How Much Do Solar Water Heaters Cost In The U.S.?

Whether you’re thinking of heating your pool or replacing your geyser, you’ve probably wondered about the cost of a solar water heater.

These water heaters help reduce your carbon footprint by reducing your monthly electricity bill. In fact, you can find yourself reaping monthly savings of 50% to 80%

However, like everything in this world, these systems come at a price. 

So what can you expect to pay for one of these heaters? What factors influence their cost? And how much is installation?

This article answers those questions and more.

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What Factors Affect Solar Water Heater Cost?

Tanked solar water heaters come in different sizes and installations
Tanked solar water heaters come in different sizes and installations
Source: Shutterstock

Pinpointing the exact cost of a solar water heater is tricky as there’s no definitive answer. However, you’re looking at between $800 and $2,800, depending on the following factors:

  • Number of solar panels being installed and their size;
  • Water storage tank size;
  • Possible additional plumbing requirements;
  • Switches and hardware required to install the system;
  • Labor cost;
  • Required permits and their cost; and
  • Cost to remove the old system.

Consider all these factors while determining the type of system you’d like to install. Additionally, don’t underestimate how much some of these variables will cost.

Furthermore, be wary of going the DIY route. Many homeowners believe they can do this instead of hiring professional labor. There can be unforeseen complications with switches, hardware, and plumbing, so it’s best to leave this job to the professionals.


How Does Size Effect Solar Water Heater Cost?

A simple system will be more affordable, while a more extensive one will require significant investment. 

Ultimately, your system’s size will depend on your water demand and the solar water heater’s energy efficiency.

Determining The Energy Efficiency Of A Solar Water Heater

You will need to use the solar energy factor (SEF) and a solar fraction (SF) to determine your solar water heater’s efficiency level. 

  • Solar Energy Factor (SEF): the energy delivered by a system divided by its electrical input. The higher the factor, the more efficient the system will be. Common factors are between 2 and 3.
  • Solar Fraction (SF): the total conventional hot water heating load (delivered energy and tank standby losses). The higher the solar fraction, the more significant the solar contribution. Solar fraction varies from 0 to 1.0.

Please note: keep these two variables in mind. You’ll learn how to use them to determine the cost of your solar water heater in the sections to come.

The Size Of Your Home

One of the primary factors you need to account for is the size of your home.

In general conversation, we often measure a house by how many rooms it has. However, it’s best to use the number of occupants or square feet when calculating your water requirements.

The amount of hot water you consume depends on your family’s water usage habits. Do you tend to take more baths or longer showers? If so, you’ll need a more extensive solar water heater system.

For reference purposes, in 2022, the average American home is 6,150 square feet and has a family of three living in it

If we continue to work with averages, this household will use 64.3 gallons daily. That’s equivalent to 12.03 kWh per day.

Use our solar calculator to size your home’s system.


How Much Do Solar Water Heaters Cost?

Determining the cost of a solar water heater is a matter of market research. It depends on location, state-offered rebates, and required efficiency levels. Additionally, it depends on the size of your home.

A person uses an average of 101.5 gallons of water per day, of which 22.5 gallons is hot water. Using this, you can quickly gauge your ideal tank size. 

As always, round the number up; nobody wants to run out of hot water during a shower.


Solar Water Heater Costs/Gallon

Tank SizePersonsTank OnlyTank With Heat Exchange
50 Gallon1 person$800 – $1,500$1,200 – $2,300
80 Gallon2 persons$1,000 – $1,600$1,400 – $2,700
120 Gallon5 persons$1200 – $2100$1,750 – $2,800
A table showing the different costs for different solar water heater sizes

All prices are based on this source from homeguide.com. However, for more accurate estimates, finding a local installer or hardware store would be best.


Calculation (Cost Per Person)

Time to delve into the nitty-gritty. We’ve already discussed the factors influencing the cost of a solar water heater. But how do you go out the calculations?

It’s pretty simple to devise a calculation that can be adapted to all family sizes. To do this, we’ll calculate the average cost per gallon of a solar water heater. We can then calculate how many gallons of hot water your home uses and the price.

We know that the average person uses 22.5 gallons of hot water daily. So for the average household of three, that’s 67.5 gallons.

We can use the above table to calculate that the average solar water heater costs $47 per gallon. However, the cost per gallon is heavily influenced by the tank size. For example, a 120-gallon tank is cheaper per gallon than a 50-gallon tank.

For a Family of Three

Cost Per Person = (persons) x (gallons per person) x (cost per gallon of 80 gallon tank)
(3) x (22.5) x (23.13)
= $3,172.50

For a Family of Five

Cost Per Person = (persons) x (gallons per person) x (cost per gallon of 120 gallon tank)
(5) x (22.5) x (16.66)
= $1,874.25

For a Single Person

Cost Per Person = (persons) x (gallons per person) x (cost per gallon of 50 gallon tank)
(1) x (22.5) x (31)
= $697.50

Something interesting to note is that a solar water heater for a family for three is the most expensive option. This is because the price includes installation fees which are the same for a larger 120-gallon tank.


How Much Do Solar Water Heaters Cost To Install?

Hiring a professional to install your solar water heater system is best.
Hiring a professional to install your solar water heater system is best.
Source: cat.org.uk

The average installation cost is $100/ft2 ($1000/m2). However, collector type, system configuration, and the local market can influence this price.
As such, installers charge between $50/ft2 and $424/ft2.

