Solar Hot Water and Solar Panels – What’s Best?

Fast read

Solar hot water (SHW) systems and PV panels both offer sustainable solutions for heating water. Solar hot water is more efficient, converting up to 65% of the sun's energy into hot water, compared to PV panels' 20-22%.

However, PV panels are versatile, converting sunlight into electricity for various household needs. The return on investment (ROI) is generally better with PV panels. Despite this, the solar hot water market remains favoured by homeowners with pre-existing systems due to simpler replacements.

For new homes, most prefer a PV system combined with a heat pump. Consultation with a professional is advised to determine the best solution based on individual circumstances.

Is a solar hot water system better than using solar PV panels?

More questions arise with more people making the jump or at least considering solar as a viable energy option. One of these questions has to do with hot water. We all use hot water every day, making it essential in our life. You can generate hot water sustainably using a solar hot water system and solar panels.

As a result, people get the two technologies mixed up. For example, solar panels lose performance above 25 degrees Celsius when they make electricity, while solar hot water collectors love heat, as it allows them to make more hot water.

However, which is the best way to get hot water- solar hot water or solar panels?

The benefits of solar hot water?

Before comparing the benefits of generating your hot water via solar hot water or solar panels, it is best first to understand the benefits of getting your hot water from a renewable energy source. On average, traditional hot water heating makes up around 25% of a household’s total energy consumption annually. Consequently, this means it greatly contributes to your electricity bills. If you were to get your hot water through solar, this number would drop to 0%, and you would make massive savings.

You will also reduce your carbon emissions by changing to solar hot water. Every time you have a hot shower or use hot water to cook, you produce carbon emissions. By making the change, you can save up to 2.5 tonnes of carbon each year.

solar hot water system


When comparing the efficiency of solar hot water systems to solar PV panels, there’s a notable difference in how effectively they convert solar energy into usable forms. A solar hot water system typically operates at an efficiency range of 60% to 65%. This means that it can convert up to 65% of the sun’s energy that falls into its collection area into hot water. This high efficiency is impressive, especially when considering that a significant portion of the sun’s energy is harnessed and utilized for heating water.

On the other hand, solar PV panels, which generate electricity from sunlight, have seen advancements in efficiency over the years. About 15 years ago, solar PV panels had an efficiency of around 15%. However, with technological advancements and research in the solar industry, the efficiency of solar PV panels has improved. Nowadays, solar PV panels can achieve efficiencies ranging from 20% to 22%.

When we look at the efficiency race between solar hot water systems and solar PV panels, solar hot water emerges as the clear winner by a factor of 3 to 1. This means that for every unit of solar energy that solar hot water systems capture and convert into usable energy (hot water), they are about three times more efficient than solar PV panels at converting solar energy into electricity.

The technology

In technology terms, solar hot water uses solar collectors with copper pipes inside to absorb the sun’s energy to heat the water inside the pipes. This heated water then flows to a storage tank, and cooler water from the tank enters the collection panels or glass tubes in the case of evacuated tube technology. On rainy days, such systems have an electric booster to allow an ongoing hot water supply to the home.

Gaining hot water via solar panels works quite differently. The panels turn the sun’s energy into electricity. This electricity will then be used to run a heat pump or electric hot water tank with a heating element to heat water. The advantage of the PV panel solar system is that the electricity they use can be utilised to make hot water but can still have the same other uses in a household; therefore, it offers more versatility.

Return on investment

Generally, a solar electric system’s return on investment (ROI) is better than a solar hot water. Solar hot water units can cost around $4,000 and above and provide one required product- hot water. On the other hand, an excellent, lasting quality solar PV system for, say, 6.6kW will cost around $6,000 to $8000 and offer much more versatility.

While a solar system has a higher cost, it only needs 2kW of its capacity to heat a similar amount of HW that the solar hot water system produces. Thus, you can use the extra 4.6kW of panels to reduce your energy bill.

heating water with solar panels

The verdict

For this reason, the solar hot water market has shrunk in the past decade by at least 60%, despite the overall consumer drive for more sustainable products increasing. It seems that only the key consumer group still going for solar hot water are the people who already had a system previously that worked well and lasted a long time, and as they already have all the correct plumbing in place, a straight swap out seems to be the easiest solution.

For all others, such as those building a new home, a solar PV system and heat pump with a tank seems to be the preferred option.

While we, here at Your Energy Answers declare a solar PV system and heat pump the winner, ultimately the choice will depend on your household’s specific needs, the size and direction of your roof, the residential location and your available budget.

As so, we recommend that you consult with a professional to determine the best option for your specific situation.

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