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Solar hot water systems are often thought to be better for the environment and cheaper to run, but is that really the case? The first concern for many people when considering installing a new system is the purchase cost and initial outlay.

It’s true that a solar hot water system is much more expensive to purchase initially and this can be a real disadvantage for some. Estimate ranges in price from $3000 – $7000 when installed, whereas a heat pump hot water system ranges from $2500 – $4000 fully installed.

The payback times for panels can also vary from 4-10 years, depending on your state and the size of your system, meaning that it can be some time before that large purchase starts to pay itself off.


As well as the high initial cost for installation of solar heating panels, another disadvantage of these systems is the added weight to the roof of your home and the difficulty of the installation process. This may not be suitable for older homes and can add money to the installation process if extra reinforcing of the roof is required.

Likewise, nearby trees and developments near your home can be a problem. Anything that adds shade to your house can limit the amount of sun your panels receive and reduce the amount of solar power your home can generate.

Once you’ve spent your hard-earned dollars on a solar hot water system, you want to make sure you’ll be able to get the most out of it.

If you are able to afford the installation costs and have access to government rebates, over time your solar hot water system can save you substantially on running costs. The Rheem running cost calculator estimates that a solar system can cost $200 less to run in NSW, after taking into consideration off-peak rate reductions that may be available.

The Energy Matters website likewise claims that even an entry level solar system can reduce power bills by up to $800 each year, depending on the size and installation location of the panels. Another clear advantage of solar hot water systems is that, depending on the size of your system, you might be able to earn money by feeding into the grid for credit, or at least receiving an offset for part of your bill.


A substantial advantage of running a solar hot water system is the positive impact it can have on the environment by reducing greenhouse gas emissions from the burning of coal to produce energy. Household heating is one of the largest sources of greenhouse gas emissions in the average home and adding solar heating can significantly reduce that.

While there is no denying that they are more costly to begin with, solar hot water systems are significantly cheaper to run than conventional systems in the long term and some of the purchase costs can typically be offset with government rebates and incentives.