Is solar hot water still worth it?

What the Guru says

Hi Solar Guru – is solar hot water still worth it?

So lets be clear about something. The traditional hot water that we see on rooftops uses the heat from the sun to heat the water, which is then stored in a tank.

And this has been around  for decades. it's a fantastic, efficient way to make hot water. However the only thing it does is make hot water.

Today, I actually would not recommend it. I would recommend adding more solar panels, which can be used to run a heat pump, or any other load on your house. It's more efficient, it's more flexible and sets you up to electrify everything.

Is a traditional solar hot water system in Australia still worth it? What are the pros and cons?

Solar hot water was, for many decades, one of the most environmentally friendly ways to make hot water. So why do we not see solar hot water units take over most Australian roofs in the time of climate change and the need for sustainability?
The reason is that even better has taken over the spot – solar PV, meaning making electricity from the sun. Solar PV wins out over solar hot water in the competition for Australian roofs because the renewable energy from PV solar can be used to make hot water via electric tanks and heat pumps. After making hot water, renewable electricity can have many more applications in the home. So it’s the flexibility of solar electricity that makes it the stand-out winner.

Of course, if you have a large roof, solar hot water and solar PV can happily reside next to each other and even complement each other. Therefore traditional solar hot water systems can still be a viable and cost-effective option in Australia, depending on several factors.

Solar hot water tank on roof
Australia has one of the highest rates of solar hot water system installations per capita in the world

When assessing if Solar Hot Water is a good choice in your particular circumstances, please consider these three points:

  • The amount of sunlight your roof gets: Solar hot water systems are most effective on roofs that receive a lot of sunlight all day. If your particular spot, where the Solar Hot Water system is located, does not receive a lot of sun, then the electric booster element will have to work hard, and your saving potential is reduced.
  • How many people live in your home and the overall size of your home: If you have more than 3-4 people living in your home, 2 solar HW collectors might not be enough, and a third one should be added. If you have a large family, you will need a larger system.
  • What do you want to spend?  The cost of a solar hot water system can vary depending on the size and type of system you choose. Systems can start at $2500 when rebates have been deducted as a minimum cost. It is important to factor in the installation cost and get several quotes before deciding.

So here are some pros and cons to consider when evaluating a traditional solar hot water system:


  • Free hot water: If you generate your hot water from a solar hot water system, and the system sits in an excellent sunny position and is appropriately sized, meaning the number of collectors matches the number of people using the system, then you will literally get free hot water for most of the year. Using the sun’s energy to heat the hot water and having a 65% plus energy conversion efficiency in this technology, not much can match a quality solar hot water system to generate hot water sustainably. With its strong sun irradiance, Australia is ideally placed as a country to use Solar Hot Water.
  • Lasting a long time: Solar Hot Water systems such as the Rheem or Solarhart brand are built robustly, and some of them are known to have lasted 15 to 20 years, providing long-term benefits and an excellent return on investment (ROI). Please ensure you have a plumber out every 3 to 5 years for system maintenance, such as replacing the relief valve.
  • Available rebates reduce the costs: Federal Government rebates are available for solar hot water, which helps reduce the initial costs. The rebates come via Small-scale Technology Certificates   (STCs), and the Victorian Government also offers a separate rebate program. In some instances, these rebates can reduce the hardware cost by close to 50%.
Man fixing solar hot water
Australia has an abundance of sunlight throughout its day which makes it ideal for a solar hot water system

What about the Environmental benefits?

Solar Hots Water reduces reliance on coal-fired electricity to make hot water. Hot water generation can take up to 1/3 of some households’ electricity bills because the hot water tap in a home is used literally 24 hours a day. So if there are many solar hot water systems, coal-fired electricity consumption from the grid reduces dramatically.

So if you are reasonably convinced it’s still a promising technology and a great way to make hot water, then maybe you want to read the FAQ on this site about How to buy the best solar hot water system or the FAQ on whether or not solar hot water is worth it or our info on the specific benefits of Solar Hot Water. 

There are also downsides to solar hot water, such as:

  1. They are not cheap: Even with the rebate applied, a solar hot water system is not cheap to purchase, and the installation costs can also be quite a bit more than other hot water solutions, from an off-peak electric tank to a heat pump. While the ROI will be pretty good over the lifetime, if people think of moving in 3-5 years from home, this positive ROI might not be realised.
  2. Free hot water only when the sun shines:  Weather conditions will affect the system’s performance. On rainy days your Solar Hot Water system will rely partly on the electric booster to generate the Hot Water, meaning your cost savings will not be as positive on those days.
  3. You need enough roof space: A thermosyphon solar hot water system comprises rooftop collectors (Usually 2) and a storage tank. Depending on the size of your roof, having the SHW system might constrain the amount of PV panels you can fit, reducing your electricity generation capacity from the sun.
  4. No backup – no hot water on some days: Ensure your SHW system has a backup system installed to cover rainy and cloudy periods. Many people do not know that solar hot water tanks have an electric booster element, which, if the sun does not shine, will guzzle up the electricity, just like a standard electric hot water tank. So make sure you purchase a unit with the booster if you do not want to sit there waiting for the sun to come out and heat the water.  And then there is the question, what happens to a solar hot water system during a blackout? If you want to know – check it out here.

In summary

If you are considering installing a solar hot water system, getting quotes from several different installers is a good idea. This will help you compare prices and services on offer. I would also like you to please ensure the installer is licensed and insured.

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