Economic and Environmental Analysis of Investing in Solar Water Heating Systems

sustainability

Article Economic and Environmental Analysis of Investing in Solar Water Heating Systems

Alexandru ¸Serban 1, Nicoleta B˘arbu¸t˘a-Mi¸su 2, Nicoleta Ciucescu 3, Simona Paraschiv 4 and Spiru Paraschiv 4,*

1 Faculty of Civil Engineering, Transilvania University of Brasov, 500152 Brasov, Romania; [email protected] 2 Faculty of Economics and Business Administration, Dunarea de Jos University of Galati, 47 Domneasca Street, 800008 Galati, Romania; [email protected] 3 Faculty of Economics, Vasile Alecsandri University of Bacau, 157 Marasesti Street, 600115 Bacau, Romania; [email protected] 4 Faculty of Engineering, Dunarea de Jos University of Galati, 47 Domneasca Street, 800008 Galati, Romania; [email protected] * Correspondence: [email protected]; Tel.: +40-721-320-403

Academic Editor: Francesco Asdrubali Received: 26 August 2016; Accepted: 2 December 2016; Published: 8 December 2016

Abstract: Solar water heating (SWH) systems can provide a signiﬁcant part of the heat energy that is required in the residential sector. The use of SWH systems is motivated by the desire to reduce energy consumption and especially to reduce a major source of greenhouse gas (GHG) emissions. The purposes of the present paper consist in: assessing the solar potential; analysing the possibility of using solar energy to heat water for residential applications in Romania; investigating the economic potential of SWH systems; and their contribution to saving energy and reducing CO2 emissions. The results showed that if solar systems are used, the annual energy savings amount to approximately 71%, and the reduction of GHG emissions into the atmosphere are of 18.5 tonnes of CO2 over the lifespan of the system, with a discounted payback period of 6.8–8.6 years, in accordance with the savings achieved depending on system characteristics, the solar radiation available, ambient air temperature and on heating load characteristics. Financially, the installation of SWH systems determines net savings of 805–1151 Euro in a 25-year period in the absence of governmental subsidies. According to the sensitivity analysis, installing a SWH system with subsidies of up to 50% determines the reduction of the discounted payback period to 3.1–3.9 years and the increase of net savings to 1570–1916 Euro. These results indicate that investing in these systems is cost-effective for Romanian households as long as the governmental subsidies increase.

Keywords: solar energy; solar water heating; solar fraction; energy savings; GHG emissions; sensitivity analysis; governmental subsidies; economic analysis; environmental analysis

1. Introduction The development of energy production from renewable resources is one of the priority goals of the European Union [1] in the energy field. The renewable resources development aims to reduce the import dependence on fossil fuels, and also to reduce CO2 emissions. In areas where solar intensity is high, and the share of fossil fuels in the supply of the domestic hot water is substantial, the solar energy can be used to achieve significant energy savings, as well as a mechanism for sustainable development [2,3]. Solar systems can cover a significant part of the hot water needs depending on local and seasonal climatic conditions [4]. They present both economic and ecological benefits. These systems

Sustainability 2016, 8, 1286; doi:10.3390/su8121286 www.mdpi.com/journal/sustainability Sustainability 2016, 8, 1286 2 of 21

use renewableSustainability 2016 energy, 8, 1286 for water heating and produce no direct emissions with greenhouse2 of 22 effect. Considering the whole life cycle, solar water heating (SWH) systems produce greenhouse gas (GHG) emissionsConsidering although the whole they life are cycle, low solar compared water he toating fossil (SWH) reference systems systems, produce greenhouse thus contributing gas (GHG) to the reductionemissions of GHG although emissions they are and low to thecompared improvement to fossil of reference the air quality systems, locally thus contributing [5–9]. Moreover, to the SWH systemsreduction can substantially of GHG emissions reduce and fossil to the fuel improvement consumption of the [10 air]. quality locally [5–9]. Moreover, SWH Solarsystems water can substantially heating systems reduce are fossil a fully fuel consumption mature technology. [10]. These systems have been used for Solar water heating systems are a fully mature technology. These systems have been used for several decades to provide heat energy to households. In most cases, solar systems can provide only several decades to provide heat energy to households. In most cases, solar systems can provide only a certain part of the energy needs, meaning a complementary heating system is required. a certain part of the energy needs, meaning a complementary heating system is required. MoreMore than than 50% 50% of dwellings of dwellings within within Romania Romania are are individual individual houses houses where where aboutabout 60%60% ofof thethe total inhabitantstotal inhabitants live. At live. least At 50% least of 50% these of these homes homes are ar suitablee suitable for for solarsolar installation. installation. According According to the to the CensusCensus of Population of Population and and Houses Houses from from 2011 2011 [[11],11], the average size size of of a household a household is lower is lower in urban in urban areas—2.5areas—2.5 persons/household—compared persons/household—compared toto ruralrural areas—2.8 areas—2.8 persons/household. persons/household. RuralRural population population of Romaniaof Romania was was approximately approximately 46 46%% of of the the Romanian Romanian population population in 2011 in 2011[11]. [11]. This percentageThis percentage reveals reveals the the potential potential of of replacing replacing thethe conventional water water heating heating systems systems with with solar solar systemssystems in rural in rural areas. areas. Romania Romania has has a a great great potential potential of solar energy, energy, as as shown shown in inFigure Figure 1. 1.

FigureFigure 1. Average 1. Average monthly monthly global global irradiation irradiation receivedreceived on on aa horizontal horizontal plane plane in Romania in Romania [12].[ 12].

The averageThe average monthly monthly solar solar radiation radiation in in RomaniaRomania is is very very good good for for solar solar applications applications and andvaries varies 2 2 between 0.9 and 1.46 kWh/m2 in the coldest month and between 4.87 and 6.86 kWh/m2 in summer between 0.9 and 1.46 kWh/m in the coldest month and between 4.87 and 6.86 kWh/m2 in summer [13]. [13]. The annual average of daily global solar radiation in Romania is 3.34 kWh/m2 . The intensity of The annualsolar radiation average is of higher daily in global Eastern solar and radiation Southern in Regions Romania of Romania. is 3.34 kWh/m Despite. the The excellent intensity solar of solar radiationpotential, is higher the use in Easternof solar andwater Southern heating Regionssystems in of Romania Romania. is Despiteonly of the5%, excellentthese systems solar being potential, the useinstalled of solar mainly water in heating new homes. systems in Romania is only of 5%, these systems being installed mainly in new homes.Thus, the purpose of this paper is to assess the solar potential and to analyse the possibility of Thus,using solar the purposeenergy to ofheat this water paper for isresidential to assess applications the solar potential in Romania. and The to present analyse paper the possibilityalso aims of usingat solar investigating energy to the heat economic waterfor potential residential of solar applications water heating in Romania. systems and The their present contribution paper also to aims at investigatingsaving energy the and economic reducing potential CO2 emissions. of solar water heating systems and their contribution to saving energy and reducing CO emissions. 2. Solar Water Heating2 Systems 2. Solar WaterEnergy Heating used for Systems heating water is an important part of total energy consumption in the residential sector [14]. However, the distribution of energy consumption for various uses of homes Energy used for heating water is an important part of total energy consumption in the residential cannot be determined accurately because of the lack of recorded statistics. Therefore, any available sectorinformation [14]. However, results theeither distribution from empirical of energy surveys consumption or approximate for calculations various uses based of on homes the analysis cannot be determined accurately because of the lack of recorded statistics. Therefore, any available information Sustainability 2016, 8, 1286 3 of 21 results either from empirical surveys or approximate calculations based on the analysis of the actual need for hot water of different categories of users. According to these approaches, water heating accounts for about 20% of the total energy consumption in the domestic sector [15]. The most popular and economical way to use the solar energy is the solar water heating. Due to the small number of system components and since the investment and operating costs are relatively low, solar water heating systems are suitable for low temperature applications under 50 ◦C. Basically, there are two types of SWH systems: active (with pump) and passive (no pump) [16]. A typically active solar system consists of a collector, storage tank, pump, heat exchanger and an auxiliary heating system. The working fluid may be pure water, glycol, or another fluid with a high specific heat. The main types of solar collectors used in common applications are flat plate collectors and those with vacuum tube. Flat plate collectors are more widely used because of the lower price. Solar water heating systems with natural circulation (passive systems) are the simplest and most widely used devices for collection and use solar energy [17]. They are intended to provide hot water for households and rely on natural circulation or thermosiphon principle. They provide hot water at a temperature of about 50 ◦C and consisting of a collector, storage tank and connecting pipes. A SWH system reduces, but does not eliminate, the need for electric or gas heating water. The performance of a SWH system can be defined by solar fraction. The effective solar fraction of a SWH system depends on the intensity of solar radiation, the technical characteristics of the individual system and the load characteristics. SWH system is one of the most common application of solar energy utilization system, but their globally installation is not commonly employed due to its high initial cost. Using SWH system will bring economic benefits compared to conventional systems over the long span time. The paper focuses on long-term economic feasibility analysis of SWH systems. SWH systems payback period varies from one region to another, as it depends on many factors such as the price of fossil fuels, the consumption of hot water, solar radiation, etc. [18]. After studying the specialty literature, we observed a considerable technically development and application of SWH systems [18–22], in order to assess their contribution to reduction of conventional energy and greenhouse gas emissions [23], substitute the fossil fuels used in heat production and increase the exploitation of renewable energy sources. Thus, the intensive research in the field of solar thermal collectors has had the aim to improve the specification of solar thermal collectors to increase their efficiency within approximately 20 years [24–27]. However, they still have a higher initial cost than conventional water heating systems, this being a major obstacle to its adoption by low income families and leading to the need for an economic analysis of this system. For this reason, many government authorities have created public policies to encourage the use of these technologies primarily among the low-income population [5,28–30]. From constructive and functional standpoint, SWH systems are of different types depending on the requirement and location parameters that affect its performance. Mugniera and Selemea (2015) studied these systems based on an innovative and energy efficient concept to optimize solar energy valorisation all year long, showing the high interest of such strategy to combine long term quality, simplicity of use and economic efficiency [31]. Considering economic and environmental benefits, SWH system must have an affordable price, especially for low-income families, in order to motivate people to use renewable energy and SWH system. Hence, it is necessary to analyse the economic feasibility of this system. Over time there were made a series of studies on the economic performance of SWH systems compared to conventional systems that use electricity. Mateus and Oliveira (2009) studied three different locations and climates: Berlin (Germany), Lisbon (Portugal), and Rome (Italy), regarding energy use and economic benefits, according to different local costs for energy (gas, electricity and water), and highlighting savings in CO2 emissions and the optimization of solar collector size and other system parameters [32]. Sustainability 2016, 8, 1286 4 of 21

