been done because of the higher cost of solar equipment and very low cost of fossil fuels in the US. A 75% solar fraction assured that the solar system was never oversized or unused, optimizing the solar investment. This sizing assumption may change as both electric and gas costs rise. Most calculations done in the tropics assume 100% solar-supplied heat, or at least most of the load is supplied by solar with backup only part of the time. This would mean that most of the time the system is oversized. Solar Dynamics assumes solar will provide 99% of the load; Helioakmi estimates 70-100% of the load is solar supplied. From a marketing standpoint, it makes more sense to supply a larger portion of the load with solar heat. Today’s collectors are made from materials that can withstand stagnation temperatures, the incremental material cost of a larger system is not significant, installation cost is about the same, and antiscalding measures protect the consumer. If one is to err in sizing, perhaps one should err on the oversized side. Safety Proper Piping Material: There are several acceptable piping materials, depending on the location in the system. Only metal piping should connect the collector to the tank in a thermosyphon system. Metal piping is also strongly recommended between the collector and tank in PV pumped systems, in fact it is required for certified systems. The metal piping should be of the same material as the collector. Generally, copper tube is used, since most collector waterways are made of copper. Copper tube of Type M or thicker is recommended. Collectors and tanks could get quite hot under stagnation conditions. Although some plastics like CPVC (chlorinated polyvinyl chloride), polybutylene, and some polypropylenes are rated for hot water service in a home, they are not rated for the potential high temperatures that could be experienced in the collector and solar tank. Although CPVC has a pressure rating of 400 psi (2.8 MPa) at 73°F (23°C), it falls to 100 psi (689kPa) at 180°F (82°C). There is a potential that plastic pipe might soften and rupture at very high temperatures, causing dangerous release of hot steam or fluid. Sometimes CPVC plastic pipe is used in the rest of the hot water plumbing after the solar system. It tends to be cheaper and easier to work with than copper, it does not corrode when exposed to chemicals commonly found in water systems, and it functions as a defacto dielectric break between different metals in the system. CPVC is acceptable and allowed in many building codes for house hot water piping. However, the first few feet of piping leaving tanks and any piping near exhaust flues (for systems with gas backup) should be metal, not plastic. Note that CPVC is a tan color. White PVC (polyvinyl chloride plastic pipe) is for cold water use only and should never be used in the hot water plumbing loop. Other plastics such as polyethylene and ABS are also only rated for cold water use, and some grades are for low pressure use only. Scalding Risk: Scalding risks have received a lot of attention in the US in recent years. According to the National SAFE KIDS Campaign, scald burn injury caused by hot liquids or steam is the most common type of burn-related injury among young children6. The elderly and handicapped are also at risk due to their slower reaction time. There are claims that water can scald at temperatures as low as 110°F (43°C)7. Some studies have shown that it takes 10 minutes to receive a third degree burn at 120°F (49°C), it only

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takes 30 seconds at 130°F (54°C), and one second at 160°F (71°C)8. In response to this safety concern, most US building codes now mandate some form of scald protection9. Even though many codes now require protection at fixtures, SRCC requires a mixing valve in any certified system. The first and best protection against scalding is precaution, especially with the very young or the feeble. However, anti-scald and mixing valves are also a strong protection against scald accidents. As can be seen from the sample in Figure 12, mixing valves have an inlet from the cold water supply (or city water), an inlet from the hot water supply (or tank), and an outlet to the hot water load in the house. A temperature sensor checks the outlet temperature and mixes cold water with the hot so that the outlet temperature does not exceed the set point.
Figure 12: Mixing Valve Used to Protect Against Scalding

In over-simplified terms, an anti-scald mixing valve has been tested to certain test standards, it is listed, and it fails closed. A simple mixing valve is usually much cheaper but it is not tested or listed and it may fail open. Many non-US markets do not yet consider scalding to be a preventable danger. Relief Valves: Without protection, a domestic hot water heater whose thermostat has failed would see a continuous rise in temperature and pressure from the expanding water. This temperature and pressure would continue to rise until the pressure exceeds the pressure capacity of the tank. If the tank bursts, the superheated, pressurized water would instantly boil and expand with explosive force. To prevent such catastrophic failures, water heaters are required by code to be protected for both over pressure and over temperature conditions. This applies to electric, gas, and solar water heaters. Certified systems must have pressure relief valves installed on all portions of the system that can be isolated and heated. Relief valves must be set below maximum design pressure of all components. For components exposed to city pressure, the pressure relief is usually set to 150 psi (1.03 MPa). Valves are usually installed on the tank and include a temperature relief to avoid over-temperature situations. Outlet of the relief valve must be plumbed to a safe place. Relief valves help protect the system from overtemperature and over-pressure situations that may damage or rupture components.

Figure 14: Two Pressure-only Relief Valves Figure 13: A Temperature-pressure Relief Valve

