Solar Hot Water Heating
Using the sun to heat hot water is a simple technology that has been around for decades. Solar hot water heating uses panels that gather direct sunlight energy from the sun to heat water or fluid for use in space heating (radiant heating systems), space cooling, or hot water needs. This technology is mainly used in residential and commercial settings. Feasibility and cost-benefits of a solar water heating will vary based on a number of variables, such as the climate where the system is sited, the orientation of roof tops to the sun, and how many people with be using the hot water. But since they use a renewable, non-polluting energy resource, they have immediate environmental benefits.
Solar water heaters are much less common than they were during the 1970s and early 1980s when they were supported by tax credits, but the units available today tend to be considerably less expensive and more reliable. Plus, incentives in the sun-belt and in other regions of the U.S. such as Oregon, Illinois and California are making a comeback. The initial cost of a solar water heater is still much higher than other competing technologies, but if you can make the upfront investment (which is easier with tax breaks and rebates), it can save 50–75% of your water heating energy over the long term. Areas that receive sun consistently for 3 or more seasons will not only save more energy, but consumers are likely to have more products to choose from at lower costs. Make sure you find a qualified installer who can properly design and size the back-up water heating system.
Solar Water Heater Basics
Solar water heaters are made up of collectors, storage tanks, and, depending on the system, electric pumps.
There are two main types of collectors for residential and commercial applications: flatplate and evacuated-tube. A flatplate collector, the most common type, is an insulated, weather-proofed box containing a dark absorber plate under one or more transparent or translucent covers.
Evacuated-tube collectors are made up of rows of parallel, transparent glass tubes. Each tube consists of a glass outer tube and an inner tube, or absorber, covered with a selective coating that absorbs solar energy well but inhibits radiative heat loss. The air is withdrawn ("evacuated") from the space between the tubes to form a vacuum, which eliminates conductive and convective heat loss.
Most commercially available solar water heaters require a well-insulated storage tank. Many systems use converted electric water heater tanks or plumb the solar storage tank in series with the conventional water heater. In this arrangement, the solar water heater preheats water before it enters the conventional water heater.
Some solar water heaters use pumps to recirculate warm water from storage tanks through collectors and exposed piping. This is generally to protect the pipes from freezing when outside temperatures drop to freezing or below.
Today’s solar water-heating systems are well proven and reliable when correctly matched to climate and load. The current market consists of a relatively small number of manufacturers and installers that provide reliable equipment and quality system design. A quality assurance and performance-rating program for solar water-heating systems, instituted by a voluntary association of the solar industry and various consumer groups, makes it easier to select reliable equipment with confidence. Building owners should investigate installing solar hot water-heating systems to reduce energy use. Before sizing a solar system, water-use reduction strategies should be put into practice.
Benefits of Solar Water Heaters
The American Council for an Energy-Efficient Economy has developed an online version of their Consumer Guide to Home Energy Savings on the topic of water heating that compares water heater types shown in the table below.
Source: http://www.aceee.org/consumerguide/WH_LCC_1107.pdf
Many home builders choose electric water heaters because they are easy to install and relatively inexpensive to purchase. However, research shows that an average household with an electric water heater spends about 25% of its home energy costs on heating water. In warm climates, solar water heaters offered the largest potential savings, with solar water-heater owners saving as much as 50% to 85% annually on their utility bills over the cost of electric water heating.
Analysis completed by the Florida Solar Energy Center illustrates that the initial installed cost of the solar water heater ($1,500 to $3,000) is higher than that of a gas water heater ($350 to $450) or an electric water heater ($150 to $350). The costs vary from region to region, so check locally for costs in your area. Depending on the price of fuel sources, the solar water heater can be more economical over the lifetime of the system than heating water with electricity, fuel oil, propane, or even natural gas because the fuel (sunshine) is free. (Source: http://www.nrel.gov/docs/legosti/fy96/17459.pdf)
Paybacks vary widely, but you can expect a simple payback of 4 to 8 years on a well-designed and properly installed solar water heater. (Simple payback is the length of time required to recover your investment through reduced or avoided energy costs.) You can expect shorter paybacks in areas with higher energy costs. After the payback period, you accrue the savings over the life of the system, which ranges from 15 to 40 years, depending on the system and how well it is maintained.
You can determine the simple payback of a solar water heater by first determining the net cost of the system. Net costs include the total installed cost less any tax incentives or utility rebates. (See the box for more information.) After you calculate the net cost of the system, calculate the annual fuel savings and divide the net investment by this number to determine the simple payback.
If you are building a new home or refinancing your present home to do a major renovation, the economics are even more attractive. The cost of including the price of a solar water heater in a new 30-year mortgage is usually between $13 and $20 per month. The portion of the federal income tax deduction for mortgage interest attributable to the solar system reduces that amount by about $3 to $5 per month. If your fuel savings are more than $15 per month, the investment in the solar water heater is profitable immediately. 
Just as in solar thermal heating systems, solar water heating systems can be either active or passive; again, the distinction is that passive systems do not make use of the additional devices (fans, pumps) that active systems utilize.
There are two types of active solar water heating systems—direct and indirect circulation systems. Direct circulation systems pump water through the solar collectors and into the home, and work well in relatively mild climates. Indirect circulation systems circulate non-freezing, heat-transfer fluid through the collectors and a heat exchanger. This heats the water that flows into the home, making them useful in regions that often freeze.
Passive solar water heating systems are generally less expensive than active solar water heating systems, but sacrifice efficiency. Passive systems can, however, be more reliable than active solar water heating systems, and often last longer.
The two types of passive solar water heating systems are integral collector-storage passive systems and thermosyphon systems. Integral collector-storage passive systems work best in regions that rarely freeze. They are also of great use to households with significant daytime and evening hot-water needs. In thermosyphon systems, water flows through the system when warm water rises as cool water sinks. The collector must be installed below the storage tank so that the warm water will rise into the tank. Due to the size and weight of the storage tank in thermosyphon systems, they tend to be more expensive than integral collector-storage passive systems.
The Department of Energy’s Office of Energy Efficiency and Renewable Energy has developed a helpful Consumer’s Guide titled "Heat Your Water with the Sun" that is an excellent primer on residential hot water heating systems.