The majority of studies found that in terms of installation expenditures and energy cost over the total life of the system, solar water heating technology has proven to be cost efficient for several domestic and industrial applications, this being proved by analyses of the systems performances [16]. This is the reason for the SWH systems widespread usage and applications in both domestic and industrial sectors. Shukla (2013) showed that SWH is not only environmentally friendly but also requires minimal maintenance and operation cost compared to other solar energy applications. SWH systems are cost effective with an attractive payback period of 2–4 years depending on the type and size of the system, and generate extensive researches performed to further improve the thermal efficiency of solar water heating [33]. In Serbia, Jovanovic et al. (2011) developed a method of multi-criteria analysis in order to analyse possible substitutions of fossil fuel used for hot water production in a heating plant with biomass and solar energy. When the ecological indicator had priority, the Gas + Solar + Biomass and Gas + Solar energy options showed the best level of sustainability. The Biomass energy option was in the group of energy options with low levels of sustainability in this case, due to calculation of the ecological indicator, and the atmospheric concentrations of CO2 emitted have been calculated for combustion of biomass in life-time of boiler and they assumed that the carbon from biomass is not entirely “biogenic” [34]. In Polish conditions, Chwieduk (2010) studied active systems with flat plate solar collectors that can be used with good efficiency for many different applications. In Poland, domestic hot water systems are effective during spring and summer, especially from May to the end of August. In average in that time they can provide about 80%–100% of total demand. Economic efficiency expressed by the payback time of active SWH system investment differs depending on the solar system producer and the fuel/heat source that is substituted, and can range from 6 to 16 years [35]. From the economic cost-effectiveness analysis of SWH systems, Sawicka-Chudy et al. (2016) found that the simple payback time of modernization is around 16 years [24]. Argiriou et al. (1997) found a better cost–benefit ratio, a low payback period for SWH systems and a reduction of CO2 emissions by 40% in Greece [36]. Martinopoulos and Tsalikis (2014) demonstrated in their study in Greece that discounted payback period is strongly influenced by the climatic zone of the building and the type of fossil fuel substituted. In all cases, the solar system covers at least 45% of the total space and water heating loads while the payback period is as low as 4.5 years with an annual abatement of more than 50 t of CO2 in the worst case scenario [37]. In Croatia, Lugarićet al. (2010) developed a study for choosing the appropriate location for household SWH systems installation, using three investment strategies, varying in financial resources according to profiled income categories of households in the country. Their results show that without using loans or subsidies, net present value varies between 459.32 Euro and 1197.40 Euro, simple payback period between 11 and nine years and internal rate of return between 13% and 19%. When loans and subsidies are considered, net present value varies between 1222.60 and 2034.53 Euro, simple payback period between nine and eight years and internal rate of return between 22% and 52% [28]. The financial analysis of SWH systems installation in six cities from Serbia showed that 20% subsidy is justified already by CO2 mitigation potential of SWH systems, while 50% subsidy reduce payback period to 5.5–6 years [30].

2.1. Experiences in Solar Water Heating Systems in Europe The most important application of SWH systems is for heating domestic hot water. In 2013, 94% of the energy provided by SWH systems was used worldwide for heating domestic hot water, 84% mainly by small-scale systems in single family houses and only 10% by larger applications attached to multi-family houses, hotels, schools, etc. Globally, in 2013, SWH systems contributed about 1.2% to the overall domestic hot water and space heating demand in buildings [38]. Most large-scale solar systems in Europe have been built in central and northern Europe, mainly in Sweden, Denmark, The Netherlands, Germany and Austria. These are used to provide heat demand Sustainability 2016, 8, 1286 5 of 21 for space heating and domestic hot water for large housing estates (central solar heating plants with seasonal storage (CSHPSS)) or to supply heat to large multiple dwellings, hospitals, hostels or to the district heating systems of large housing estates (solar systems with diurnal heat storage) [39,40]. In Europe, Germany is typically at the forefront of alternative energy production. The 2013 capacity of this country to use solar water heating technologies accounted for 3.3% of the global market, and since then it has had the largest number of new installations throughout the European Union. While in Europe considerable progress has been recently made in the development of organic Rankine cycle (ORC) systems for small-scale power generation from solar energy, in Romania the level of installation of simple solar water heating systems is the lowest in Europe [41,42]. Table1 shows that Romania ranks 7th in terms of the number of inhabitants out of the 31 countries listed. In terms of solar radiation intensity, we can notice that Romania is among the top 10 countries that have large amounts of solar radiation, but despite these favourable conditions, the installed solar collector area per 1000 inhabitants is very low, Romania ranking 29th place. Another very important factor that could be decisive for this situation is the minimum income per month, which in Romania is 237 EUR/month, being among the smallest in Europe, while the European average is 810 EUR/month, according to the Table1.

Table 1. Total solar collector area installed by the end of 2012 in Europe (revised 2015) (m2).

Installed Solar Total Installed Horizontal Monthly Collector Area per No. Country Inhabitants Solar Collector Radiation Minimum 1000 Inhabitants Area (m2) (kWh/m2/Year) Wage (EUR) (m2/1000 inh.) 1 Albania 3,011,405 111,921 37 1604 160 2 Austria 8,221,646 4,929,656 599 1126 - 3 Belgium 10,444,268 429,533 41 971 1501 4 Bulgaria 6,981,642 122,100 17 1188 214 5 Croatia 4,475,611 120,000 26 1212 407 6 Cyprus 1,155,403 709,923 614 1886 924 7 Czech Republic 10,609,762 891,738 84 998 360 8 Denmark 5,556,452 684,673 123 989 - 9 Estonia 1,266,375 6520 5 960 430 10 Finland 5,266,114 48,502 9 948 - 11 France 65,951,611 2,186,269 33 1112 - 12 Germany 81,147,265 16,675,320 205 1091 1473 13 Greece 10,772,967 4,122,000 382 1585 684 14 Hungary 9,939,470 236,550 23 1199 358 15 Ireland 4,775,982 271,968 56 949 1545 16 Italy 61,482,297 3,446,766 56 1419 - 17 Latvia 2,178,443 4040 1.8 991 370 18 Lithuania 3,515,858 6000 1.7 1001 350 19 Luxembourg 514,862 39,800 77 1037 1923 20 Macedonia 2,087,171 36,890 17 1381 210 21 The Netherlands 16,805,037 864,642 51 999 1502 22 Norway 5,085,582 39,088 7 971 - 23 Poland 38,383,809 1,211,500 31 1024 430 24 Portugal 10,799,270 858,995 79 1686 530 25 Romania 21,790,479 110,700 5 1324 237 26 Slovakia 5,488,339 147,000 26 1214 405 27 Slovenia 1,992,690 186,800 93 1115 791 28 Spain 47,370,542 2,962,824 62 1644 757 29 Sweden 9,647,386 450,000 46 934 - 30 Switzerland 7,996,026 2,141,490 267 1094 - 31 United Kingdom 63,395,574 728,673 11 943 1398 Source: Data extracted from [43–46].

