Economics ETDs

Publication Date



The rapid depletion of our domestic fossil fuel resource base is an issue of great concern. Shortages, curtailments, and increased dependence upon foreign sources of energy are becoming the rule rather than the exception. This study examine the role of residential solar water and space heating as an alternative source of energy. In this study a scenario of future energy prices is developed and consumer costs from traditional sources are projected both on an annualized (life cycle) basis and on a current cost basis for residential space heating and domestic hot water. These costs are developed by state through 1990 and are compared to the cost and performance of solar energy systems to determine year of feasibility for solar energy by state and optimal system design (least cost) given projected energy prices. Potential energy savings in 1990 resulting from utilization of solar energy systems are also discussed. Because natural gas is in a state of rapid depletion, its price is expected to rise much faster than other energy sources under decontrol, thereby relinquishing its comparative cost advantage. Thus, it was necessary to calculate the price of a competing energy substitute which might replace natural gas. For this purpose, the price of electric heat pumps to provide both space heat and domestic hot water was selected. A comparison between decontrolled natural gas and heat pump prices yields the least cost energy alternative to solar. A comparison to the cost in dollars per BTU of solar energy then determines the economic desirability of solar energy. If annualized fossil fuel costs are used for comparison, and solar energy is cheaper, then feasibility is accepted on a life cycle costing basis. If current fossil fuel prices are used for comparison, then feasibility is determined on a current cost basis. Economists advocate the former as the appropriate criterion but consumers are likely to respond to the latter, so both criteria are used. The most important result of the space heating feasibility analysis is the clear picture which emerges: solar feasibility begins in the northern tier of states and with very few exceptions systematically moves southward. The results of the feasibility analysis for domestic hot water heating does not present as well defined a picture as that exemplified by the north to south movement portrayed for residential space heating. Rather, there is a mixture of Southern and Eastern states demonstrating feasibility in the late 1970s and early 1980s.

Degree Name


Level of Degree


Department Name

Department of Economics

First Committee Member (Chair)

William Dietrich Schulze

Second Committee Member

Alfred Leroy Parker

Third Committee Member

Shaul Ben-David



Document Type


Included in

Economics Commons