bathing in sunlight – can solar hot water save you money?

DSC06363As a follow on to the article on solar power a couple of weeks ago, I thought I would write about another solar alternative: solar hot water.

We had a solar hot water system installed about a year ago. Our old system, although it performed valiantly to the end, finally gave up the ghost so we were in the market for a new system. After doing the research and the maths, solar hot water made the most sense for our situation.

Below is a description of how solar hot water works, the costs, rebates and savings applicable as well as details about our own system and savings.

Solar hot water – the system and how it works

Solar hot water works differently to solar energy in that it heats water using the heat generated from the sun rather than converting the UV rays into electricity.

There are two main types of solar hot water: the roof-mounted system, where the tank is on the roof; and the split-system where you only have panels or glass tube collectors on the roof and a stand-alone tank below. This article gives a detailed description of the two systems.

According the the Energy Matters website, the energy benefits of each system are similar. The choice between the two comes down to cost (the roof-mounted system is cheaper), the structure of your roof, aesthetics etc. One thing to keep in mind is that glass tube collectors can be more efficient in colder climates, which would make a split-system more appropriate.

With a roof-mounted system, water from the mains gets heated by the panels, which then rises (is thermo-siphoned) into the tank on the roof for storage. With a split-system, cold water is pumped from the mains into the solar panels, is heated by the sun (copper pipes in the panels absorb the sun’s heat) and then travels down to the tank where it is stored until used. If the water in the tank drops below a certain temperature, it is pumped back up to the solar panels to be reheated. The pump runs on electricity; the roof-mounted system has no pump.

With either system, if there’s not enough sun to heat the water, you will have to ‘boost’ the system with electricity (or gas, if you have gas) from the grid.

Boosting your system

There are two options for boosting your system: either you have your system connected so that it automatically kicks in when the sun can’t maintain the heat of the water or you boost the system manually by turning on the booster at the switch-board.

Whether you choose the manual or automatic option will depend on where you live and your household usage. Your installer should be able to advise you which method will be appropriate for your circumstances. In colder climates, where you have to rely more on the grid, it may be better to have your booster automatically kick in and connect your system to your off-peak metre.

We chose to boost our hot water system manually. If you do this, make sure you get your electricity company to remove the off-peak hot water metre so that you aren’t paying rent on a metre that isn’t being used.

About our system

We purchased a split-system. While it would have been nice to have the extra yard space rather than a whopping great big tank in the middle of it, there was no way the other members of our body corporate would have approved the ‘ugly’ roof-mounted system.

Our aspect couldn’t be more perfect for solar power. We get direct, unobstructed sub-tropical sunlight for the entire day and throughout the whole year on one side of the house (where the panels are) and pretty much no sun on the other (where the tank is). As a result, we had a fair bit of pipework installed inside the roof, and we have only had to ‘boost’ our system about 20 times in the last year.

Because we boost our hot water manually, it is connected to the regular tariff metre rather than the off-peak metre, saving us around $18 a month on the off-peak metre rent. When our hot water isn’t so hot anymore, it’s simply a matter flicking the hot water switch at the fuse box, leaving a reminder note on the kitchen bench and then switching it back off again after an hour or two.

Here are some pictures of our system. The photo above is of the panels on our roof.


The old system on the brink of death.


New system – much larger.


And smack bang in the middle of our courtyard.


DH made a box to keep small hands away from hot taps
and wires. The box has hinges on the front for easy access.

How much does a solar hot water system cost?

The cost of installing a solar hot water system will vary depending on the system you choose, the installer’s retail price, the design of your home (how much pipework you’ll need, for instance) and the rebates that are available to you. You could be looking at anything between $1000 and $10,000 (the breakup of our system costs are below).

The rebates available

(Note: Subject to change – current at time of writing (October 2011); STCs are set to change in November 2011.)

Depending on where you live and what system you install, you could be eligible for a cost offset of between $300 – $3,100.

The rebates available include small scale technology certificates (which replaced the old renewable energy certificates), the federal government rebate and possible state government rebates (assuming you meet the eligibility criteria on the last two (see resources below).

To find out about the rebates available to you, check out the Hot Water Rebate website.

1. Federal rebates

The Federal rebate is currently $1,000 (applied for through the Medicare system) and paid into your bank account after installation (their advertised turnover period is around 8 weeks, however, we waited seven months for our rebate, so don’t rely too heavily on the rebate!). You are not eligible if you received the insulation rebate.

2. State rebates





$600 or $1,000

$1000 is for eligible concession card holders; must be replacing existing electric hot water system.