2.2. Rural Energy Program Energy policy tends to be written by and for the urban population and this ignores half of European citizens, which results in a limitation of their abilities to improve their livelihoods and to Sustainability 2016, 8, 1286 6 of 21 contribute to environmental goals. Rural areas represent 90% of all territory in the EU 27 and 56% of the population [47]. InSustainability Romania, 2016 rural, 8, 1286 communities face considerable challenges because the income per household6 of 22 is 30% lower than in urban areas, unemployment tends to be higher too, as does fuel poverty [48]. They needIn help Romania, andsupport, rural communities particularly facewhen considerable it comes challenges to energy because choices. the income per household Ruralis 30% regions lower than in Romania in urban haveareas, different unemployment characteristics tends toin be terms higher of too, energy as does access fuel and poverty use compared [48]. They need help and support, particularly when it comes to energy choices. to urban areas and they rely more on carbon intensive fuels that include coal, diesel and wood. In some Rural regions in Romania have different characteristics in terms of energy access and use remote areas, the rural inhabitants have no access to electricity supply and gas and therefore they compared to urban areas and they rely more on carbon intensive fuels that include coal, diesel and havewood. a more In limitedsome remote choice areas, of energythe rural solutions. inhabitants Moreover,have no access the to rural electricity buildings supply are and relatively gas and old, sub-optimallytherefore they insulated have a and more equipped limited choice with inefﬁcientof energy solutions. heating units,Moreover, so the the people rural buildings from these are areas may facerelatively higher old, energy sub-optimally bills [49 ].insulated and equipped with inefficient heating units, so the people Thefromdistribution these areas may of face dwellings higher energy by type bills of [49]. building, on area of residence are shown in Table2, which alsoThe reveals distribution that inof ruraldwellings areas, by single type of dwelling building, buildingson area of areresidence predominant, are shown and in Table account 2, for approximatelywhich also 98%reveals of allthat buildings. in rural areas, single dwelling buildings are predominant, and account for approximately 98% of all buildings. Table 2. The number of dwellings grouped by type of building, by residence in 2009. Table 2. The number of dwellings grouped by type of building, by residence in 2009.

TotalTotal UrbanUrban UrbanUrban RuralRural RuralRural TOTALTOTAL dwellings dwellings 7,383,643 7,383,643 4,257,683 4,257,683 3,125,960 3,125,960 SingleSingle dwellings dwellings 4,182,986 4,182,986 1,134,468 1,134,468 26.65% 26.65% 3,048,5183,048,518 97.52%97.52% Two dwellings 63,601 41,249 0.97% 22,352 0.72% Two dwellings 63,601 41,249 0.97% 22,352 0.72% 3–16 dwellings 439,744 405,702 9.53% 34,042 1.09% Over 163–16 dwellings dwellings 2,697,312 439,744 2,676,264 405,702 62.86%9.53% 21,04834,042 0.67%1.09% Over 16 dwellings 2,697,312 2,676,264 62.86% 21,048 0.67%

Moreover,Moreover, Figure Figure2 shows 2 shows that that the the electricity electricity (39%) (39%) and biomass biomass (39%) (39%) are are the the main main sources sources that that meetmeet the energy the energy demand demand for for hot hot water water in in the the rural rural areas.areas.

Electric energy 39% 39% Natural gas Coal / other fosil fuels Liquefied petroleum gases 7% 12% Liquid fuels 0% Firewood (including biomass) 3%

FigureFigure 2. The 2. The structure structure of of houses houses according according toto thethe en energyergy source source used used for for heating heating water water in 2009. in 2009.

All these above-mentioned factors combined show the great environmental, social and Alleconomic these above-mentionedpotential of transition factors to cleaner combined renewa showble energy the great sources environmental, that are locally social available. and economic The potentialrural of energy transition use is to important cleaner renewablebecause rural energy communiti sourceses have that a are higher locally carbon available. footprint The than rural their energy use isurban important compatriots because and rural thus communities are forced to havechoose a higherhigh polluting carbon footprintenergy sources, than their such urbanas coal, compatriots diesel and thusor wood. are forced to choose high polluting energy sources, such as coal, diesel or wood.

3. Solar3. Solar Potential Potential Analysis Analysis in in 52 52 Romanian RomanianCities Cities

3.1. Climatic3.1. Climatic Data Data SolarSolar energy energy is is a a clean clean sourcesource of of energy energy and and does does not contribute not contribute to global to warming. global warming. The The performanceperformance of a SWH system system is is heavily heavily dependen dependentt on on climatic climatic conditions. conditions. The Themonthly monthly average average valuesvalues data data used used for for simulation simulation of of solar solar water water systemsystem in in 52 52 locations locations in inRomania Romania were were provided provided by by Retscreen software [13]. The data required are the monthly average of the solar global radiation on Retscreen software [13]. The data required are the monthly average of the solar global radiation on horizontal surface, ambient temperature and wind speed. horizontal surface, ambient temperature and wind speed. Sustainability 2016, 8, 1286 7 of 21

TheSustainability maximum 2016, 8, 1286 radiation for the locations included in this analysis occurs in May7 and of 22 June. The timing of this peak roughly coincides with the June solstice when day lengths are maximum and solar heightsThe aremaximum their greatest. radiation However, for the locations the monthly included temperature in this analysis variations occurs doin May not followand June. the The changes in radiationtiming of exactly. this peak The roughly peak monthly coincides temperatures with the June occursolstice about when two day monthslengths are after maximum the net radiationand solar heights are their greatest. However, the monthly temperature variations do not follow the maximum in July and August. This lag is probably caused by the delayed movement of stored heat changes in radiation exactly. The peak monthly temperatures occur about two months after the net energyradiation in the groundmaximum into in theJuly atmosphere. and August. TheThis minimumlag is probably monthly caused temperatures by the delayed occur movement in January of and do notstored coincide heat energy with the in the lowest ground values into ofthe net atmo radiation,sphere. The which minimum occur monthl duringy temperatures the December occur solstice. in January and do not coincide with the lowest values of net radiation, which occur during the 3.2. SolarDecember Radiation solstice. on a Tilted Surface In order to design and assess the efficiency of the solar collectors, it is necessary to know solar 3.2. Solar Radiation on a Tilted Surface radiation intensity for that location. Thus, the data related to hourly, daily and monthly average solar radiationIn that order reaches to design the and horizontal assess the and efficiency tilted surfacesof the solar are collectors, essential it foris necessary designing to theknow solar solar water heatingradiation equipment intensity [50 ].for that location. Thus, the data related to hourly, daily and monthly average Solarsolar radiation radiation that incident reaches on the the horizontal solar collector and tilted surface surfaces depends are essential not only for designing on the solar the solar radiation water heating equipment [50]. intensity but also on and the angle made by the collector and the sun [51]. When solar radiation is Solar radiation incident on the solar collector surface depends not only on the solar radiation perpendicular on absorbing surface of the collector, the power on collector surface will be maximum intensity but also on and the angle made by the collector and the sun [51]. When solar radiation is and equalperpendicular to that on of absorbing solar radiation. surface of Because the collector, the angle the power between on collector fixed surface will of collectorbe maximum and the sun isand changing equal to continuously,that of solar radiation. the power Because on fixedthe angle surface between of the fixed collector surface of is collector lower than and thethe incidentsun radiationis changing [52,53]. continuously, the power on fixed surface of the collector is lower than the incident Becauseradiation solar[52,53]. collectors are inclined at a certain angle to the horizontal is necessary to determine the solar radiationBecause solar incident collectors on their are surface inclined [54 at–57 a]. certain The tilted angle angle to the of thehorizontal collector is has necessary a major to impact on thedetermine solar radiation the solar incident radiation on incident its surface. on their The surfac tilt anglee [54–57]. of the The collector tilted angle was of considered the collector equal has a to the latitudemajor of theimpact location, on the in solar order radiation to maximize incident the on solar its surface. energy collectedThe tilt angle throughout of the collector the year was [58 –60]. considered equal to the latitude of the location, in order to maximize the solar energy collected Because the solar collector will be inclined at an angle of 45◦ (the latitude of the locations) from the throughout the year [58–60]. Because the solar collector will be inclined at an angle of 45° (the horizontal,latitude it of was the necessary locations) tofrom calculate the horizontal, the amount it was of necessary solar radiation to calculate incident the onamount a surface of solar tilted at this angle.radiation incident on a surface tilted at this angle. FigureFigure3 shows 3 shows the the monthly monthly variation variation of of the the powerpower available on on the the tilted tilted surface surface of the of thesolar solar ◦ collectorcollector at a 45at a 45°angle angle calculated calculated for for the the locations locations analysed.