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A pressure relief valve is required in all portions of the system that can be isolated. Most solar water heaters have the pressure-only relief valve for the collector loop installed at the collector. Again, special care should be taken to ensure the hot overflow from this valve does not come into contact with people or pets; some codes specify how this should be accomplished. The discharge pipe must be large enough to safely handle the overflow volume. A temperature-pressure relief valve or T&P valve is shown in Figure 13, and two pressure-only relief valve designs are shown in Figure 14. Note the handle at the top for checking the valve. Also note the lack of a temperature probe on the pressure-only relief valve. Proper Mounting: Solar systems are usually mounted on roofs. The hurricane-resistance concerns that will be addressed below not withstanding, it is essential that the system be properly secured. The tank can weigh several hundred pounds, and the collector is not very lightweight either. Improperly secured systems could roll or slide off the roof and cause damage to people and property below. Awningmounted systems should of course also be securely mounted. It is usually sufficient to mount groundmounted systems on concrete piers. Ground-mounted systems have significantly reduced wind-loading concerns but much higher concerns for damage from everyday risks. Also, they may consume valuable space in the yard. Tempered Glass: Certified systems must have glazings that are tempered or non-shattering. Tempered glass is stronger than regular float glass and when it does break, it breaks into small pebbles that are relatively harmless compared to the sharp shards of broken float glass. Non-shattering or laminated glass has a clear plastic film adhered to the glass that holds the pieces together when it breaks. It is the kind of glass found in automobiles. Collectors are not only exposed to winds and flying debris during storms, they are also exposed to everyday hazards like wayward tree branches and cricket balls. Sub-par Materials: In addition to not performing up to specification, sub-standard materials could sometimes lead to unacceptable safety risks. “Bargain” parts may not meet minimum international standards. Sometimes even reputable manufacturers may export poor quality parts to faraway foreign markets in the hopes that the customers will find it too difficult to return defective pieces to the factory. This practice is bad business and reflects very poorly on the reputation of the factory, but it does happen. For example, brass fittings or copper pipe might fail at pressures lower than even the pressure relief valve setting. This could result in a dangerous rupture in the system. St. Lucian manufacturers and assemblers should take care to order parts from reputable vendors, and should vigorously follow-up on shipments of defective parts. Another safety issue is lead-free solder. Lead is considered hazardous to health, and lead in any form has been banned from potable water systems in the US and many parts of Europe. The lead ban includes the solder used to make copper pipe joints. The traditional “50/50” lead/tin solder should not be used. Rather, “95/5” or “97/3” tin/antimony solder must be used by plumbers and installers. Reliability “Reliability” relates to how well the system will continue to provide service through the years. Failure or degradation of components may not be safety issues, but they may mean lower performance as the system ages. Maintenance issues will also be considered. Material Compatibility: Material compatibility is an important issue in avoiding premature failure of solar systems. In particular, incompatible materials such as steel and copper should not be in the same plumbing circuit. Sometimes it is unavoidable, such as copper piping returning to a steel tank. Then, dielectric unions should be inserted between the two metals. This helps to reduce galvanic corrosion.


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System Maintenance: A good warrantee is one tool to determine the reliability of a system. While even a well-written warrantee is useless if the company is out of business, the vendors involved in this loan program have been in business long enough to determine what is a reasonable warrantee. Warrantees usually run three to five years and cover manufacture defects. Some may cover parts and labor, but may be voided if the system is improperly installed, if it is not installed by an approved installer, or if the system is abused. Most materials in properly installed certified systems are designed to provide troublefree service long after the warrantee has expired. However, some materials may require maintenance or periodic replacement. Typical design lifetimes of collectors might be 20-30 years. Some claim pumps will last 20 years, others claim 5 to 10 years. More delicate valves such as automatic air vents or relief valves that are exercised too often may need replacement after just a few years. One material that may fail quickly is the insulation covering the pipes. Over several years, the sun’s ultraviolet (UV) rays will degrade insulation, drying it out and turning it to powder. Insulation of hot pipes is not as critical to performance in warm St. Lucia as it is in northern climates. However, loss of insulation does mean loss of collected solar heat. Also, disintegrating insulation can be an eyesore, or expose hot pipes. There are coatings and coverings available. Aluminum and plastic coverings last a very long time but are relatively expensive. UV-resistant paint is less expensive, but may not give as professional of a look. Also, paints tend to need re-coating after several years. Another option is if the installer were to offer to replace damaged insulation in critical places after a period of time, perhaps as part of a maintenance package. Valves could be a source of problems after several years of operation, especially in locations where the water quality is poor or aggressive. Corroded valves may fail or develop leaks. Calcified valves may become inoperable or become plugged. This might stop the system from operating. Or, in the case of a pressure relief valve, it might impair the valve’s ability to perform its function. All valves should be checked periodically to assure that they are functioning as intended. The inspection might be done by the homeowner, or it might be done by the company as part of a maintenance package. Installers should offer customers a maintenance package. This might be included as part of the sale price, or it might be offered as an optional add-on to sale. It is useful to check the system every few years to be sure that it is still functioning properly. This could include checking the insulation for deterioration, checking valves for operability and/or calcification, checking the sacrificial anode for depletion, and changing out or replacing any of these parts that might no longer function efficiently. It is also important to flush the tank periodically to remove any sediment buildup. While some tank manufacturers require that this be done semi-annually or even quarterly, annual flushing schedule or even bi-annual may be sufficient. Any maintenance plan should be clear on frequency of visits, what is inspected, and who pays for parts or components that need replacement. Hurricane-Resistant Mounting: Hurricane-resistant mountings are another good measure of reliability. These mountings go beyond those discussed earlier that just assure a system will not slide off a roof. Hurricane resistance is something that is being considered among the architects and engineers of the region, after last year's storms leveled so much of Grenada and Haiti. A hurricane-resistant mounting must be able to stand up under hurricane force winds. It is possible to conduct wind-load testing to ASCE standards and calculate how much wind a particular system and mounting will withstand.


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Figure 16: J Bolt Mount Figure 15: Spanner Mount

These tests and calculations also determine how the collector will fare, examining the glazing, frame walls, and connecting bolts as well as the roof mounting technique. However, these calculations are beyond the scope of this training course. Further, there are some basic mounting designs that will be a significant improvement over what is currently done in the field. Two of these are shown in Figures 15 and 16. Note that both the spanner mount and the J bolt mount require that an installer enter the residence to get access to the underside of the roof deck and the rafters. Previously, installers usually only had access to the yard and the roof, possibly entering a kitchen or pantry to hook up the hot water line. These new mountings also require increased installation time, and may add to the cost of installation. Further, on rafters that are exposed to the living space, the mountings will be visible. This might be undesirable for high-end residences, but there are ways to minimize (not eliminate) the "eye sore". And finally, a hurricane-resistant mounting is not of much value if the roof and rafters are not securely attached to the walls, and the walls to the foundation. This might be taken into consideration when specifying hurricane-resistant mountings on weak roofs. If the mounting is on a flat concrete roof, the ideal mount is to tie into the metal reinforcing rod during new construction. On existing concrete roofs, it could be necessary to drill through the masonry and fix a plate on the underside of the concrete.


