Different people like to look at the same investment in different ways. Some people like to consider the return on investment over the entire life of the system (or a part of it), which we look at in this article . Other people prefer to think about how it affects their monthly cash flow. We'll look at the cash flow approach here.

Instead of looking at gross figures and working out how a solar thermal system pays for itself over time, cash flow considers your monthly income and expenditure. A healthy cash flow is one which is positive: your incoming money (from work or other sources) is higher than your outgoings (on mortgages, groceries and whatever other costs you have).

Let's assume that you're installing a $5,000 solar thermal system and borrowing the money from a bank. They give you a 6% rate of interest for ten years. We'll assume that fossil fuel costs rise in the same way as they did in our other example: 6% per year for electricity and 10% per year for gas.

As you can see, the payments are hardest at the start: the solar thermal system costs more than either grid-connected gas or electric equivalents. But by the time you've paid off the loan some ten years later, you're also covering your hot water bills: the effective monthly cost of the system has fallen to zero because you're no longer forking out money to the bank or your utility company!

Even better, the total cost of the system is remarkably low when you consider it over a long period. For a few extra dollars a month, you could install a reliable solar thermal setup that will provide effectively free hot water to your home for decades.