December November October September August July June May April March February January Iasi Blaj Husi Arad Brad Deva Sibiu Zalau Braila Galati Sulina Grivita Pitesti Crisan Bacau Barlad Buzau Tulcea Oravita Calafat Roman Giurgiu Bistrita Oradea Craiova Ploiesti Predeal Fagaras Calarasi Suceava Turnu M. Botosani Targu Jiu Mangalia Petrosani Timisoara Targoviste Constanta Baia mare Baia Satu Mare Satu Sighetu M. Drobeta TS Ramnicu V. Caransebes Cluj-Napoca Int. Buzaului Kogalniceanu Bucuresti Oto. Bucuresti Bucuresti Ban. Bucuresti Ceahlau Toaca Miercurea Ciuc Rosiori de Vede 0.00-2.00 2.00-4.00 4.00-6.00 6.00-8.00

Monthly solar radiation [kWh/m²/day]

FigureFigure 3. Monthly 3. Monthly variation variation of global of global radiation radiation on theon the surface surface of theof the solar solar collector collector tilted tilted by by an an angle angle of 45◦. of 45°.

It canIt can be observedbe observed that that the the available available powerpower on the the solar solar collector collector surface surface for forthis thistilt angle tilt angle increasesincreases throughout throughout the the year, year, even even in in the the cold cold period.period. Average Average daily daily solar solar radiation radiation increases increases from from 3.51 kWh/m3.51 kWh/m2/day2/day to to 4.15 4.15 kWh/m kWh/m22/day./day. IntermittencyIntermittency is one is one of theof the major major critical critical characteristics characteristics of solar solar energy energy and and consequently consequently affects affects it so theit solarso the thermal solar thermal collector collector output output varies varies throughout throughout the day the andday throughand through the seasonsthe seasons and and is affected is by dust,affected cloud bycover, dust, cloud frost orcover, snow. frost Thus, or snow. the solar Thus, energy the solar source energy and source the waterand the heating water demandsheating of Sustainability 2016, 8, 1286 8 of 21 a house, in general, do not match each other, the peak solar radiation occurs near noon, but the peak hot water demand is in the late evening or early morning when solar radiation is not available. Many of these factors are fairly predictable, and thermal energy storage is generally required to couple the time-dependent hot water demands of a residential house with time-dependent solar energy source. The solar water heating system analysed in this study is a thermosiphon system (natural circulation) as the most common and simplest installation in the Romania, it converts energy of solar radiation to useful energy for sanitary water heating at a temperature of 50–60 ◦C. The main components of the system are the solar collector, the hot storage tank and the supporting structure. Table3 presents the basic parameters of the analysed system.

Table 3. Parameters of the solar water system considered.

Parameter Value Average number of people per house [11] 3 Occupancy rate 100% Daily hot water usage estimate (rural area) [61] 75 L/day Hot water temperature 50 ◦C Operating days per week 7 Solar water heater type Glazed Collector area [13] 2.2 m2 Collector slope 45◦ FR (τα) coefﬁcient [13] 0.69 FRUL coefﬁcient [13] 4.12 W/m2/K Auxiliary capacity 1.5 kW Backup water heating electric resistance SHW initial & installation cost (offer was made by the company Cyclone) [62] €765 Electricity rate [63] 0.126 €/kWh Project life 25 years Incentives and grants (per cent of initial cost) 0% Annual O&M cost (per cent of initial installed cost) [64] 1.0% These characteristics of the system were considered in the following calculations.

3.3. Calculation of the Monthly Energy Demand Domestic hot water consumption depends on many factors, such as consumer habits, sanitation facilities of homes and the energy cost. Demand varies depending on time of day, days of the week and season [65]. According to the literature, per capita demand for domestic hot water, to an apartment with a centralized distribution system is between 40 and 80 L/day [66]. However, the use of hot water differs from one household to another and, thus, in most cases, there is a peak in energy consumption in the morning, late afternoon and evening. Within the consumption profile, 45% of the daily energy is used in the late afternoon and evening when occupants get back home from work. In individual homes, where water is heated on kitchen stoves, the consumption of hot water for sanitary needs is much lower than in homes with centralized system. As the standard of living of these homes is improving, the total consumption of hot water and, thus, the energy demand will increase significantly. Most often the water for sanitary needs is heated using electricity, but a large percentage is still heated on kitchen stoves, with small efficiency, and involves the use of wood or agricultural waste. For individual homes in rural areas without centralized distribution system, consumption of hot water between 20 and 25 L/day was considered with an average water temperature of 50 ◦C[61]. The estimated energy consumption for water heating is in the range of 2.66–3.09 GJ/year. Since there is no connection to the gas network of the rural sector, the solar collectors can be a viable solution for getting domestic hot water. Sustainability 2016, 8, 1286 9 of 21

Very good results can be achieved, especially in locations in the southern of Romania, where the sunshine period is the highest during the year. Due to the low cost of installation and maintenance, the passive systems are thus much more cost-effective and, on winter, auxiliary electric heating solutions can be added if need be. Calculation of the monthly energy demand for preparation of domestic hot water is necessary for determining the collection surface and the storage volume. Effective energy demand is calculated as the energy needed to heat water at the speciﬁed temperature. The monthly energy required Qload for heating water is determined as [67]:

Qload = Vw × ρw × Nd × cpw × (Th − Tc), (1) where Vw is total volume of hot water used in building (L/day); ρw is speciﬁc mass of water (1 kg/L); Nd is number of days in the month; cpw is speciﬁc heat of water (kWh/kg/K); Th is the temperature required to the hot water (K); and Tc is the inlet temperature of cold water (K). The groundwater supply temperature, which is the inlet temperature of cold water in the solar collector has simulated as proposed by Arias-Penas et al. (2015) [68]. Required load is proportional to the number of days per week in which the system is used. Regarding the thermal load, although the hot water demand varies from day to day and from one consumer to another, the total demand of heat energy was considered fairly constant throughout the year. This is not very fair during the summer, when consumption is slightly higher. However, at this time, the heat demand for hot water is about as high as in the winter due to the higher temperature of the feed water.

3.4. Solar Collectors Efﬁciency Useful energy provided by the solar collector can be calculated with the following formula [57,69]:

Qu = FR A [(τα) It − UL (Th − Ta)], (2)

2 where FR is the collector heat removal factor, A is the area of the collector (m ), It is the solar radiation 2 to the plane of the collector (W/m ), (τα) is the product of transmittance and absorbance, Ta is the monthly ambient temperatures of the installation site (K) and UL is the heat loss coefﬁcient of the collector (W/m2). The efﬁciency of plane solar collector is:

FRUL (Th − Ta) η = FR (τα) − , (3) It

Because solar energy is a time-dependent energy resource, the solar system requires a thermal energy storage. The energy balance of the water tank storage is: mcpw Th = Qu − Qload − (UA)s (Th − Ta), (4) where m is mass of water in the tank storage and Qload is energy removed from the tank to the load. Another indicator related to the performance of the solar water heating system is the solar fraction. The solar fraction is the stake of solar energy in the total load of conventional water heater. The greater is the solar fraction, the greater the solar contribution will be for water heating, which reduces the energy required for the auxiliary system. The solar fraction ranges between 0 and 1. The solar fraction f is deﬁned as the ratio of the useful solar energy supplied by the system and the energy required for heating water. Figure4 presents the average annual solar fraction of SWH system for the locations analysed and considering a constant load proﬁle. The average annual solar fraction for all the cities in Romania varies in the range of 64%–78% for a tilt angle of 45◦. Sustainability 2016, 8, 1286 10 of 22 Sustainability 2016, 8, 1286 10 of 22 The solar fraction f is defined as the ratio of the useful solar energy supplied by the system and the energyThe solar required fraction for f isheating defined water. as the Figure ratio of4 prtheesents useful the solar average energy annual supplied solar by fraction the system of SWH and thesystem energy for therequired locations for heatinganalysed water. and considering Figure 4 pr esentsa constant the averageload profile. annual The solar average fraction annual of SWHsolar systemfraction for for the all thelocations cities inanalysed Romania and varies considering in the range a constant of 64%–78% load profile. for a tilt The angle average of 45°. annual solar fractionSustainability for2016 all ,the8, 1286 cities in Romania varies in the range of 64%–78% for a tilt angle of 45°. 10 of 21

