Are solar water heaters worth it? Here’s what to consider.

Canary Media’s Electrified Life column shares real-world tales, tips, and insights to demystify what individuals can do to shift their homes and lives to clean electric power. Canary thanks EnergySage for its support of the column.

Every so often in sunny Colorado, I pass by a house with rooftop solar panels that look a little bit different. With their muted luster and thicker frames, these big, dark panels stand out for a reason: They’re not your typical electricity-making solar panels but are instead used to heat up a home’s water.

First developed in 1891, well before their power-producing photovoltaic (PV) counterparts, solar water heaters are ​“the other white meat” of solar tech, says William Giese, policy director at The Solaray Corporation, the largest U.S. manufacturer of solar water heaters. These systems have the potential to cut a big chunk of a household’s carbon emissions, as about 17 to 32 percent of home energy use goes to water heating.

While solar water heaters are popular in countries like Israel, Barbados, Austria, and China, they haven’t taken off in the United States. American reluctance comes down in large part to their steep price: They often cost thousands of dollars more upfront than other water-heating options, including ascendant superefficient electric heat-pump water heaters.

But solar water heaters are experiencing a burst of renewed public interest.

More federal taxpayers are installing solar water heaters, according to data released last month from the Internal Revenue Service. In 2021, an estimated 109,032 households got a tax break for installing the systems. Fast-forward to 2023: Based on initial returns processed through mid-May, already more than 139,000 households had claimed the credit. That’s also more than the 104,180 households who got a tax break for a heat-pump water heater.

So why are more people turning to the power of the sun for hot showers? Here’s what to know.

The basics on solar water heaters

Solar water heaters come in two flavors: active, which use powered pumps to move water around; and passive, which harness the natural buoyancy of hot water. 

The panels that sit on the roof and soak in the sun’s rays are known as collectors. They contain fluid-filled pipes and can take different shapes, like evacuated tubes or dark, shallow boxes that look similar to PV panels.

Water can flow through the collector to directly absorb heat. Or a heat-transfer fluid can harvest heat first, then release that heat to water stored in a tank. This fluid contains anti-freeze, making these indirect heating systems suitable for colder climates.

The collectors for solar water heaters are extremely efficient, converting up to 80 percent of solar energy into heat, whereas PV panels capture about 20 percent for electricity, says Larry Weingarten, a general contractor based in Salinas, California, who has worked with solar water heaters for more than four decades. (The caveat is that electricity can be used for more purposes than heat energy, so it’s not an apples-to-apples comparison.)

In the U.S., the collector typically connects to a tank inside the home that stores the hot water. In other countries, it’s more common to use a thermosiphon system, in which the water tank is mounted on the roof above the collector.

Solar collectors can be sized to supplement a home’s hot-water needs or meet 100 percent of them, but keep in mind, the bigger the system, the more it costs. U.S. households with solar water heaters typically get 50 to 80 percent of their needs met by the sun, according to the U.S. Department of Energy (DOE), and have a backup heating system when demand for hot water outstrips what’s in the tank. Backup systems often rely on fossil gas or electric resistance, though heat pumps can be used instead, Giese says. 

Solar water heater costs, incentives, and advantages

The major disadvantage of solar water heaters is that they’re expensive: They cost anywhere from $4,000 to $13,000 including a backup system and labor, according to home renovation website Fixr.com.

That’s about double the upfront cost for gas or electric options, including heat-pump water heaters, per Fixr.com. The average installed solar water heater cost in tax-credit claims was about $6,000, according to the recently released 2023 IRS data.

Different system types and sizes have widely varying prices. Small passive systems that heat water directly, don’t need a pump, and are equipped with a 60-gallon tank will be at the low end of the spectrum, while active, freeze-resistant systems with a 120-gallon tank will be at high end.

The premium for solar water heaters has remained ​“stubbornly high,” says Shawn Martin, vice president of technical services at the Solar Rating and Certification Corporation (SRCC), which certifies the performance of solar water heaters. ​“They haven’t been able to achieve the kind of economies of scale that would start to really push the prices down.”

Luckily, the 2022 Inflation Reduction Act extended a 30 percent tax credit for solar water heaters rated by the SRCC, and local incentives can further reduce costs. In Texas, Austin Utilities offers a rebate of up to $1,200 for solar thermal systems, for example. You can search the Database of State Incentives for Renewables & Efficiency (DSIRE) for rebates in your area.

In places with high fuel costs, solar water heaters can be well worth it. The systems generally have a payback time of five to 10 years, Giese says, but in Hawaii, which has the most expensive electricity rates in the country, you can break even in less than three years. With free energy from the sun, this kind of water heating is also insulated from fossil-fuel shortages and price spikes.

Exactly what you’ll save, though, depends on how much hot water your household uses, how much sun you get, how well your system performs, and what you’d be paying if you used only gas or electricity to heat your water.

The solar collectors themselves are also pretty durable — they can last 20 years — but the hot water tank will need to be replaced sooner, Giese says. Like other tank water heaters, it tends to give out after about 10 to 15 years.

So, should you go the solar route when you’re in the market for a new water heater?

It’s a tricky question that can ultimately be answered only on a case-by-case basis. If you live somewhere with high energy prices — like Hawaii or California — and you don’t intend to get photovoltaic panels for your home, going with a solar water heater might be a good option. But if you have cheap electricity, or have PV panels on your roof or plan to get some, it could make more financial sense to clean up your water use with a heat-pump option instead.

A 2020 study by Flagstaff Research found that for Californians getting solar PV to power their homes, it can be less expensive to upsize the array to cover a heat-pump water heater than to install a water heater powered by the sun. However, the study was done when the economics for rooftop PV panels in the state were better, Adam Chrisman, president of SunEarth Inc. (a Solaray subsidiary), points out.

You could go for the double whammy of a solar PV array and a solar water heater. Some homeowners fit both on their roofs.

Advice on getting a solar water heater

As with other home energy projects, make sure you get multiple quotes from contractors for any type of water-heating system you’re considering, whether a solar-powered or heat-pump water heater, recommends Kyle Gluesenkamp, an expert in thermal energy storage at the Oak Ridge National Laboratory. You’ll be able to compare payback periods and dissect estimates of operating and maintenance costs and how much you’d spend if you stick with the kind of water heater you already have. If you’re feeling extra nerdy, you can estimate the payback length yourself with this calculator from the DOE.

Because of the complexity of installing a solar water heater on the roof, ​“you need to find an installer who really knows the technology well and is there to advise you,” Martin says. ​“They don’t require a lot of maintenance once they get up and running, but you do have to get them running properly.”

Then you can let your solar hot water flow.

EnergySage is the leading online comparison-shopping marketplace for rooftop solar, energy storage, heat pumps, and community solar. Supported by the U.S. Department of Energy, EnergySage is trusted by over 10 million consumers across the country to help them make smarter energy decisions through simplicity, transparency, and choice. Unlike traditional lead-generation websites, EnergySage empowers consumers to request and compare competing quotes online from a network of more than 500 pre-screened installation companies — a proven formula that has led to 20 percent lower prices on average.

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