Solar hot water systems: What are they and how can they save you money?
Water heating is a fairly large cost on most household energy bills, accounting for up to 30% on average. While we’ve previously written some tips to cut down on the cost of hot water, installing a solar hot water system could dramatically decrease the amount you spend on home energy.
Whether you’re a supporter of renewable energy or not, everybody likes to save money on household costs and bills. A solar hot water system, as the name suggests, allows you to draw power from the sun that is then used to heat your water. Sounds simple, right?
Not only does this cut back on the amount of energy your household needs from the grid, saving you money on your energy bill, it also reduces your carbon footprint by minimising the emissions of your home.
You don’t have to cut out traditional energy altogether, either. A gas or electric-boosted solar hot water system allows you to make use of energy from the grid to keep your water heated if there is ever an issue with the solar. This way, you can guarantee your water will be hot with a grid backup to cover any issues your solar may encounter.
What is a solar hot water system?
Solar hot water systems harness energy from the sun to heat water for your home. By utilising solar power to heat your water, your energy expenditure is reduced and money is saved on your energy bill, although there will of course be an upfront cost in getting a system installed.
With an electricity or gas backup, your system is kept effective with energy from the grid to ensure you’re not left without hot water during periods of low sunlight. You will likely see the lowest cost on your energy bills in summer, when sunlight is abundant, while cold and cloudy days will require more energy from the grid to help heat your water.
A solar hot water system requires the installation of panels on your roof, and you can choose whether you want solar panels to power your home or just your water heating. A battery is also installed to store solar energy absorbed during the day so that it can be used to heat your water at any time in accordance with your energy tariff.
How does a solar hot water system cut costs?
By utilising the sun’s energy rather than the traditional water heating methods of electricity or gas, a solar hot water system is able to rely on energy that isn’t from the grid, thus reducing your energy usage.
You will still need to pay operating costs for the backup energy your solar hot water system relies on, but your energy bills will be significantly reduced.
While you will likely be saving money on your energy bills consistently over time, you will have to pay upfront costs for the installation of the system, and therefore should therefore think of a solar hot water system as more of a long-term investment.
After installing your solar hot water system, sign up with a compatible energy provider or enquire whether your current supplier can support your new system. Once everything is up and running, you’ll be ready to switch out your grid usage for solar.
How much money can a solar hot water system save each year?
Your water heating costs are dependent on the type of energy tariff you’re on. Continuous water heating systems, which heat your water at any time of day, will cost more than off-peak water heaters. A solar hot water system is also dependent on your energy tariff, meaning you can choose whether your water will be heated instantly or overnight using solar and whichever energy backup you decide on.
According to 2017 data from Harvest Hot Water, the average running costs of a 250L-315L electric storage water tank stand around $970 per year on average, while an off-peak system of the same size and technology costs roughly $460 per year to run. A five or six star gas storage system costs around $570 per year to run.
Switching to a solar hot water system brings your yearly running costs down substantially, with an electric-boost system costing around $150 per year to run and a gas-boost system costing just $120 yearly on average.
Savings of that size will obviously stack up pretty quickly, and your solar hot water system will essentially pay for itself in the long run. If you can afford the upfront cost of installing a hot water system, you could see the financial benefits for many years to come.
How much does a solar hot water system cost?
While a new electric or gas hot water system may cost roughly $1,500 to purchase and install, a solar hot water system will typically cost between $4,750 and $5,000 to purchase and install.
This is quite a large upfront cost, but thankfully there are government initiatives and rebates available to help cover some of that purchase price.
As the purchase and installation price of a solar hot water system is generally a few thousand dollars more expensive than a traditional water heater, it may take 5-10 years before you start seeing real savings. While your energy bill will be cheaper instantly, you will need to pay off your system before your reduced energy costs mean more money in your pocket.
Looking for a new energy plan? Head over to our energy hub to compare providers in your area, or use our handy comparison tool below.