Selecting a Solar Water Heater

There are a number of important factors to consider before you purchase and install a solar water heating system.

Consider the economics of a solar water heating system

Solar water heating systems usually cost more to purchase and install than conventional water heating systems. However, a solar water heater can usually save you money in the long run.

How much money you save depends on the following:

  • 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%. Also, because the sun is free, you're protected from future fuel shortages and price hikes.

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.

Evaluate your site's solar resource

Before you buy and install a solar water heating system, you need to first consider your site's solar resource. The efficiency and design of a solar water heating system depends on how much of the sun's energy reaches your building site.

Solar water heating systems use both direct and diffuse solar radiation. Even if you don't live in a climate that's warm and sunny most of the time—like the southwestern United States—your site still might have an adequate solar resource. If your building site has unshaded areas and generally faces south, it's a good candidate for a solar water heating system.

Your local solar system supplier or installer can perform a solar site analysis.

Determine the correct system size

Sizing your solar water heating system basically involves determining the total collector area and the storage volume you'll need to meet 90%–100% of your household's hot water needs during the summer. Solar system contractors use worksheets and computer programs to help determine system requirements and collector sizing.

Collector Area

Contractors usually follow a guideline of around 20 square feet (2 square meters) of collector area for each of the first two family members. For every additional person, add 8 square feet (0.7 square meters) if you live in the U.S. Sun Belt area or 12–14 square feet if you live in the northern United States.

Storage Volume

A small (50- to 60-gallon) storage tank is usually sufficient for one to two three people. A medium (80-gallon) storage tank works well for three to four people. A large tank is appropriate for four to six people.

For active systems, the size of the solar storage tank increases with the size of the collector—typically 1.5 gallons per square foot of collector. This helps prevent the system from overheating when the demand for hot water is low. In very warm, sunny climates, some experts suggest that the ratio should be increased to as much as 2 gallons of storage to 1 square foot of collector area.

Other Calculations

Additional calculations involved in sizing your solar water heating system will include determining the Orientation and tilt of the solar collector

Determine the system's energy efficiency

For a solar water heating system, use the solar energy factor (SEF) and solar fraction (SF) to determine its energy efficiency.

The solar energy factor is defined as the energy delivered by the system divided by the electrical or gas energy put into the system. The higher the number, the more energy efficient. Solar energy factors range from 1.0 to 11. Systems with solar energy factors of 2 or 3 are the most common.

Another solar water heater performance metric is the solar fraction. The solar fraction is the portion of the total conventional hot water heating load (delivered energy and tank standby losses). The higher the solar fraction, the greater the solar contribution to water heating, which reduces the energy required by the backup water heater. The solar fraction varies from 0 to 1.0. Typical solar factors are 0.5–0.75.

Don't choose a solar water heating system based solely on its energy efficiency. When selecting a solar water heater, it's also important to consider the size and overall cost, including how long it will take to recover the initial investment.>

Estimate and compare system costs

Before purchasing a solar water heating system, you can estimate its annual operating cost and compare it with other more and/or less efficient systems. This will help you determine the energy savings and payback period of investing in a more energy-efficient system, which will probably have a higher purchase price.

Before you can choose and compare the costs of various systems, you need to know the system size required for your home.

Calculating Annual Operating Cost

To estimate the annual operating cost of a solar water heating system, you need the following:

  • The system's solar energy factor (SEF)

  • The auxiliary tank fuel type (gas or electric) and costs (your local utility can provide current rates).

Then, use the following calculations.

With a gas auxiliary tank system:

You need to know the unit cost of fuel by Btu (British thermal unit) or therm. (1 therm = 100,000 Btu)

365 × 41,045/SEF × Fuel Cost (Btu) = estimated annual cost of operation


365 × 0.4105/SEF × Fuel Cost (therm) = estimated annual operating cost

Example: Assuming the SEF is 1.1 and the gas costs $1.10/therm

365 × 0.4105/1.1 × $1.10 = $149.83

With an electric auxiliary tank system:

You need to know or convert the unit cost of electricity by kilowatt-hour (kWh).

365 × 12.03/SEF × Electricity Cost (kWh)= estimated annual operating cost

Example: Assuming the SEF is 2.0 and the electricity costs $0.08/kWh

365 X 12.03/2.0 X $0.08 = $175.64

Comparing Costs and Determining Payback

Once you know the purchase and annual operating costs of the solar water heating systems you want to compare, you can find the costs associated with conventional water heating systems and compare the two.

Use the table and calculations below to compare two solar water heating systems and determine the cost savings and payback of the more energy-efficient system model.

System Models System Price SEF Estimated Annual Operating Cost
System Model A      
System Model B (higher SEF)      
Additional cost of more efficient system model
(Model B)
    Price of System Model B - Price of System Model A = $Additional Cost of Model B
Estimated annual operating cost savings (System Model B)     System Model B Annual Operating Cost - System Model A Annual Operating Cost = $Model B's Cost Savings Per Year
Payback period for Model B     $Additional Cost of Model B/$Model B's Cost Savings Per Year = Payback period/years


Comparison of two solar water heating system models with electric backup systems and electricity costs of $0.08/kWh.

System Models System Price SEF Estimated Annual Operating Cost
System Model A $1,060 2.0 $176
System Model B $1,145 2.9 $121
Additional cost of more efficient model
(Model B)
    $1,145-$1,060 = $85
Estimated annual operating cost savings (Model B)     $176-$120 = $56 per year
Payback period for Model B     $85/$56 per year = 1.5 years

Other Costs

When comparing solar water heating systems, you should also consider installation and maintenance costs. Some systems might cost more to install and maintain.

Consult the manufacturer(s) and a qualified contractor to help estimate these costs. These costs will vary among system types and sometimes even from model to model.

Investigate local codes, covenants, and regulations.

Before installing a solar water heating system, you should investigate local building codes, zoning ordinances, and subdivision covenants, as well as any special regulations pertaining to the site. You will probably need a building permit to install a solar energy system onto an existing building.

Not every community or municipality initially welcomes residential renewable energy installations. Although this is often due to ignorance or the comparative novelty of renewable energy systems, you must comply with existing building and permit procedures to install your system.

The matter of building code and zoning compliance for a solar system installation is typically a local issue. Even if a statewide building code is in effect, it's usually enforced locally by your city, county, or parish. Common problems homeowners have encountered with building codes include the following:

  • Exceeding roof load

  • Unacceptable heat exchangers

  • Improper wiring

  • Unlawful tampering with potable water supplies.

Potential zoning issues include the following:

  • Obstructing sideyards

  • Erecting unlawful protrusions on roofs

  • Siting the system too close to streets or lot boundaries.

Special area regulations—such as local community, subdivision, or homeowner's association covenants—also demand compliance. These covenants, historic district regulations, and flood-plain provisions can easily be overlooked.

To find out what's needed for local compliance, contact the following:

  • Your local jurisdiction's zoning and building enforcement divisions

    • Briefly describe your intended construction, asking for other relevant ordinances/codes that might be in effect.

    • Find out if there are any additional local amendments or modifications to the regulations in effect.

    • Ask how to determine whether you are located in a historic district, flood-plain area, or any other special category regulated by a government body.

    • Ask where you may find pertinent ordinances/codes (local library, government office, etc.).

    • Read pertinent sections of the regulations, making photocopies of information you wish to file for future review and design/installation analysis.

  • Homeowner's, subdivision, neighborhood, and/or community association(s)

    • Ask if they have any ordinances, provisions, or covenants that may affect the design and installation of the system.

    • Copy and file pertinent sections for reference.
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