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FREQUENTLY ASKED QUESTIONS 1. Will I get hot water from my SHWS in the morning? Yes, if your system is properly designed and installed. If you had a cloudy day yesterday, or you used up all the hot water last night, it may take more time to get hot water from your SHWS. However, if your system comes with a back-up electric heater, turn the element on 15 to 30 minutes before you need the hot water. A thermosyphon or PV-pumped system usually will keep your water hotter overnight than an ICS, but in the islands ICS will usually provide satisfactory service. 2. How much time is needed for water to reheat after I have used all the hot water from the system? It depends on the collector/tank ratio and whether it is a good sunny day, but a good system can recover in two to four hours of good sunlight. 3. Does the SHWS require new or special plumbing to connect the hot water taps to the system? The installer will cut into the cold water supply to your existing hot water heater. He may choose to remove the existing heater if it is in bad condition. The SHWS either replaces the existing water heater or is placed upstream of the existing water heater in the piping path. There is no other disturbance to the house plumbing. 4. Can I use hot water from the SHWS for my washing machine? Absolutely yes! Solar heated water is often plumbed straight to clothes washers and dish washers, since a mixing valve is not necessary. Using solar heated water greatly improves the cleaning power of many soaps and detergents. However, if you intend to use hot water from your SHWS to wash clothes, dishes, and so on, make sure the company supplying the system is aware of this so the SHWS can be accordingly sized. 5. How does cloud cover effect the efficiency of my SHWS? If you walk into the shade or if a cloud goes by, your skin feels cooler relative to standing in the hot sun. In the same way, the heat-collecting process slows when sunlight is diminished with clouds or shading. As long as the collector is hotter than the tank and maximum tank temperatures have not been reached, the system will collect heat. 6. Can I increase the capacity of my SHWS later if required? Yes, if you find that you are consistently running out of hot water or if your family has increased, the installer may install a larger system, may add a second system, or may just add another collector to assure sufficient hot water supply. 7. What maintenance does the system require? Like electric and gas water heaters, the tank should be flushed periodically to remove sediment and the sacrificial anode will need to be replaced periodically. Some delicate valves such as air vents or pressure relief valves many need replacement if they function too often or are in areas with aggressive water. The insulation on pipes will degrade over time. Many companies will offer a maintenance agreement to periodically check your system for proper operation.

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8. What is the difference between a solar hot-water panel and solar PV panel? A solar hot water panel converts sunlight to heat. It has a liquid in it (usually water) and pipes going in and out if it. A solar PV panel converts sunlight directly into electricity. There is no liquid, but it will have two wires coming from a junction box on the back. 9. What is the space requirement for installing a SHWS? The footprint of an SHWS depends on the size installed. For a 4 or 5 person household, a thermosyphon system might take up 40 or 50 ft2. This is larger than most skylights but smaller than a large satellite dish. 10. What dangers are associated with using a SHWS? The tank dangers are the same as with an electric or gas water heater: proper pressure and temperature relief valves must be installed and functional or the system will risk exploding in an over-pressure situation. The collector dangers are the same as with any roof-mounted equipment: it must be properly attached to the structure to avoid danger to people below, or to avoid blowing away in a hurricane. 11. Do I have to get my water tested (for sediment, minerals, etc.) before I can install a SHWS? If you or your neighbors have not had trouble with scaling, corrosion or sediment in your hot water before, then there should be no need to be concerned for a SHWS. If scaling or corrosion has occurred, then an indirect, or closed-type of design may be a good choice. If you plan to use water from an untested well or unknown source, the water should be checked for these things and for potability, regardless of whether or not you install a SHWS. 12. What is the life of the different components of the SHWS? If properly installed in areas without aggressive water, the collector life can exceed 10 or 15 years. Good pumps and valves may exceed this lifetime. Some valves may require changing after three to five years. If properly maintained, tanks may also last as long as the collector. By comparison, electric and gas water heaters may last between five and ten years. 13. What is the cost of the different components of the SHWS that I may have to replace over time? Air vent valves, T&P valves, sacrificial anodes and electric heating elements may cost less than EC$ 30, some tempering valves may be under EC$ 130, and most pumps will be under EC$ 270. An unscheduled service call will cost more than the actual cost of the component replaced, to cover the cost of the technician and the site visit. A maintenance contract is a good way to anticipate unforeseen repairs. 14. How is the SHWS protected from pressure-related bursting? Temperature-pressure relief valves are required on any plumbing loop that can be isolated and has a heating source. This includes the tank and the collector if it can be isolated from the tank. A pressureonly valve may also be required on the collector to keep the valve from opening unnecessarily during normal stagnation conditions.


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15. Can I install a SHWS on an existing structure or do I have to build new structures for the SHWS? Yes, SHWS usually goes on an existing roof. Most manufacturers have sufficient mounting materials to install SHWS on all types of roof structure found in St. Lucia including shingle, tile, flat concrete, or metal. Sometimes it is installed as an awning above a window or in the yard. Some large systems have been used as shades for car parks. 16. I have an electric hot water system. Can I use any part of that system with a new SHWS? Yes. You can install your SHWS as a backup to your existing water heater, or you might choose to install a SHWS as a replacement to your existing electric heater when it fails. The installer will take this into account when he sizes your system. If you are replacing your electric heater, he might recommend a larger SHWS or one with an electric backup. Some people with electric backups have turned off the electric and have reported more than sufficient hot water for their needs. 17. Can I move my SHWS from one location to another? Yes, but just like any other major appliance (such as an air conditioner or even large refrigerator), it will require a qualified technician to safely and properly remove it from your roof and install it at your new location. Be sure that the technician caps the plumbing, seals any roof penetrations, and disconnects any electrical connections if used.