80 80 75 75 70 70 65 65 Solar fraction [%] 60 Solar fraction [%] 60 55

55 d e j a . i a ti i i a i i n e . a te a au r a il au ca v an a si s lu li ita st V. a de r va Jiu ea au c rladrita a to.z ras a oca io s l rgiu u Ia a an e eal e biu M a is c l Ar a a Bl Brad BanO u o p ri Deva u H au s i d u v l j Br i a ti . i T a ra a ta TS Ga ti Grivita z i i ng a radea ro i lo rei icu om n MaSie t ce. Sulina a e u Za Bda maBreBist a til B Calafatala ca Cv e Gi siu s lu li OravitaPitesti RV.e Vu r u va t Tiu rnuea M. au a i au ladrita sa to. auC rasu -Na ocaC san Fagarasla u Ia a O an P Pst eal d a t de hebiu M a is J u l ac r BotosaniBl e O z la io rgiu H B Ma Pet s ie mnd ae g S Targuv Tlc ArB a a BradrBrures Bani u oConstantap ri Devata TS u t. au radea o o ae icuriomS MaSi tu TimisoarTargo u Za B B cti t B Calafatalah T a ra C Drobe Ga Grivitan z ng Oravr Pitestil R r o u Si ce Sulina T rnu M. ia ma Bist cu us CaransebesC a Cluju C FagarasGi I u O P P si R e Vt he u u a Botosaniu Be e -N Kogalniceanu B Ma mn d a g S Targu T B B r ures C la Constanta t. Miercurea Ciuc Pet a ri S TimisoarTargo c h Drob n R Ro o Si cu u Caransebesa Cluj I si u B e Kogalniceanu B C Miercurea Ciuc Ro

Figure 4. Predicted solar fraction of SWH system. Figure 4. Predicted solar fraction of SWH system. Figure 5 shows the monthly average variation in energy collected for analysed locations. The Figure 55 showsshows the monthly monthly average average variation variation in in energy energy collected collected for foranalysed analysed 2locations. locations. The figure shows that the maximum energy is collected in July being of 4.36 kWh/m /day2 and the Thefigure ﬁgure shows shows that thatthe themaximu maximumm energy energy is collected is collected in July in July being being 2of of4.36 4.36 kWh/m kWh/m2/day/day and andthe average amount of annually collected energy will be of 2.64 kWh/m /day.2 It can be noticed that in the average amount of annually collected energy will be of 2.64 kWh/m2 /day. It can be noticed that averageDecember amount the incident of annually solar collectedradiation energyshows awill decrease be of 2.64and kWh/mtherefore/day. the Itenergy can be collected noticed willthat bein Decemberin December the the incident incident solar solar radiation radiation shows shows a a2decrease decrease and and therefore therefore the the energy energy collected collected will will be reduced, this having a minimum of 0.88 kWh/m 2/day. reduced, this having a minimum of 0.88 kWh/m2/day./day.

December November DecemberOctober NovemberSeptember OctoberAugust SeptemberJuly AugustJune JulyMay JuneApril MayMarch AprilFebruary MarchJanuary February January Iasi Blaj Husi Brad Arad Deva Sibiu Zalau Braila Galati Grivita Sulina Buzau Bacau Barlad Crisan Pitesti Iasi Tulcea Blaj Calafat Oravita Bistrita Giurgiu Roman Craiova Oradea Ploiesti Husi Predeal Brad Arad Deva Sibiu Calarasi Fagaras Zalau Suceava Braila Botosani Turnu M. Galati Mangalia Targu Jiu Grivita Sulina Buzau Bacau Barlad Crisan Pitesti Petrosani Tulcea Timisoara Calafat Oravita Targoviste Bistrita Giurgiu Roman Baia mare Baia Constanta Craiova Oradea Satu Mare Satu Ploiesti Predeal Sighetu M. Calarasi Fagaras Drobeta TS Suceava Ramnicu V. Botosani Turnu M. Caransebes Mangalia Targu Jiu Cluj-Napoca Int. Buzaului Int. Petrosani Timisoara Targoviste Baia mare Baia Constanta Satu Mare Satu Kogalniceanu Sighetu M. Drobeta TS Bucuresti Oto. Bucuresti Ramnicu V. Bucuresti Ban. Bucuresti Ceahlau Toaca Caransebes Miercurea Ciuc Cluj-Napoca Int. Buzaului Int. Rosiori de Vede Kogalniceanu Bucuresti Oto. Bucuresti Bucuresti Ban. Bucuresti Ceahlau Toaca Miercurea Ciuc 0.00-1.00 1.00-2.00 2.00-3.00 3.00-4.00 Rosiori de Vede 4.00-5.00 0.00-1.00 1.00-2.00 2.00-3.00 3.00-4.00 4.00-5.00 Solar energy collected [kWh/m²/day] Solar energy collected [kWh/m²/day]

Figure 5. Variation of monthly solar energy collected for analysed locations. Figure 5. Variation of monthly solar energy collected for analysed locations. Figure 5. Variation of monthly solar energy collected for analysed locations. Figure6 shows6 shows that that the maximumthe maximum auxiliary auxiliary electricity electricity consumed consumed during the yearduring is approximately the year is 2 2.43approximately kWh/mFigure 6/day 2.43shows inkWh/m December.that2 /daythe inmaximum December. auxiliary electricity consumed during the year is approximatelyThe annual 2.43 average kWh/m solar2/day fraction in December. was determined as being 71%, lower in winter months and higher, reaching 100%, in the summer months. It is noted that by the use of solar systems for preparing domestic hot water through easy adjustment of consumption proﬁle, contributions of 100% in the months from May to September, could be obtained, which actually happens in practice. Sustainability 2016, 8, 1286 11 of 21 Sustainability 2016, 8, 1286 11 of 22

December November October September August July June May April March February January Iasi Blaj Husi Brad Arad Deva Sibiu Zalau Braila Galati Grivita Sulina Pitesti Crisan Buzau Bacau Barlad Tulcea Oravita Calafat Roman Giurgiu Bistrita Oradea Craiova Ploiesti Predeal Fagaras Calarasi Suceava Turnu M. Botosani Mangalia Targu Jiu Petrosani Timisoara Targoviste Constanta Baia mare Baia Satu Mare Satu Sighetu M. Drobeta TS Ramnicu V. Caransebes Cluj-Napoca Int. Buzaului Int. Kogalniceanu Bucuresti Oto. Bucuresti Bucuresti Ban. Bucuresti Ceahlau Toaca Miercurea Ciuc Rosiori de Vede

0.00-0.50 0.50-1.00 1.00-1.50 1.50-2.00 2.00-2.50

Auxiliary energy [kWh/m²/day]

FigureFigure 6. VariationVariation of monthly auxiliary energy.

4. EconomicThe annual and average Environmental solar fraction Impact was Analysis determined as being 71%, lower in winter months and higher, reaching 100%, in the summer months. It is noted that by the use of solar systems for This study aims to determine whether residential solar systems are ﬁnancially attractive preparing domestic hot water through easy adjustment of consumption profile, contributions of investments for homeowners in the absence of governmental subsidies or other material support or in 100% in the months from May to September, could be obtained, which actually happens in practice. the presence of subsidies, on the basis of cash ﬂows estimated as energy savings [30].

4.4.1. Economic Economic and Features Environmental Impact Analysis ThisTypically, study investors aims to willdetermine consider whether making resident such investmential solar systems only if itare is profitable.financially Theattractive main investmentsobjective ofevaluation for homeowners of this investmentin the absence is to of calculate governmental the expected subsidies cash or flows other and material the indicators support or of inselecting the presence investments of subsidies, in order on to the determine basis of cash whether flows the estimated investment as energy will be savings suitable [30]. for the investor. Treated as a financial investment, the attractiveness of residential solar energy systems depends 4.1.on the Economic following Features parameters: the initial cost of system, maintenance costs, the lifespan of the system, the amountTypically, and investors form of energy will consider used, the concordancemaking such between investment solar only energy if capturedit is profitable. and load, The the main cost objectiveof the energy of evaluation consumed of using this investment conventional is to energy calculate and the awarded expected grants. cash flows and the indicators of selectingInvestment investments valuation in order methods to determine applied whether in this study the investment include: net will present be suitable value for (NPV), the investor. savings to investmentTreated as ratio a financial (SIR), simple investment, payback the periodattractivene (SPB)/discountedss of residential payback solar energy period systems (DPB)/modified depends ondiscounted the following payback parameters: period (MDPB) the initial and cost internal of system, rate maintenance of return (IRR), costs, in the accordance lifespan of with the possiblesystem, thelifespan amount period and of form maximum of energy 25 years.used, the concordance between solar energy captured and load, the cost ofThe the economic energy consumed analysis includes using conventional the cost of SWH energy system and of awarded 765 Euro grants. being offered by the company CycloneInvestment and cash valuation flows generated methods on applied the exploitation in this study period include: of maximum net present 25 years value [63 (NPV),]. In this savings study, toit wasinvestment considered ratio that (SIR), all cost simple of the payback SWH system period was (SPB)/discounted paid entirely at payback the beginning period without (DPB)/modified taking out discountedany loans. The payback total capitalperiod investment (MDPB) and includes internal all rate costs of incurred return (IRR), to purchase in accordance the equipment with possible needed lifespanfor the SWH period system of maximum (purchased 25 years. equipment costs), the costs of labour and materials for installing that equipmentThe economic (direct installation analysis includes costs) and the some cost other of SWH costs system (indirect of installation 765 Euro costs)being [offered70]. by the companyThe cashCyclone flows and represent cash flows the savingsgenerated obtained on the byexploitation using SWH period system of comparingmaximum 25 with years the [63]. classic In thiselectric study, systems it was of heatingconsidered water. that These all cost savings of the for SWH each city system are presented was paid in entirely Figure7 .at The the savings beginning are withoutreferred taking to the costsout any of replacedloans. The energy total capital (electricity), investment and were includes considered all costs constant incurred on to the purchase forecasting the periodequipment that isneeded the lifespan for the of theSWH SWH system system. (purchased equipment costs), the costs of labour and materialsThe annualfor installing energy savingsthat equipment associated (direct with inst theallation SWH system costs) isand determined some other by subtractingcosts (indirect the installationenergy produced costs) [70]. by the SWH system from the base case energy consumption. The calculation of monetaryThe cash savings flows for represent the solar the water savings heating obtained system by took using into SWH account system a variety comparing of factors, with the including classic electricclimate, systems how much of heating hot water water. is used These at savings the location, for each conventional city are presented fuel costs in (electricity),Figure 7. The the savings water aretemperature referred required,to the costs and of system replaced performance. energy (electricity), and were considered constant on the forecasting period that is the lifespan of the SWH system. SustainabilitySustainability 20162016,, 88,, 12861286 1212 ofof 2122

