Solar Hot Water

• Gross cost of a residential solar hot water system range from $7,000-$12,000
• These costs will be reduced by up to 50% through rebates and tax credits. (See "Tax Incentives and Rebates," below.)

• The cost of the system is broken down into the following components:

  • Solar collectors;
  • Storage tanks with heat exchangers;
  • Other installation materials;
  • Labor cost (to install the system);
  • Permit cost.
• The net cost (after rebates and tax credits) of a residential solar hot water system is likely to range from $3,500 - $7,500

• The Federal government allows homeowners and commercial property owners to deduct 30% of the net cost of the system from their income taxes. This tax break is available through 2016.

• Some states offer additional rebates for installing solar hot water systems.

  • Some states may offer additional state tax credits or exemptions from sales and property taxes.
  • Local utilities and some states may also offer cash rebates (ranging from $250 to $1,500 for a residential system).

• Annual returns on investment can range from 5% to 15% for residential systems, to 10% to 40% for commercial systems.

  • Solar thermal systems can save an average user 50% to 80% of hot water costs each year.

  • Factors that drive the amount of savings are:

    • Consumption
      Households consuming large amount of hot water tend to save more. Larger families, especially those with teenage children, are likely to enjoy the most significant savings.
    • System performance
    • Geographic location, and the number of sunny days
    • Cost of fuel of existing water heating system (electricity, oil, or natural gas)
      Solar thermal systems that assist existing electric or oil hot water systems are likely to save the most.
    • Age of existing heating system
      The older your existing system is, the less efficient it is likely to be so your savings will also be higher.

  • Returns are even more attractive when installing solar hot water systems in new homes and commercial buildings

    • The increase in the monthly mortgage cost attributable to the solar thermal systems can be substantially less than the amount the borrower saves on energy bills.

Several financing options are available to finance an investment in a solar hot water system.

• Home equity or other collateralized loans
• Subsidized loans
• Peer-to-Peer loans
• Specialized loans

For a detailed discussion, refer to our Financing Options page or search for banks and leasings companies that provide financing.