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REFERENCES AND NOTES 1. 2. A Golden Thread, p. 117, by Butti and Perlin, Cheshire Books, Palo Alto CA, 1980. ibid, p. 152.

3. US Department of Energy’s Energy Information Administration, as reported in Energy Design Update, December 2004, p. 7 4. French periodical Systemes Solaires report “2004 EurObserver Barometer on Solar Thermal Energy”, as reported in Energy Design Update December 2004, p.8 5. 6. 2004. Sun & Wind Energy 1/2005, p.8 National SAFE KIDS Campaign (NSKC) Burn Injury Fact Sheet, Washington (DC): NSKC

7. Comment by Redwood Kardon,







8. “Domestic Hot Water Scald Burn Lawsuits: the Who, What, When, Why, Where, How” Bynum, Petri, and Myers, Seminar and Technical Paper for Annual ASPE Meeting, Indianapolis, Indiana, October 25-28 1998. via 9. 2003 International Plumbing Code, Section 424.3 ( requires mixing valves at shower heads complying with ASSE1017 and limited to 120°F (49°C). Other references apply. NOTE: All Figures taken from “Solar Water and Pool Heating Manual July 2004” (Draft), prepared by Florida Solar Energy Center, Cocoa Florida; unless otherwise noted. Credit to Mark Thornbloom for photos in Figures 8, 9, and 10.


CSFP Training Manual

PURPOSE This Module of the Manual is designed to introduce lending officers in credit unions in St. Lucia to the approaches and methods relevant to financing the purchase and installation of solar hot water systems (SHWS) under the Caribbean Solar Finance Programme (CSFP). While each credit union may have its own specific guidelines related to the financing of SHWS broad guidelines with respect to loans for SHWS under CSFP are briefly discussed below. GENERAL AND CLASSIFICATION Loans for SHWS fall under the same category as general personal or consumer durable loans. As such, general eligibility criteria, the minimum amount required as a down payment by the member versus the maximum loan sanctioned by the credit union, loan proposals and application procedures, security and guarantees, appraisal procedures, disbursement, service charges, and repayment procedures will be similar to those established by the credit union for general consumer loans. UNIT SIZE AND COST Briefly reviewing and summarizing the material presented in the Familiarization Module, a typical SHWS includes a flat plate collector, a well-insulated storage tank, cold and hot water pipes, and other balanceof-system components necessary to harness thermal energy from the sun to provide households with reliable, safe, and affordable hot water systems for domestic use. Typically, SHWS are sized based on the number of people who would be drawing hot water from the system. In general, the systems are sized based on the assumption that each individual in the household will consume 20 gallons of hot water, at a temperature of 122°F (50° C), per day. In addition, most manufacturers have already determined correct collector to storage ratios for their markets. General rules of thumb for the Caribbean are 1.5 to 2 gallons of storage for each square foot of collector, or a 2:1 ratio. For example, an 80-gallon (303 liter) tank would be well-matched with a 40 ft2 (3.7 m2) collector. Or, some US contractors assume 20 square feet (2 m2) each for the first two people in the house, and 8 square feet (0.7 m2) for each additional person. However, most established manufacturers have determined by trial and error the correct ratio that meets customers’ requirements. The table below provides the approximate prevailing cost per unit of three different sizes of SHWS that are commonly installed in St. Lucia: Table 1: Approximate Cost of Three Different Sizes of SHWS Commonly Installed in St. Lucia: Customer Base 2-person Household 4-person Household 6-person Household Unit Size 35-50 gallon tank and 15-20 square foot or 21-25 square foot collector 65 or 66 gallon tank and 25 to 35 square foot of collector* 75 or 80 gallon tank and 35 to 40 square feet of collector Cost (in EC$) $2,670 – $3,200 $3,340 - $3,740 $3,870 – $4,400

* The customer can increase the collector area for an additional $280 to $370 depending on the size selected.


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Tank sizing starts at about 15 - 20 gallons per person, with no less than about 35 gallons simply because smaller tanks are not available. This sizing baseline would be revised based on the salesperson’s assessment of the customer’s lifestyle and available tank sizes. For instance, the salesperson may suggest an increased storage capacity for high school children, people who entertain a lot, or houses with extra shower heads to meet relatively higher hot water requirements. Lower storage capacity may be suggested for retirees, vacation homes, etc. The ratio of gallons to people declines as the number of people requiring hot water from the SHWS exceeds two. While the Storage to Collector ratio (in gallon per square feet) for the Caribbean is about 1.5 - 2.0 (2 gallons per square foot), it is important to allow the salesperson some flexibility in sizing a system within these guidelines. While one may think that a salesperson would want to sell the largest model the customer will buy, there is a strong incentive to properly size the system. If it is too small it will not be able to meet the customer’s hot water requirements, resulting in repeated complaints and a possible call-back under warrantee. If it is too large, the relief valves will open too often, again resulting in a call-back possibly under warrantee. For additional information on the technical aspects of SHWS, please refer to the Familiarization Module of this Manual. ELIGIBILITY The loans to support union members’ purchase of SHWS under CSFP are to be treated as special loans and will be offered only to members falling into the low and middle income categories. A household is treated as a “low income” household if the monthly income of the household is EC$2,500 or below. A “middle income” family is one where the total monthly income to the household is between EC$ 2,500 and EC$ 4,000. In general, in order to qualify for a loan for a SHWS from a credit union, the low or middle income applicant must, first and foremost, be a member of the constituent credit union and must have sufficient savings that are not hypothecated in support of another loan or pledged as surety for a loan to another member. In addition, the individual must have been a member of the credit union for the minimum amount of time stipulated by the union. The applicant’s share balance must be adequate to cover the prescribed percentage of the loan required for hypothecation, failing which he must provide other security to cover the value of the SHWS. Further, the applicant must have definite sources of income for repayment of the loan and must be creditworthy. Applicants must own a property or must have a long-term lease on a property in order for the loan to be approved. Alternatively a loan may be granted to a customer for purchase of SHWS to be placed on their parent’s home. An applicant who is merely renting from month to month does not have a stable enough domicile to be granted a loan to purchase SHWS. Consideration will be given to members that are servicing another loan from the credit union at the time of applying for a loan for a SHWS. In order for that member to be granted the loan for the SHWS, her/his existing loan and related repayments must be on schedule and in good standing. If the existing loan is delinquent, the request for the SHWS loan will be denied. LOAN PROPOSAL The loan application shall be submitted in the form prescribed by the credit union. The applicant shall furnish all the necessary information as required by credit union.


