Solar water heating: How it works & benefits explained

Solar water heating: How it works & benefits explained

Published 9/29/2023

Have you ever considered how much energy it takes to heat water in your home? You may be surprised to learn that it’s the second-largest energy expense in a typical home, accounting for 14% to 18% of your energy costs1

There are some basic steps you can take to save energy when heating your water. For example, you can insulate your water pipes and choose an energy-efficient traditional water heater. While these examples may result in modest savings, switching to full home solar power is considered the gold standard solution to the high costs of heating water in your home. 

Switching your home from traditional energy to solar energy is a wonderful long-term investment when it comes to decreasing your carbon footprint and insulating your home against the unpredictable rising costs of traditional energy. That said, if you’re not yet ready to make the switch to solar, starting your sustainability journey with a solar water heater may be an alternative. Choosing a solar hot water system offers a sustainable, eco-friendly, and cost-effective approach to water heating that does not require a significant overhaul of your home energy setup.

This guide sheds light on the advantages of a solar hot water heating system and how it works. Armed with this information, you’ll be well prepared to evaluate its fit for your home and make an informed investment choice. Now, let’s delve deeper into the world of solar hot water heaters.

What is a solar water heater?

A solar water heater is a system that captures sunlight to heat water for domestic use. A solar water heater is typically comprised of solar collectors which absorb solar energy, and a system to transfer the heat to the water. 

There are two main types of solar water heaters: passive systems, which rely on natural convection to move heated water, and active systems, which use pumps for circulation. These systems can significantly reduce reliance on conventional energy sources for water heating, making them cost-effective and environmentally friendly.

The components of a solar water heating system

A solar hot water system operates simply, but understanding its components and their functions is key. Simply put, water is heated in the collectors, stored in tanks, and then flows to your tap. If unused, the water returns for reheating, either automatically or through a pump.

These are the components of a solar hot water heating system:

  • Solar collector: This water heater component converts sunlight to heat energy, which is then used to heat the water.

  • Storage tank: This is where the heated water is stored when not in use. 

  • Heat exchanger: This device facilitates heat transfer from the solar-collected fluid (often a specialized heat-transfer fluid) to your home’s water supply without mixing the two fluids.

  • Heat transfer fluid: This is a specialized liquid used to absorb and transfer heat from the sun to the domestic water supply, typically through a heat exchanger.

  • Pump station or system controller: This device uses temperature data to manage the system, ensuring optimal performance. While beneficial, they’re not always necessary and can be optional, depending on the setup.

  • Pump: This component is essential in water heaters with standing tank reservoirs to ensure effective water circulation

Types of solar water heating systems and how they work

Now that you know what the solar water heater system is made of, knowing how it works becomes simpler. The following are the two types of solar-powered water heating systems. Let’s walk through how these systems work2.

  • Passive solar water heater

  • Active solar water heater

Passive water heating systems

Passive solar water heaters use basic principles like gravity and the natural circulation of heated water to manage the water flow in the system. They are simpler in design and have fewer components, making them more reliable and less expensive than active systems. There are two main types of passive systems:

  1. Integral collector-storage (ICS) systems: Also known as “batch systems,” these involve a large, blackened storage tank placed inside a collector box. Water preheats as it moves through the collector and into the tank. When a hot water tap is turned on in the house, preheated water is drawn from the top of the tank, and cold water flows into the bottom to replace it. They’re best suited for areas where temperatures remain above freezing.

  2. Thermosiphon systems: These systems position the water storage tank over or higher than the collector. As the water heats up in the collector, it gets lighter and naturally ascends into the tank. Cooler water from the tank flows into the bottom of the collector, creating a continuous loop. They are more efficient than ICS systems but require careful installation to ensure the tank is positioned above the collector.

Passive systems might not be as efficient as active ones, but their simplicity offers fewer points of failure and longer operational lifespans. For homeowners looking for a low-maintenance and reliable solar water heating solution, passive systems are a worthy consideration.

Active water heating systems 

Active solar water heaters utilize external pumps and control systems to circulate water or heat-transfer fluids through the collectors. This active circulation allows for more flexibility in system design and placement of components. Active systems can be categorized into two primary types:

  1. Direct circulation systems: These pump water directly from storage tanks through the collectors and into the home. They work best in climates where freezing temperatures are infrequent. When a sensor detects that the solar collectors have reached a temperature above that of the storage tank, it activates a pump to circulate the water.

  2. Indirect circulation systems: These employ a heat-transfer fluid (usually a mixture of water and antifreeze) that circulates through the collectors and a heat exchanger. The fluid gathers heat from the collectors and transfers it to the water in the storage tank through the heat exchanger. These systems are more suitable for freezing climates, as the heat-transfer fluid can be chosen for its freeze-resistant properties.