Zalau Turnu M. Tulcea Targu Jiu Targoviste Timisoara Sulina Suceava Sighetu M. Sibiu Satu Mare Rosiori de Vede Roman Ramnicu V. Predeal Ploiesti Pitesti Petrosani Oravita Oradea Miercurea Ciuc Mangalia Kogalniceanu Int. Buzaului Iasi Husi Grivita Giurgiu Galati Fagaras Drobeta TS Deva Crisan Craiova Constanta Annual Cash-flows / Savings (euro) / Savings Cash-flows Annual Cluj-Napoca Ceahlau Toaca Caransebes Calarasi Calafat Buzau Bucuresti Oto. Bucuresti Ban. Braila Brad Botosani Blaj Bistrita Barlad Baia mare Bacau Arad 0 50 100 150

Figure 7. Annual savings. Figure 7. Annual savings.

4.1.1.The Net annual Present energy Value andsavings Savings associated to Investment with the Ratio SWH system is determined by subtracting the energyThe produced net present by valuethe SWH (NPV) system of a streamfrom the of paymentsbase case energy is defined consumption. as the sum The of the calculation discounted of valuesmonetary of thesavings individual for the terms solar inwater the stream,heating wheresystem eachtook terminto account is discounted a variety to aof common factors, including reference dateclimate, [71 ].how NPV much is the hot sum water of allis used the future at the cashlocation flows, conventional to determine fuel the costs present (electricity), value. Cash the flowswater includetemperature the both required, inflows and (investment system performance. cost) and outflows (savings generated on the exploitation period) that are discounted at a rate. 4.1.1. Net Present Value and Savings to Investment Ratio Assuming that our initial investment is I0 and savings are net cash flows (CFi) on exploitation period,The where net present the forecasting value (NPV) period of a is streami = 1 of÷ npaym, whichents corresponds is defined as to the the sum lifespan of the of discounted the SWH system,values ofn thebeing individual 25 years. terms Assuming in the thatstream,r is wher the sociale each discount term is discounted rate of 5% accordingto a common to the reference Guide todate Cost–Benefit [71]. NPV is Analysis the sum of of Investment all the future Projects cash [flows72], the to determine NPV of the the introducing present value. SWH Cash system flows is determinedinclude the byboth deduction inflows of(investment the present cost) value and of savingsoutflows resulted (savings by generated the exploitation on the ofexploitation the initial investmentperiod) that value are discounted in SWH system: at a rate. Assuming that our initial investment is I and savings are net cash flows ( CF ) on 0 n CF i NPV = −I + i , (5) exploitation period, where the forecasting period0 is∑ in1 i, which corresponds to the lifespan of i=1 (1 + r) the SWH system, n being 25 years. Assuming that r is the social discount rate of 5% according to the GuideThe to investmentCost–Benefit is Analysis cost-effective of Investment if its NPV Proj> 0.ects [72], the NPV of the introducing SWH system is determined by deduction of the present value of savings resulted by the exploitation of the initial investment value in SWH system: Sustainability 2016, 8, 1286 13 of 21

Saving to investment ratio (SIR) is used when beneﬁts occur primarily as cost reductions [73]. We can use here SIR because it is recommended for use when debt ﬁnancing is not present [74]. The formula is: NPV SIR = , (6) I0 where

NPV is the present value of net savings of the activity; and

I0 is the present value of the investment costs, without considering replacement costs and also salvage values.

Calculating NPV and SIR for a lifespan between 1 and 25 years, we found that NPV without subsidies (NPV-S0%) became positive earliest in Year 7 for Galati (21.81 Euro) where the yearly savings are the highest and the investment become proﬁtable, SIR-S0% being of 0.0285, and at the latest in Year 9 for Ceahlau Toaca (21.81 Euro) where the yearly savings are the lowest, and SIR-S0% is only 0.0352. In addition, for an exploitation period of 20 years, the NPV-S0% and SIR-S0% varies between 623.46 Euro and 0.8150 (Ceahlau Toaca), respectively, and 929.58 Euro and 1.2151 (Galati), respectively, and, for a lifespan of 25 years, NPV-S0% and SIR-S0% range between 805.26 Euro and 1.0526, respectively, and 1151.46 Euro and 1.5052, respectively. A SIR-S0% of 1.5052 registered for Galati, when the lifespan is 25 years, shows that the investment will save 1.5052 Euro on average for every 1 Euro invested, over and above the required rate of return reﬂected in the discount rate.

4.1.2. Simple Payback Period and Discounted Payback Period Simple payback period (SPB) is a quick, simple way to compare alternative investments. Simple payback is the number of years necessary to recover the project cost of an investment under consideration [74]. One drawback to the SPB method is that it ignores the time value of money, i.e. the use of SPB implies that there are no opportunity costs to the investor and consequently the investor’s discount rate is zero [75]. However, the simple payback method can be useful if there are uncertainties, such as uncertain tenure or life of the technology. When there is a high degree of uncertainty associated with future cash flows, SPB gives an indication of how long one’s assumptions must hold to ensure that at least the principal is returned to the investor [74]. Simple payback periods are determined mainly by the solar radiation intensity in the analysed locations, they are being minimal for areas with high global solar radiation. The minimum value of simple payback period is 5.6 years for Galati and the maximum value of 6.9 years was found for Ceahlau Toaca when considering 0% subsidies. An average simple payback period in the other locations was determined to be approximately 6.2 years. The simple payback period for solar systems installed in Ceahlau Toaca is higher by 22% compared to that of Galati, and by 11% compared to the average SPB registered in all areas. The discounted payback period (DPB) is the number of years that will pass before the investment cost is recovered; it is calculated while accounting for the time-value of money [70]. The DPB period works as a quick assessment of the time period during which an investor’s capital is at risk [74]. The DPB period is determined by: 1 ln I ×r 1− 0 DPB = CF , (7) ln (1 + r) We apply DPB because we assumed that cash flows are considered constant during the analysed period. The minimum value of DPB is 6.8 years for Galati and the maximum value of 8.6 years was found for Ceahlau Toaca when considering 0% subsidies. An average DPB in the other locations was determined to be approximately 7.6 years. The discounted payback period for solar systems installed Sustainability 2016, 8, 1286 14 of 21 in Ceahlau Toaca is higher by 27% compared to that of Galati, and by 14% compared to the average DPB registered in all areas. This discounted payback period has some limits in the sense that does not take into account the post-payback period cash flows of investments. If we take into account all cash flows discounted on the lifespan period of SWH system, we can determine the modified discounted payback period (MDPB) as follows: I0 MDPB = n , (8) CFi ∑ i i=1 (1+r) n In this case, we will obtain different MDPB depending on the lifespan period considered in the analysis, between 1 and 25 years. Thus, the minimum value of MDPB is nine years for Galati and the maximum value of 11 years was found for Ceahlau Toaca when considering 0% subsidies and 20 years for lifespan. When the lifespan is considered 25 years, MDPB is 10 years to Galati and 12.2 years to Ceahlau Toaca. These values are higher than DPB because take into account all cash flows actualized until the end of lifespan considered.

4.1.3. Internal Rate of Return The internal rate of return (IRR) approach determines the discounted rate at which the cumulative NPV of the investment costs would exactly equal the cumulative NPV of all investment beneﬁts if both are discounted at the internal rate of return [76]. Therefore, the investment with an IRR greater than the cost of capital is approved [77]. The IRR is the rate that sets the NPV of the cash-ﬂows equal to zero. The IRR is therefore expressed by:

NPV = 0, n CFi (9) ∑ i − I0 = 0 i=1 (1+IRR)

Calculating IRR for a lifespan period between 1 and 25 years, we found that IRR without any subsidies (IRR-S0%) for an exploitation period of 20 years varies between 13.44% (Ceahlau Toaca) and 17% (Galati), and, for a lifespan of 25 years, IRR-S0% ranges between 14% and 17.5%. According to the results presented above, installing a SWH system without subsidies presents a payback period ranging between 6.8 and 8.6 years. From a ﬁnancial standpoint, the installation of SHW will determine savings between 1570 Euro and 1916 Euro on a 25-year period.