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QUANTUM OF LOAN While credit unions differ with regards to the amount of share capital the member must have to support the loan, on average the minimum requirement is 33.33%. The loan from the credit union would cover 100% of the installed cost of the unit, including cost of accessories and the warranty, if not included in the base price, as per the proforma invoice or quotation. RATE OF INTEREST The credit unions may charge interest not to exceed a rate of six (6) percent (%) per annum on all SHWS sub-loans accessed by middle income households. The credit unions may charge interest not to exceed a rate of four (4) percent (%) per annum on all SHWS sub-loans accessed by low income households. Middle income clients are defined as households earning equal to or greater than EC$ 2,500 monthly but less than EC$ 4,000 and low income clients are defined as households earning below EC$ 2,500 monthly. SECURITY If the member applying for the loan has a minimum un-hypothecated share capital of 33.33%, additional security may not be required. However, in the absence of such, the applicant may be asked to secure a co-maker or provide acceptable collateral before accessing the loan. Acceptable forms of collateral for these loans could include the SHWS financed by the loan, allocation of a portion of the member’s salary as repayment of the loan, certificates of share holding in public or private limited companies, business assets, cash surrender value of insurance policies, and so on. When accepting a particular form of collateral, the lending officer must take into account the nature of the asset with respect to its liquidity, possible depreciation in the value of the hypothecated asset, and other factors that could impact the union’s ability to recover the value of the loan through sale of the collateral in the event of default. CO-MAKER OR GUARANTOR A credit worthy co-maker (preferably a third party) good for the loan amount may be included in the loan transaction as a guarantor. This would apply in cases where the member’s share capital is less than 33.33% of the loan. The third party must be a member of the credit union, in good financial standing, and with an adequate debt to income ratio. In general, the eligibility criteria for the third party are the same as for the member. SERVICE CHARGES Service charges applicable to the SHWS loan will be determined by the internal policy of the credit union to which the member applies for the loan. REPAYMENT The loan is to be repaid in periodic installments over a period of one to five years depending on the source of income of the borrower. Interest shall be paid monthly or as mutually agreed upon by the member and the credit union and accordingly be debited to the loan account. OTHER REQUIREMENTS Other requirements for a SHWS loan include:

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    

A salary slip certified by the applying member’s current employer Insurance certificate for the property in question Proforma invoice or quotation from the manufacturer or supplier who will provide and install the SHWS for the cost of the system including all accessories and installation A certificate stating that the system has been installed in compliance with recommended performance, reliability, and safety practices Where the loan is required to be secured by mortgage, the applicant shall also submit the original title deed of the property, encumbrance certificate, legal opinion, property valuation certificate, and other supporting documents

ASSESSING THE BORROWER – CERTAIN COMMON CHECK POINTS To frame a proposal quickly, the lending officer should meet with the applicant. The assessment standards will vary from person to person, depending upon the size of the proposed loan, experience of the loan official, dealings of the potential borrower, and so on. It is advisable that the officer meet the borrower directly and not through any agency or third person. Such a meeting provides an opportunity to collect first hand information for discussion. It also helps the loan officer check the various statements and figures furnished in the loan application. The following brief should help the loan officer prepare the related proposal efficiently. The background of the borrower should be evaluated when assessing the loan proposal. Some of the common questions to be asked include:       Who is the borrower? What are his/her sources of income? If she/he has not previously taken a loan from the credit union, how has she/he met her/his credit requirements (if any) till date? Does she/he have outstanding financial commitments to any other institutions or individuals and why has she/he not approached the union for credit requirements? If she/he has taken a loan from the credit union in the past does her/his repayment record meet the union’s policies? In the case of a new borrower, the loan official should collect the requisite details, and check the applicant’s credit worthiness through credit check provider.

The loan officer should also look into aspects particular to SHWS when assessing the application, including: Has the time required to install and initiate operation of the equipment been clearly specified? Is the SHWS being procured from a reputed manufacturer/supplier? Have provisions for adequate after-sales been made? Have arrangements for the supply of spares in case of defective materials been made? The following general aspects must also be examined:     What is the amount of loan required, and are cost estimates included in the application reasonable as per standard rates? What will the loan mean to the borrower from the cash-flow point of view? When and how will the loan be repaid? Where will the funds come from for repaying the loan?

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    

Will the SHWS help the borrower in reducing expenditure and increasing savings to repay the loan? Does the borrower have a basic idea about the possible net savings/profit, after the installation? Does the borrower have the necessary technical skill to handle the SHWS and its maintenance or does she/he need any managerial training? Has she/he properly assessed the special features, such as hot water consumption throughout the year, and so on? What is the warranty on the SHWS?

