Solar Hot Water Heaters

Economics of Solar Hot Water

The average initial cost to invest in a solar hot water ranges between $4,000 – $12,000. There are some systems available that cost less. However, we do not recommend installing them due to their poor reliability and low yearly efficiency. Initial costs can be reduced significantly with tax credits and rebates, making solar hot water a very attractive option. State tax credits is 25% of the purchase price with a maximum of $1,000 per installation. Federal tax credits is 30%. APS or SRP utility rebates may also be available.

How much money you actually save versus a traditional water heater depends on a number of important factors:

  • The amount of hot water you use
  • Your system’s performance
  • Your geographic location and solar resource
  • Available financing and incentives
  • The cost of conventional fuels (natural gas, oil, and electricity)
  • The cost of the fuel you use for your backup water heating system, if you have one.

On average, if you install a solar water heater, your water heating bills should drop 50%–80%.

If you’re building a new home or refinancing, the economics are even more attractive. Including the price of a solar water heater in a new 30-year mortgage usually amounts to between $13 and $20 per month. The federal income tax deduction for mortgage interest attributable to the solar system reduces that by about $3–$5 per month. So if your fuel savings are more than $15 per month, the solar investment is profitable immediately. On a monthly basis, you’re saving more than you’re paying.