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.

A solar hot water system is expensive to purchase initially, making it a real disadvantage for some. They range 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. This depends on your state and the size of your system. This means that it can be some time before that large purchase starts to pay itself off.


  • The high cost for your initial installation of the solar panels looks daunting. You also have to take into consideration that these systems add weight to the roof of your home.
  • A difficult installation process. This may not be suitable for older homes, adding money to the installation process. You might be required to reinforce your roof.
  • Nearby trees and developments 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.


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


  • An advantage of running a solar hot water system is the positive impact it can have on the environment. This works 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, adding solar heating can significantly reduce that.
  • The Energy Matters website claims that an entry level solar system can reduce power bills by up to $800 each year. This depends on the size and installation location of the panels. A clear advantage of solar hot water systems is that you might be able to earn money by feeding into the grid. Or you could apply to receive an offset for part of your bill.
  • Solar hot water systems do cost more upfront, but are significantly cheaper to run in the long term. If you’re having trouble finding the money, some of the purchase costs can be offset with government rebates and incentives.