If necessary, arrangements may be made to brief and train prospective borrowers about handling and maintenance of the SHWS. Such training could be provided by the SHWS supplier at the time of installation of the system. All documents required by the credit union are to be submitted along with the application. APPRAISAL OF A SHWS PROPOSAL On receipt of the loan proposal for financing a SHWS, along with the credit union’s regular requirements, the loan official or any other designated officer may select to undertake a pre-sanction spot inspection of the location of the site where the unit is to be installed and discuss the details of the proposal with the applicant. In appraising the loan, the officer should take into consideration the technical, financial, economic, and managerial aspects along with the client’s ability to repay the loan. Technical Aspects It is strongly recommended that only tested and certified systems are financed under CSFP. As such, the manufacturer or his/her authorized dealer should produce a copy of the test report issued by the Solar Rating Certification Corporation, Florida Solar Energy Center Certification, or an equivalent solar thermal certification entity, certifying that the SHWS being supplied to the member conforms to the specifications prescribed by the certifying entity. The financed SHWS should also be under warranty for the duration of the loan, if not longer. While the SHWS typically come with a warranty of about three to five years, the lending officer should ensure that the manufacturer/dealer supplying the system offers Annual Maintenance Contracts (AMC) covering supply of spares and services if the warranty does not cover the system for the duration of the loan. The exact terms, including frequency of visits or payment options, of the AMC should be agreed upon between the system supplier and the end user. The precise system requirement and design will be determined by the end-user in discussions with the manufacturer/authorized dealer. These measures will establish the technical feasibility of the system. Financial Aspects The financial benefits of SHWS should be computed taking into consideration the savings on electricity consumption from the national utility company and related electricity bills, expenses on other alternate devices such as electric powered water heaters, and the like. Although the initial capital cost of the system is relatively high when compared to the cost of an electric point heater, SHWS are cost effective over time as there are no associated fuel costs and maintenance costs are relatively lower. In addition, the intangible benefits such as reduced dependence on high-cost, imported fossil fuels; improvement in

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environmental conditions and reductions in pollution levels; and other similar benefits should also be considered. As the initial investment in the system is relatively high the payback period of the loan should ideally be relatively longer. Nevertheless the loan official should verify that the investment is financially viable over the term of the loan. The Case Study Module presents a financial work-up analyzing the financial viability of a loan taken in support of purchasing a SHWS versus expenses associated with an electric point heater typically used by low and middle income households in St. Lucia. Economic Aspects St. Lucia spends a large portion of its foreign exchange earnings to pay for imported fossil fuels. The country is all but exclusively dependent upon the imported oil and gas to generate electricity. As a result of the high landed cost of these fuels and the monopoly position of the generation and distribution utility, low and middle income households in St. Lucia pay approximately EC$ 0.688 per kWh consumed. This high per unit cost results in a high cost paid to meet domestic hot water requirements by using electric point or tank heaters. Households can reduce these expenditures, and the country’s dependence on volatile international fossil fuel markets by supplementing the electric point heaters with SHWS. Managerial Aspects SHWS technology is relatively simple and the system is comparatively maintenance free. This fact coupled with a warranty and/or an AMC should be sufficient to ensure the proper functioning of the system with minimal management of the SHWS. Repayment Capacity The scope of this Training Course is limited to the financing of members’ purchase of SHWS for domestic applications. As the income generation capacity of such loans is by nature limited, repayment capacity should be gauged based on the potential client’s existing income and expenditure levels, and the cost savings associated with the installation of the SHWS. As such, the lending officer should adopt a holistic approach and consider the entire budget of the applicant to gauge her/his repayment capacity relying on viable and known sources of income as is the norm in case of most personal or consumer durable loans. However, the lending officer should take into account the potential savings to the family that would accrue as a result of switching from gas powered or electric point heater to SHWS. SANCTIONING AUTHORITY After the credit proposal is thoroughly appraised establishing its bankability, sanction is accorded with the applicable terms and conditions of the credit union. The lending officer must first interview the applicant and then sign the loan form for approval and attesting such. The application is then reviewed by the credit committee. Where necessary, the loan application will be forwarded to the board of directors, who will discuss it and approve it by affixing their signatures thereon. If the loan is not approved, the lending officer should communicate the reason for the rejection to the applicant. The member may resubmit the application depending upon the reasons behind the decline of the initial loan proposal. If it is a situation that requires minor adjustments such as the provision of a document or additional signatures then the applicant can take the required corrective measures. However if the rejection arises from a situation that truly disqualifies the applicant, for instance, if the applicant is a high income earner or has a loan that is delinquent, then it will be rejected.

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DISBURSEMENT Upon approval of the application, the lending officer intimates such to the member. The loan is finalized once the member fulfills the required terms and conditions; executes the underlying documents; and posts the related guarantee, if required, in a manner acceptable to the credit union. A cheque is then written in the name of the supplier for half the value of the loan. The member confirms the order for the SHWS by paying the 50% deposit for the system. The balance 50% is paid by the member to the supplier upon installation of the SHWS to the satisfaction of the member. This balance amount is also paid via a cheque from the credit union written in the name of the supplier. CHECKLIST FOR SHWS The summary checklists and tips provided below are only illustrative and not exhaustive. The guidelines provided are general in nature and not a substitute for the practices followed by individual credit unions. The application form and other documents, the appraisal systems and checkpoints relevant to the type of loan, and other requirements as prevailing in the credit unions must be followed when evaluating loan applications for SHWS. Application Particulars Has the applicant/end-user furnished all the particulars in the application forms prescribed by the credit union? Is the applicant an existing or new member of the credit union? If she/he has previously taken loans from the credit union, what is her/his credit record? If she/he is a new customer, who are her/his existing bankers/financiers? What is her/his track record at the other financial/lending institutions? User Aspects How are hot water requirements currently met in the household? What is the approximate hot water usage? How many family members are in the household? How many bedrooms are there in the house? Will opting for a SHWS be financially beneficial for the applicant? Does the alternative save the expenditure on purchase of gas or electrical consumption? If so, how much is the saving in terms of EC$ compared to the cost of the SHWS? Technical Aspects Has a proper estimate been prepared with regards to the cost of installation and the cost of the existing system? Does the system sizing seem appropriate? Is it as per the requirements of the end-user or estimate (pressure?) by the supplier? Are adequate after-sale service and repairing facilities available locally? What is the availability of spare parts? Have adequate number of years of warranty been made available by the supplier? Economic Aspects What is the anticipated savings from the proposed activity? Is the net surplus available sufficient to repay the loan after meeting household expenses? Are the cost estimates well within the average in the area?