4.2. Sensitivity Analysis of the Impact of Subsidies In many developing countries, such as Romania, certain programs have been developed, aiming at improving air, water and soil quality by reducing pollution caused by the burning of wood and fossil fuels used to produce thermal energy for heating and domestic hot water. Thus, these programs stimulate the introduction of the systems that use renewable, non-polluting sources. Grants that have been given for residential solar systems also raise an issue of social justice, because these systems are typically purchased by high-income families. Moreover, because of eligibility conditions, low-income families cannot access these funds, even if subsidies would be 90% of eligible costs. Consequently, subsidies granted in developing countries aimed at encouraging low-income families to adopt these systems could not achieve their goal, as was the case in Romania [29]. During the sensitivity analysis, the inputs and outputs associated with the SWH system investment were analysed. The purpose of doing so was to consider those inputs that had the greatest likelihood of occurring, analyse them for potential changes, and investigate the impact that they would have on investment indicators. With all other inputs held constant, uncertainty was found with the granting of subsidies to homeowners by national funding programs. In our study we analysed the efﬁciency of SWH systems when the homeowners can beneﬁt of subsidies of 15%, 30% and 50%. Sustainability 2016, 8, 1286 15 of 21

4.2.1. Sensitivity Analysis of the Impact of Subsidies on NPV and SIR Analysing the impact of changes in the investment cost as a result of grants, we can conclude: (1) When the subsidies are 15%, NPV-S15% and SIR-S15% became positive earliest in Year 6 for Galati (39.93 Euro, 0.0614) and at the latest in Year 8 for Ceahlau Toaca (69.84 Euro, 0.1074). During a 20-year exploitation period, the NPV-S15% and SIR-S15% vary between 738.21 Euro and 1.1353 (Ceahlau Toaca) and 1044.33 Euro and 1.6060 (Galati), respectively, and, for a lifespan of 25 years, NPV-S15% and SIR-S15% range between 920.01 Euro and 1266.21 Euro, and between 1.4149 and 1.9473, respectively. (2) When the subsidies are 30%, NPV-S30% and SIR-S30% became positive earliest in Year 5 for Galati (53.21 Euro, 0.0994) and at the latest in Year 6 for Ceahlau Toaca (30.00 Euro, 0.0560). For an exploitation period of 20 years, the NPV-S30% and SIR-S30% vary between 852.96 Euro and 1.5928 (Ceahlau Toaca) and 1159.08 Euro and 2.1645 (Galati), respectively, and, for a lifespan of 25 years, NPV-S30% and SIR-S30% range between 1034.76 Euro and 1380.96 Euro and between 1.9323 and 2.5788, respectively. (3) When the subsidies are 50%, NPV-S50% became positive in Year 4 for all cities, while SIR-S50% is positive, with a minimum of 0.0329 in Ceahlau Toaca and maximum 0.2606 in Galati. For an exploitation period of 20 years, the NPV-S50% and SIR-S50% vary between 1005.96 Euro and 2.6300 (Ceahlau Toaca) and 1312.08 Euro and 3.4303 (Galati), respectively, and, for a lifespan of 25 years, NPV-S50% and SIR-S50% range between 1187.76 Euro and 3.1052 and 1533.96 Euro and 4.0103, respectively. We can observe that, for Galati, which is the location with the highest intensity of solar radiation and thus offers the best conditions for SWH installation, NPV increases between 12% and 41% for a 20-year lifespan and between 10% and 33% for a 25-year lifespan, when subsidies increase from 0% to 50%. SIR increases with between 32% and 182%, for a 20-year lifespan and between 29% and 166% for a 25-year lifespan.

4.2.2. Sensitivity Analysis of the Impact of Subsidies on SPB, DPB and MDPB Analysing the impact of reducing the investment cost as a result of subsidies granted, we found that: (1) SPB decrease from 5.6 years to 4.8 years (S15%), 3.9 years (S30%) and 2.8 years (S50%) in the area with the highest intensity of solar radiation (Galati) and from 6.9 years to 5.8 years (S15%), 4.8 years (S30%) and 3.4 years (S50%) in the area with the lowest intensity of solar radiation (Ceahlau Toaca). The results show that a reduction of up to 50% in the investment cost determines a reduction of up to 50% in SPB. (2) DPB decrease from 6.8 years to 5.6 years (S15%), 4.5 years (S30%) and 3.1 years (S50%) in Galati and from 8.6 years to 7.1 years (S15%), 5.6 years (S30%) and 3.9 years (S50%) in Ceahlau Toaca. The results show that a reduction of 50% in the investment cost determines a reduction of 54%–55% in the DPB, depending on the area of installation SWH system. (3) MDPB was calculated for each strategy for a lifespan between 1 and 25 years in all areas. We also found a decreasing of MDPB when the subsidies increase. For the area with the highest intensity of solar radiation, the MDPB decreases from nine years to 7.7 years (S15%), 6.3 years (S30%) and 4.5 years (S50%) for 20-year lifespan and from 10 years to 8.5 years (S15%), seven years (S30%) and ﬁve years (S50%) for 25-year lifespan, which shows that, when investment cost is reduced by 50% because of subsidies, the MDPB is also reduced by 50%. A similar evolution is registered for all areas included in this study. We can observe that when the subsidies granted increases, the payback periods are reduced, but the spread between the maximum and minimum payback periods is maintained similar to the variant without subsidies. Sustainability 2016, 8, 1286 16 of 21

4.2.3. Sensitivity Analysis of the Impact of Subsidies on IRR Analysing the impact of subsidies awarded on IRR we found that: (1) When the subsidies are 15%, IRR-S15% became positive earliest in Year 5 for Galati (0.0150) and at the latest in Year 6 for Ceahlau Toaca (0.0080). For an exploitation period of 20 years, the IRR-S15% varies between 0.1630 (Ceahlau Toaca) and 0.2040 (Galati) and, for a lifespan of 25 years, IRR-S15% is between 0.1678 and 0.2072, respectively. (2) When the subsidies are 30%, IRR-S30% became positive earliest in Year 4 for Galati (0.0063) and at the latest in Year 5 for Ceahlau Toaca (0.0133). For an exploitation period of 20 years, the IRR-S30% varies between 0.2029 (Ceahlau Toaca) and 0.2510 (Galati) and, for a lifespan of 25 years, IRR-S30% is between 0.2061 and 0.2530, respectively. (3) When the subsidies are 50%, IRR-S50% became positive earliest in Year 3 for Galati (0.0329) and at the latest in Year 4 for Ceahlau Toaca (0.0641). For an exploitation period of 20 years, the IRR-S50% varies between 0.2895 (Ceahlau Toaca) and 0.3547 (Galati) and, for a lifespan of 25 years, IRR-S50% is between 0.2908 and 0.3553, respectively. We can conclude that when the investment costs are reduced by 50% due to governmental subsidies, the IRR increases with ratio between 107.4% and 116.4% for a lifespan between 20 and 25 years for the area where the intensity of solar radiation is the lowest, and between 103% and 109% for the area with the highest intensity. Based on economic indicators, Galati proved to be the best location for installing SWH systems. In all cases, simple payback period was less than seven years. According to the results of the sensitive analysis, installing a SWH system with subsidies of up to 50% determines the reduction of simple payback period to 2.8–3.4 years. From a ﬁnancial standpoint, the installation of SWH systems will determine savings between 1570 and 1916 Euro on a 25-year period and internal rate of return between 0.2908 and 0.3553, which shows that investing in SWH systems is cost-effective and feasible as long as the grant percentage increase. The very high yields produced currently by solar installations have made the savings to investment ratio become more attractive to domestic users. Thus, the investment in a solar system for domestic water heating is recovered in a reasonable period of 6–8 years. Considering the lifetime exceeding 20 years, the implementation of such a system is cost-effective and if we consider the obvious probability in the future of price increase to fossil fuels, it will lead in the future to the increase the return on investment. As the payback period is reduced, the installation of SWH will be more attractive and the savings thus achieved will be higher over the life period of the project.