No state rebates currently available



No state rebates currently available



$300 – $1,500

Depends on system type and where you live.


No state rebates currently available


South Australia


For concession card holders only.

Western Australia


For gas or LPG boosted systems only.

Northern Territory

No state rebates currently available



3. Small Scale Technology Certificates

You can find a detailed explanation of how the STCs work in last fortnight’s solar power article. According to the Solar Hot Water Quotes website, the STCs will give you between $300 and $600 back on your hot water installation.

What our system cost

We installed our system just over a year ago, before the RECs became STCs. We got several quotes and found Solarhart to be several thousand dollars more expensive than other companies. That’s quite a big difference, although as I understand it, Solarhart systems are Australian made, whereas we bought a Chinese made system (which still has to meet Australian standards).

The total cost of our system was $4,400 from which the RECs were deducted, making our up-front payment $3,175. The federal and state rebates brought the total cost down to $1,175. As a comparison, replacing the existing electric storage tank with another would have cost between $600 and $1,000 plus the constant running costs, so it was a no-brainer for us to go solar.

The savings

The savings you make with solar hot water will depend on several factors including where you live (how much sun you get), your usage (how long your showers are, whether you wash clothes in hot or cold water) and the number of people in your household.

Having said that, the government estimates that the average household will save around $300 a year off their bills.

Our savings

I have a small caveat before I write about our savings: living in the sub-tropics makes solar energy more than feasible. The ambient air temperature is quite high, even on a cloudy day, which means we rarely have to turn the booster on for our hot water. If I were still living down south, where the winters are significantly colder, I am sure our hot water would need to be boosted much more frequently, reducing our savings.

Ok, having said that, our energy consumption dropped by an overall average of 34% after installation. Here’s a graph of our average daily kilowatt usage over the past four years as per our bills (I know, I really need to get a shredder!):

electricity usage

Click the graph to enlarge.

The high points on the graph are, not surprisingly, during the cooler months where we have hotter (ahem, and longer) showers. Also, our electricity rose quite a bit after we had a baby.

You can also see by how much our consumption dropped after we installed solar hot water. This year’s winter ‘high’ is still significantly lower than the previous years’ lows.

As far as the money goes, compared to last year, our average daily expense dropped by about 10%. The discrepancy between the savings in electricity and the dollar savings results from the continuous price rises. The price rises are further emphasised by the fact that compared to the average daily expense between 2008 and 2010, this year’s average daily expense has increased by 4%, despite our reduction in usage. I’m sure it’s only going to get worse.

If you’re in the market for a new hot water system, solar could be the way to go, especially when you take into account the government rebates. Other options include a gas system or a heat pump system, both of which are cheaper and more environmentally friendly than an electric storage system and may also be eligible for rebates.

A solar system has certainly saved us money and will continue to do so in the future, particularly considering that we had to get a new hot water system anyway.


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  1. says

    you are SO lucky to have the air temps that you do plus the advantage of having no trees directly above our roof. (at least in the winter. in the summer months you’d probably like some.)

    i have nothing but trees and 2.5 month summers. and trees. and cold winters. and trees.

    i could definitely use some more warm around here. (USA)

  2. says

    Thanks again, Melissa! I’m saving this page to refer to in the new year.

    We’re moving from Sydney to Melbourne (back to our own house) and solar hot water has been on the Wish List for a few years now!

    Thanks for all that work putting all these links together – I for one will use them!

  3. waltersdad says

    I didn’t see any mention of heat pumps. They attract credits run on very little, you don’t need extra piping (or reinforcing the roof like some solar units). They can be left to run in the middle of the day when the air temp is highest so you never have to boost them, can run as long as air temp is above 4 degrees, and are about the same price as solar in my experience.

  4. says

    @Fiona, thanks!

    @Waltersdad, no, heatpumps only got a brief ‘mention’ in the conclusion, I could also have written about gas too, but that would have made one very long post! Do you have a heat pump? If so, it would be great to hear about your savings. I stayed in a holiday cabin on a farm one year and it had a heat pump and it was very, very noisy during the night (when everything else was quiet) it was such a shame because we couldn’t sleep (everything else about the place was fantastic). That experience put me off heat pumps, but I am told they are not that noisy normally.

  5. says

    @Mustbethrifty, Solar Hot Water Quotes website (link above in article) suggests that it’s not very cost effective to switch from gas to solar because gas is already quite cheap and cleaner than coal and because you don’t get the same rebates as you do when switching from electric. Check out their website for more info.