The average-sized home we’ve been working with would have two solar collectors for an area between 64 and 80 square feet. That’s $800 on top of the solar water heater cost of $2,100.

Related Reading: Solar Thermal Vs. Photovoltaic


How Much Can Solar Water Heaters Save You?

How much money you save depends on the following:

  • Household size and water usage;
  • Collector type and system performance;
  • Geographic Location;
  • Rebates, incentives, and tax credits; and
  • Conventional fuel prices.

According to the Department of Energy, you should save between 50% to 80% on your water heating costs. 

Let’s use our 3-person household example to carry out our calculations.


Calculate The Conventional Annual Operating Cost

To determine how much a solar water heater can save you annually, you’ll need to establish the cost of a conventional water heater. 

There are two ways to go about this: 

  • You can refer to your electrical bill to see your current spending. 
  • Alternatively, if you’re building a new home, use the calculations in this section. 

Daily Water Heating Energy

You’ll need to know your conventional water heater’s efficiency before you continue. 

The efficiency is the Uniform Energy Factor (UEF). This is the amount of hot water produced per unit of energy consumed. The higher the UEF, the more efficient your water heater is. 

For electrical water heaters, the UEF is always 1.0 as all the energy is used and transferred into the water.

Now you can calculate how much energy you use daily to heat your water.

Daily water heating energy = (gallons of hot water per day) x (8.35 lols/gallon) x (1 but/lbs/F) x (Hot water temp – cold water temp)

In our examples, we’ll use a hot water temperature of 135ºF and a cold water temperature of 58ºF. These are the same temperatures that the DOE uses in their testings.

Daily water heating energy = (64.3) x (8.35 lols/gallon) x (1 but/lbs/F) x (135ºF – 58ºF)
= 0.413 therms/day

To convert therms to kWh, you multiply the unit by 29.3001. Therefore, 0.413 therms equal 12.1 kWh per day of electricity. Thus, for a family of three, you’ll need a solar system that can produce 12.1 kWh daily.

Annual Cost of Electrical Auxiliary Tank

Next, you need to calculate the cost of energy that the tank consumes. This is simple— all you’re doing is multiplying the electricity cost by the daily kilowatts used.

In 2022, the average electricity price was $0.144/kWh. Using this, we can calculate:

Annual water heating cost = (365 days/year) x Daily Water Heating Energy / (1.0) x $0.144
Annual water heating cost = $635.97


Comparing Costs And Determining Payback For A Solar Water Heating System

Finally, you must calculate how many kWh you will save and if the solar water heater is worth the cost. Use the UEF and the solar energy factor (SEF) to calculate the annual solar energy savings. Typical values for the SEF fall between 2 and 3; thus, we’ll use 2.5 in our calculation.

Annual Solar Energy Savings = (12.03kWh/day) x 365 ((1/1.0) – (1/2.5))


So for a solar system with a 2.5 SEF and 1.0 UEF:

Annual Solar Energy Savings = (12.03kWh/day) x 365 ((1/1.0) – (1/2.5)) = 2635 kWh/year

Annual Solar Costs Savings: 2634 kWh x $0.144 = $379.29 saved.


Payback Period

Lastly, and this is mostly for additional information, you can calculate how long the payback period will be. To do this, use the following calculation:

Payback period (years) = (initial cost $)/(Annual cost savings $/year)


When compared to our example:

Payback period (years) = (tank cost + installation cost)/(Annual cost savings/year)
= (2,100 + 800)/(379.29)


Payback period = 7.6 years


Are There Rebates Available For Solar Water Heaters?

Solar water heaters can be installed on the slope of your roof or propped up by a stand
Solar water heaters can be installed on the slope of your roof or propped up by a stand.
Source: Treehugger

Many U.S. states offer tax credits, rebates, and incentives that can reduce the cost of your solar water heater. However, legislation is about to change, so now is the best time to make a purchase.

If you purchase your solar water heater before 2023, you’re eligible for a 26% Renewable Energy Tax Credit; however, if you install your system in 2023 or after, the tax credit percentage falls to 22%.

In addition, various states offer additional tax credits and rebates of $1,000 to $5,000. However, your solar water heater must meet the following requirements:

  • Certified by the Solar Rating and Certification Corporation (SRCC)
  • Installed in the homeowner’s residence, not an income-generating property
  • Used for water in the home, not in a swimming pool or hot tub

To find tax incentives and rebates in your state, visit energystar.gov or the Database of State Incentives for Renewables & Efficiency.


Final Thoughts

We know that towards the end of the article, things became a little complicated, but we hope you were able to follow along. 

As a final reminder, the tax rebate percentage will fall to 22% by the end of the year. So, if you’re planning on installing a solar water heater, now is the time.

What are your thoughts on the rebate percentage falling? Will you be installing a solar water heater regardless of the cost? Let us know in the comments section below or join the conversation on Twitter.

Dylan Crosbie

Dylan Crosbie

Dylan is a qualified Architectural Technician who's combined his passion for sustainable architecture with journalism. He believes that it's possible for everyone to work towards a sustainable future, even if it’s one small step at a time. This interest has led him to the Climatebiz team where he continues to strive for a greener future for all.

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