4.3. Greenhouse Gas Emission Analysis Although solar energy is considered the cleanest energy source available, interaction with the environment occurs over the whole life cycle of a SWH system (materials, manufacturing, transportation, use and final disposal or recycling) [15,78]. These interactions can lead to depletion of natural sources, greenhouse effect, acidification, eutrophication, etc. [79]. We evaluate the environmental impacts associated with greenhouse gas emissions of a solar water heating system during its operation phase. The greenhouse gas (GHG) emissions for the manufacturing and dismantling of the solar water heating system were not included in this analysis. GHG emission reductions are calculated based on the fuel type mainly used at dwellings namely electricity. The GHG emissions are calculated using the GHG emission factor, which is the level of CO2 emitted per unit input energy. The GHG emission factor depends on the type of fuel used and the efficiency of the energy conversion device used on-site. In order to estimate emissions from power plants, specific emission factors for each type of pollutant, which depend on fuel characteristics and combustion technology, have been used. Carbon dioxide (CO2) is a main product from the combustion of all fossil fuels. The CO2 emission is directly related to the carbon content of fuels. Electricity is a significant source of carbon dioxide. Alongside carbon dioxide, methane (CH4) and nitrous oxide (N2O) are the most prevalent greenhouse gases Sustainability 2016, 8, 1286 17 of 22 manufacturing and dismantling of the solar water heating system were not included in this analysis. GHG emission reductions are calculated based on the fuel type mainly used at dwellings namely electricity. The GHG emissions are calculated using the GHG emission factor, which is the level of CO2 emitted per unit input energy. The GHG emission factor depends on the type of fuel used and the efficiency of the energy conversion device used on-site. In order to estimate emissions from power plants, specific emission factors for each type of pollutant, which depend on fuel characteristics and combustion technology, have been used. Carbon dioxide (CO2) is a main product from the combustion of all fossil fuels. The CO2 emission is directly related to the carbon content of fuels. Electricity is a significant source of carbon dioxide. Alongside Sustainability 2016, 8, 1286 17 of 21 carbon dioxide, methane (CH4) and nitrous oxide (N2O) are the most prevalent greenhouse gases from fossil fuels combustion for energy and heat production. Other GHGs produced by the energy fromsector fossil but fuelsin relatively combustion low for volumes energy andsuch heat as production.SF6, widely Otherused GHGsin high-voltage produced bygas-insulated the energy sectorsubstations but in were relatively neglected. low volumes such as SF6, widely used in high-voltage gas-insulated substations wereEach neglected. greenhouse gas has heat-trapping properties. To compare greenhouse gases, they are indexedEach according greenhouse to their gas Global has heat-trapping Warming Potential properties. (GWP). To This compare is the greenhouse ability of a greenhouse gases, they gas are indexedto trap heat according in the to atmosphere their Global Warmingrelative to Potential an equal (GWP). amount This of is carbon the ability dioxide. of a greenhouse The effects gas are to trapestimated heat in by the converting atmosphere these relative gases to into an equalCO2 equivalent amount of using carbon the dioxide. CO2 equivalence The effects arefactors estimated to assess by convertingthe GWP100. these Carbon gases dioxide into CO equivalency2 equivalent is using a quantity the CO that2 equivalence describes, factorsfor a mixture to assess and the amount GWP100. of Carbongreenhouse dioxide gas, equivalencythe amount isof a CO quantity2 that thatwould describes, have the for same a mixture global and warming amount potential, of greenhouse when gas,measured the amount over a ofspecified CO2 that timescale would have(generally, the same 100 globalyears) warming[80]. potential, when measured over a specifiedThe GHG timescale emissions (generally, of the 100 solar years) water [80]. heating system are calculated in comparison to an electricalThe GHGboiler. emissions For the ofelectrical the solar boiler water an heating averag systeme annual are total calculated efficiency in comparison of 33% (total to an efficiency electrical boiler.includes For the the efficiency electrical of boiler the electrical an average boiler, annual the totalgrid efficiencytransmission of 33%losses (total and efficiency the average includes electrical the efficiencyefficiency ofof the the electrical national boiler, power the gr gridid) transmissionwas assumed losses [81]. and Because the average the CO electrical2 emission efficiency factor of thefor nationalelectrical power energy grid) is highly was assumed dependent [81]. on Because the fuel the mi COx, 2weemission assume factor this factor for electrical constant energy although is highly the dependentfuel mix is onlikely the fuelto change mix, we in assumethe future. this In factor this constantcase, CO although2 equivalent the fuelemission mix is for likely electric to change backup in thesystem future. is 299.02 In this case,g of COCO22 equivalentper kWh of emission produced for electricelectricity backup considering system is the 299.02 mix g of COelectricity2 per kWh in ofRomania produced [64]. electricity considering the mix of electricity in Romania [64]. From thethe viewpointviewpoint of of environmental environmental protection, protection, it wasit was found found that, that, on on average, average, the the emission emission in the in localthe local atmosphere atmosphere of an of approximate an approximate quantity quantity of 0.53 tonnesof 0.53 oftonnes CO2 each of CO year2 each per householdyear per household (Figure8), respectively(Figure 8), respectively 13.25 tonnes 13.25 CO tonnes2 during CO operation2 during operation period of period the SWH of the system SWH system can be can avoided be avoided [5,82]. As[5,82]. we canAs we see, can by usingsee, by solar using energy solar instead energy of instea electricald of energy,electrical the energy, production the production of large amounts of large of greenhousesamounts of greenhouses gases is avoided. gases is avoided.

0.7

0.6

0.5 emissions [t] emissions 2 0.4

0.3

0.2

0.1

t u u a i i e e u . ad ta laj o. ui uc it V. r u na i M au l ri rad an. t afa ova gi ivita Iasi i dea v est a bi i Arad B B B O l ai Deva ur r Husi ean C a a ist osani Brailai i Toacaapocatantar Galatii G c r loi cu M Si Sul gu J Zal Bacau BarB ot BuzauCa ns C Crisan G Or O PitestP ni Romanu Tulcea est Calarasiansebes-N Fagaras Buzaulni ea Predeal de Vede Suceava B rest au . Mangalia Petrosani i TimisoaraTar Turnu Baia mare u ar uj Co cur am Sat Sighetu M. Targovist C Cl Drobeta TS nt ogal R or uc eahl I K ier B Bucur C M

The annual reduction of CO of reduction annual The Rosi

Figure 8. The annual reduction of CO22 emissions.

5. Conclusions The current solar technologies for heating water in Romania have the potential to save about 65%–80% ofof thethe energy energy used used for for this this purpose purpose in all in regions. all regions. The general The general trend observedtrend observed in this analysis in this is that solar water heating systems that replace conventional systems are more suitable in areas with high solar radiation. Solar heating water can especially be applied to homes and buildings in rural areas, which often have more surfaces available for installing solar collectors than those in urban areas. In this study, we analysed the potential beneﬁts offered by solar systems. As the result of this analysis, we can conclude that the environmental impact of any energy system is an important factor and that the solar systems have the potential to reduce environmental pollution. The results show that, by using solar energy, a considerable amount of greenhouse gas emissions can be reduced. Sustainability 2016, 8, 1286 18 of 21

For the considered solar water heating system, the operating cost savings compared to an electric water heater is about 70%. The average annual solar contribution to the hot water needs of the household is 76%, while the maximum discounted payback period of system is 8.6 years, and the average savings on lifespan are 1151.46 Euro. Financial analysis of SWH installation for a typical household indicates that such a system is always profitable, with a simple payback period on investment of 5.6 to 6.9 years without any government subsidy. The greenhouses gases emissions analysis indicates that such a SWH system will prevent the emission into the atmosphere of about 17 to 20 t CO2 over its lifespan. When subsidies are granted to reduce the investment costs supported by households, then the payback period is reduced considerably and the net present value, savings to investment and internal rate of return increase substantially. It seems that the only barrier that prevents the penetration of large scale of solar water heating systems in Romania is the lack of understanding among the population of the benefits they provide and financial unattractiveness to poor households. When the population understands all these technology advantages, they accept it easily. In the case of SWH systems, for a payback period of seven years, the benefits are not immediately visible; the energy bill will be reduced, but not fast enough in order to justify the cost of installation, so that governmental subsidies will be an important incentive for beneficiaries. Economic indicators showed that Galati is the best location for the use of solar systems. From an environmental viewpoint, it was found that, on average, the emissions in local atmosphere of 0.7 tonnes CO2 per year can be avoided and the average CO2-equivalent payback period is 16 months. Although solar water heating systems have great potential for use with subsidies, many families believe that solar water heating systems are too expensive because of the high initial investment costs.

Author Contributions: Alexandru ¸Serbanand Spiru Paraschiv analysed experiences in SWH systems in Europe and accomplished the solar potential analysis in 52 Romanian cities; Nicoleta B˘arbu¸t˘a-Mi¸suand Nicoleta Ciucescu performed the economic and sensitivity analysis; Simona Paraschiv analysed similar studies performed, realised the environmental impact analysis of SWH systems and had drawn the conclusions; Nicoleta B˘arbu¸t˘a-Mi¸suwrote the paper. Conﬂicts of Interest: The authors declare no conﬂict of interest.

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