In contrast to passive systems, active solar water heaters provide more precise control over water temperature and circulation, leading to potentially higher efficiencies. However, they involve more moving parts, which might necessitate more maintenance over time. Active systems are an optimal choice for those living in variable climates and seeking greater control over their solar water heating process.

As mentioned earlier, the best long-term investment in renewable energy comes when you transition your entire home energy system to solar and not just a solar water heater. The good news is that it’s easier than ever to go solar. If you partner with an experienced solar provider like Sunrun, you could make the switch to solar for as little as $0 down when you choose a finance option like our monthly solar lease. Even if you opt for a solar water heater, you can still reap the benefits of harnessing the power of the sun. 

Benefits of solar water heaters

Harnessing the sun’s power for heating water is a forward-thinking solution that promises economic and ecological benefits. Here’s a deep dive into the compelling reasons for considering solar water heaters for your property:

Significant savings

Tapping into the sun’s energy is environmentally wise and financially smart. According to the U.S. Department of Energy, you can expect a 50% to 80% reduction in your water heating expenses3 when you install a solar water heater. The exact savings can vary, depending on factors like your geographical location, current heating system, and the frequency of your hot water usage.


Solar water heaters stand out as champions of renewable energy. When you transition to solar products, you actively reduce dependence on fossil fuels, decreasing harmful greenhouse gas emissions. This helps preserve the environment for future generations and positions you as an eco-conscious consumer.

Boosted property value

Investing in a solar water heating system is also an investment in your property’s worth. Homes with solar products are often more attractive to prospective buyers, reflecting a modern, energy-efficient approach. Moreover, studies consistently show homes with solar enhancements achieve higher sale prices than those without4.

Low maintenance

A standout benefit of solar water heaters is their minimal maintenance needs. They are designed without moving parts, which translates to fewer breakdown risks and reduced upkeep costs. This ensures you have a reliable system that serves your needs with little intervention.


Built for the long haul, solar water heaters offer impressive longevity. Most systems can reliably serve a household or business for up to 20 years5 if not more, much longer than conventional gas or electric tank water heaters. This means that once you make the initial investment, you’re set for decades of consistent, energy-efficient water heating.

Tax credit advantages

For homeowners contemplating the switch to solar water heaters, there’s a significant financial incentive in the form of tax credits6. To qualify, solar water heaters must derive at least half of their energy from the sun and be certified by the Solar Rating and Certification Corporation (SRCC) or an equivalent state-endorsed entity. Note that the system can’t serve swimming pools or hot tubs; the heated water must be used within the home.

A significant aspect of this benefit is that the tax credit covers the cost of the solar water heater itself and the expenses incurred during its installation. Additionally, the property benefiting from the solar water heating system doesn’t need to be your primary residence, offering homeowners greater flexibility.

The Residential Clean Energy Tax Credits have been structured to gradually decrease over time. Here’s a quick overview:

  • 30% for systems installed between January 1, 2022, and December 31, 2032

  • 26% for systems installed between January 1, 2033, and December 31, 2033

  • 22% for systems installed after December 31, 2033, up to December 31, 2034

Incentives like these make the transition to solar an eco-friendly and financially savvy choice.

Solar water heating system vs. solar-powered home

Solar water heaters are specialized systems aimed at harnessing the sun’s energy solely for the purpose of heating water. They don’t generate electricity but directly convert sunlight into heat through collectors, using it to raise water temperature for domestic use.

On the other hand, a solar-powered home employs photovoltaic (PV) panels to generate electricity that can power an entire household. While both primarily utilize solar energy, their applications differ: one targets water heating, and the other offers a broader solution for overall household energy needs.

Transitioning to a solar-powered home allows expansion beyond just water heating. With Sunrun, you can equip your home with advanced solar panels that cater to water heating and power other household appliances, ensuring a comprehensive approach to renewable energy and potential savings on energy bills. Interested in learning more? Get a free quote for home solar.


  1. “Water Heating.” n.d. Energy.Gov.

  2. Solar water heaters. (n.d.).

  3. “Estimating the cost and energy efficiency of a solar water heater.” (n.d.). 

  4. Cohen, S. S. (2023, September 6). Your Ultimate Guide To Solar Water Heaters: Are They Worth It? Forbes Home. 

  5. “Save Money and More with ENERGY STAR Qualified Solar Water Heaters.” (n.d.). ENERGY STAR.

  6. “Is there a tax credit for solar water heaters?” (n.d.).

Take control of your energy bills

Avoid unexpected energy bill hikes
Get a cutting-edge solar and battery system
Rely on expert installation from America's #1 provider