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PURPOSE The previous two Modules in this Manual are designed to provide lending officers in the credit unions with data and a theoretical framework to assist in the evaluation of loan applications to support members’ purchase of solar hot water systems (SHWS). This section builds on the data and theory presented in the first two sections and presents a case study illustrating the financial viability of a SHWS given the availability of a loan to purchase the system. A comparison is then made between the financial viability of installing a SHWS in comparison to an electric point heater. GENERAL Many low and middle income households in St. Lucia use electric-powered systems to meet their hot water requirements. On average, a household in St. Lucia pays approximately EC$ 0.688 per kWh for power consumed, resulting in a relatively high cost for heating water for domestic applications. Further, while efficiency ratings vary across different electric hot water systems and depend on factors such as distance of the hot water tank from the tap or shower head, typically only about 90% of the electricity paid for is actually consumed in heating water. While SHWS provide a technologically as well as financially viable alternate to electric hot water systems, the high upfront cost of SHWS prevents many low and middle income households on the island from purchasing such systems. Offering financing to support the purchase of SHWS could help households defray the high upfront cost of purchasing SHWS, thus making the systems more affordable to low and middle income families. This Module examines the financial viability of SHWS relative to electric point heaters for residential use in St. Lucia and explores the potential monetary savings associated with financing alternatives for such systems to be offered through the credit unions under the Caribbean Solar Finance Programme (CSFP). COSTS ASSOCIATED WITH ELECTRIC POINT HEATERS On average, a family of four would purchase a 3.3 kW point heater at a cost of approximately EC$ 95 to meet the household’s domestic hot water requirements. After accounting for system losses, this unit consumes about 6 kWh of electricity on a daily basis. Assuming a cost of EC$ 0.688 per kWh, and a daily consumption of 80 gallons of hot water for each day of the year, the household pays about EC$ 4.13 per day, or EC$ 126 per month, or about EC$ 1,507 per year in electricity charges to heat water using an electric point heater. Table 2 below presents the total costs associated with purchasing, installing, and operating a typical electric hot water system.
Table 2: Cost of Purchasing, Installing, and Operating an Electric Point Heater
Upfront System Cost One Year Three Years Five Years 95 95 95 Total Energy Costs 1,507 4,520 7,534 Total Cost of System 1,602 4,615 7,629


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COSTS ASSOCIATED WITH SHWS On average, it is estimated that each individual in a typical household will consume about 20 gallons of hot water, at a temperature of 122°F (50° C), per day. It is recommended that an average family of four install a SHWS with a 65 gallon tank and a 7 x 5 ft collector. This system would be sufficient to provide the household with 80 gallons of hot water on a daily basis. The cost of this system, inclusive of installation and a three to five year warranty, is about EC$ 3,600. There are no fuel costs associated with the system, and as warranties are usually provided for a three to five year period, operational costs are taken to be nil. As such, the only costs associated with the SHWS over the term of the warranty would be those related to the repayment of the loan taken to finance the system. The CSFP loan for the SHWS offered by the credit unions to their members would cover 100% of the installed cost of the system; carry an interest rate of 4% to 6% on a declining balance basis, depending on whether the member is from a low or middle income family; and have a term of three to five years. The analysis presented in this Module assumes that the member is from a middle-income family, and that the applicable interest rate is thus 6% on a declining balance basis. Based on these assumptions, the total costs associated with installing and operating SHWS over a one to five year period, including the interest payments against a loan taken from the credit union for the system, are provided in Table 3 below:
Table 3: Total Cost of Financing, Installing, and Operating a SHWS

Principle Payments One Year Three Years Five Years 3,600 3,600 3,600

Interest Payments 117 333 549

Total Cost of System 3,717 3,933 4,149

Given the interest rate applicable on these loans are charged on a declining balance basis, the associated average monthly installment payments range from about EC$ 310, EC$ 109, and EC$ 69 for a loan taken over a one, three, or five year term respectively. COMPARING THE COST OF ELECTRIC POINT HEATERS AND SHWS While the upfront cost of a SHWS (approximately EC$ 3,600) is substantially higher than that of an electric point heater (EC$ 95), over time, the savings associated with the SHWS makes such systems the financially prudent choice. The high cost per kWh of electricity paid by households in St. Lucia coupled with the fact that the SHWS have no associated fuel and few maintenance costs make the solar systems a viable, competitive option for domestic consumers in St. Lucia. Graph 1 below presents a comparison of the costs associated with installing and operating an electric point heater with four different options for purchasing a SHWS; i) without any loan, ii) with a one-year loan, iii) with a three-year loan, and iv) finally with a five-year loan. In comparing the cost effectiveness of the two technologies for residential consumers in St. Lucia, this analysis assumes that the member takes a loan from the credit union for 100% of the installed cost of the SHWS at an annual interest rate of 6% on a declining balance basis to finance the purchase and installation of the system. It is further assumed that the costs of installing and operating the electric point heater are not financed, and that operational costs associated with the point heater are taken to be constant

