Solar Water Heating for Apartment Buildings – The Economics for Landlords

This is a 3 unit apartment building in Charlottetown, PEI. There are 11,000 apartments on PEI out of a total of 54,000 households. I have been wondering what can landlords do to reduce their exposure to oil costs.

I called my friend Wes, the owner to find out how he had made the business case for adding solar water heating to his building.

Wes sees the math like this:

Each unit uses about 1,750 litres of oil a year. At current prices this is about $2,000 a unit. About 25% of the cost/use ($500) is in water heating. The potential for Solar in normal years on PEI is about 60% or $300 a unit. So Wes’s target is about $900 a year in savings.

The cost of the installation was $5,000. So his pay back 5.6 years. His after tax ROI is 18%!

I am finding that in this time of low interest rates and uncertainty about the safety of the “market” that investing in my own energy savings is a good use of my capital. Even in a poor summer like this one with much less sunshine Wes might at worst get 7% or 8% – still way better than in the market. Over time of course the returns get very attractive – for as oil prices rise, the return gets better.

This is only a small operation. I wonder what the potential is for the larger operators on PEI? With 11,000 units out there – there is lots to play for.


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