Ask the Energy Expert: Is Solar Hot Water Worth the Investment?

Press release
Mike Reynolds of NHEC
Mike Reynolds of NHEC

Each month, New Hampshire Electric Cooperative (NHEC) offers you the chance to Ask the Energy Expert. Got a question about energy efficiency or renewable energy? Send your question to and get answers from the Co-op Energy Solutions team.

This month’s Energy Expert is Mike Reynolds. Mike is a Program Administrator who oversees NHEC’s Residential Solar programs.

Q: Are solar hot water systems worth the upfront investment?

A: The environmental benefits of solar water heating are obvious – a typical system will prevent 34 tons of CO2 emissions over its 20-year lifetime – but for most people, the decision to invest in solar hot water comes down to money. Generally speaking, a solar hot water system will save you 60% to 70% on your annual water heating bills. Depending upon how much hot water you use, and your fuel costs, this usually amounts to between $200 and $500 per year.

Before you start running the numbers, though, you need to know first if you have a good location. Solar hot water collectors need to receive direct sunshine. This typically means having a mounting location on your site that is unshaded between the hours of 9 AM and 3 PM. Although solar hot water is not as sensitive as solar electric systems to partial shading, you should still carefully consider the sun’s path in the winter and summer as well as shading from trees, chimneys, and other buildings when evaluating your available solar resource. Solar professionals have tools and methods available to quickly determine your site’s solar resource.

A small solar hot water system (50 to 60 gallon storage) is generally sufficient for one to three people. For larger families (four to six), the benefits are greater using a system sized for 80 to 120 gallons of storage. Collector size varies according to system design, but a general rule of thumb is to anticipate between 0.7 and 0.85 square feet of collector for each gallon of storage.

So, once you determine the proper size of your system, it’s time to run the numbers. Estimates will vary by type of system, the manufacturer, the installer, and the size of the system, but a safe cost range for a system that will meet the needs of a household of four is $8,000 to $10,000. Fortunately, there are a number of rebates and tax credits available that will reduce that cost.

As of 2013, the federal government offered a tax credit of 30% of the installed cost of the system, up to $3,750. The State of New Hampshire will pay you $1,500 to install a solar hot water system, further reducing your upfront costs. Finally, members of New Hampshire Electric Cooperative are eligible for a further incentive up to $1,500 through its Co-op Energy Solutions program.

When you add up all the incentives and tax credits, you can get a solar hot water system installed for as little as a $3,500 to $5,000 net investment. Based on a savings of 160 gallons of oil per year at $3.80 per gallon, the system will pay for itself in four to eight years.

Based on those numbers, using the sun’s clean renewable energy to heat water is not only good for the environment; it’s good for your wallet as well.