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at EC$ 126 per month, which represents the electricity charges paid by the household to operate the system.
Graph 1: Comparison of Costs of Electric and Solar Hot Water Systems


3,000 EC$ 2,000 1,000 0 0 12 24 Month SHWS (1 Year Loan) Electric System SHWS (3 Year Loan) SHWS (Without any Loan) SHWS (5 Year Loan) 36 48 60

As is apparent from the graph, while over the five-year analysis period all four options for the purchase of the SHWS present a financially prudent choice over the electric point heater, the financial burden of the purchase of the SHWS differs substantially for the household based on the option selected. Thus, while a low or middle income member of a credit union interested in purchasing a SHWS may not have the financial flexibility or disposable income to afford to pay the entire cost of a SHWS at one time, she/he could defray the high upfront cost over a one to five year period by taking a loan offered by the union under CSFP to support the purchase. By making the purchase of the SHWS affordable through offering such loans, the credit unions make SHWS accessible to a relatively larger number of low and middle income families. Further, by providing a loan for a period of more than one year, a credit union could reduce the expenditure related to hot water effective immediately. As such, not only would this benefit the household that purchases the system, but further would reduce the risk of default as incremental income to repay the loan would not be required. Table 4 below presents the monthly costs and cumulative savings associated with purchasing a SHWS under the four options mentioned above as opposed to purchasing and operating an electric point heater. If the household were to purchase the SHWS without a loan from the credit union, it would take about 28 months before the related cash-flows become positive. If the household took a one-year loan from the credit union top finance the purchase of the SHWS, the cumulative cash flows will be negative till the 29th month. Loans to support the purchase of the SHWS taken over a three to five year period would result in net savings to the household starting in the first month. This arises primarily due to the high costs associated with using electricity to operate the electric hot water system.


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Table 4: Monthly Costs and Cumulative Savings Associated with Purchasing a SHWS
Monthly Costs and Cumulative Savings Solar Hot Water System No Financing One-Year Loan Three-Year Loan Cumulative Cumulative Cumulative Cost Savings Cost Savings Cost Savings -3,379 -3,254 -3,128 -3,003 -2,877 -2,752 -2,626 -2,501 -2,375 -2,249 -2,124 -1,998 -1,873 -1,747 -1,622 -1,496 -1,370 -1,245 -1,119 -994 -868 -743 -617 -492 -366 -240 -115 11 136 262 387 513 638 764 890 1,015 1,141 1,266 1,392 1,517 1,643 1,769 1,894 2,020 2,145 2,271 318 317 315 314 312 311 309 308 306 305 303 302 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -97 -288 -478 -666 -852 -1,037 -1,221 -1,403 -1,583 -1,762 -1,939 -2,115 -1,990 -1,864 -1,739 -1,613 -1,487 -1,362 -1,236 -1,111 -985 -860 -734 -609 -483 -357 -232 -106 19 145 270 396 521 647 773 898 1,024 1,149 1,275 1,400 1,526 1,652 1,777 1,903 2,028 2,154

Electric Hot Water Month System 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46

Five-Year Loan Cumulative Cost Savings 78 78 77 77 77 77 76 76 76 75 75 75 74 74 74 74 73 73 73 72 72 72 71 71 71 71 70 70 70 69 69 69 68 68 68 68 67 67 67 66 66 66 65 65 65 65 143 190 239 287 336 385 434 484 534 584 635 686 737 788 840 892 944 997 1,050 1,103 1,157 1,211 1,265 1,319 1,374 1,429 1,484 1,540 1,596 1,652 1,709 1,766 1,823 1,880 1,938 1,996 2,055 2,113 2,172 2,231 2,291 2,351 2,411 2,471 2,532 2,593

221 3,600 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0 126 0

118 118 117 117 116 116 115 115 114 114 113 113 112 112 111 111 110 110 109 109 108 108 107 107 106 106 105 105 104 104 103 103 102 102 101 101 0 0 0 0 0 0 0 0 0 0

103 111 119 128 138 148 158 169 181 193 206 219 232 246 261 276 292 308 324 341 359 377 395 414 434 454 475 496 517 539 562 585 608 633 657 682 808 933 1,059 1,184 1,310 1,436 1,561 1,687 1,812 1,938

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Electric Hot Water Month System 47 48 49 50 51 52 53 54 55 56 57 58 59 60 126 126 126 126 126 126 126 126 126 126 126 126 126 126

Monthly Costs and Cumulative Savings Solar Hot Water System No Financing One-Year Loan Three-Year Loan Cumulative Cumulative Cumulative Cost Savings Cost Savings Cost Savings 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,396 2,522 2,647 2,773 2,899 3,024 3,150 3,275 3,401 3,526 3,652 3,777 3,903 4,029 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,279 2,405 2,530 2,656 2,782 2,907 3,033 3,158 3,284 3,409 3,535 3,660 3,786 3,912 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,063 2,189 2,314 2,440 2,566 2,691 2,817 2,942 3,068 3,193 3,319 3,444 3,570 3,696

Five-Year Loan Cumulative Cost Savings 64 64 64 63 63 63 62 62 62 62 61 61 61 60 2,655 2,716 2,778 2,841 2,903 2,966 3,029 3,093 3,156 3,220 3,285 3,349 3,414 3,480

CONCLUSION While over time, SHWS are financially beneficial for households relative to electric point heaters, the high upfront cost of these solar systems is often a limitation to their purchase by low and middle income families. However, if financed over a period of two years or more, the monthly repayment against a loan taken by a member from a credit union to support the purchase of a SHWS would be lower than what the household was previously paying for heating water using an electric point heater. As such, credit unions could potentially play a pivotal role in opening the market for SHWS for low and middle income families in St. Lucia.


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