How your hot water system affects your solar PV setup

The hot water system you use in your home has a big impact on how you size your solar panels, and on how you position them on your rooftop.

That’s because hot water systems come in gas, electric and solar forms. The system you’ve chosen will impact your demand for electricity, and if you’ve chosen solar hot water, you’ll need to find additional space on your rooftop for solar PV.

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The different technologies

We’ve compared the impacts of 4 different hot water systems on the solar setup for a mid-sized household of 3-4 people.

  • Electric storage (twin-element, running 24 hours) – these systems have a storage tank and use electricity to heat the water
  • Gas instantaneous – these systems are tankless, and use gas to heat water on demand.
  • Solar / Electric – these systems use solar thermal energy to heat water, which is then stored in a tank. An electric booster takes over to keep the water warm when the sun is not shining.
  • Heat Pump – these systems have a storage tank, and run on electricity. They use the same technology as an air conditioner in order to heat water.

<h3>Electricity Use and Ownership Costs</h3>

Electric Storage Gas instantaneous Solar / Electric Heat Pump
System Size 315 Litre 20 Litre 330 Litre / 2 Panel / 3.6kw booster 270 Litre
Upfront Cost $1,540 $1,728 $4,204 $2,970
Annual Energy Cost $1,045 $383 $333 $387
Total Ownership Cost (over 10 years) $11,989 $6,434 $4,451 $5,146
Electricity Use per annum 4,779 kwh 0 kwh 1,525 kwh 1,772 kwh

Source: Money Grows on Trees, Hot Water Systems for Mid-Size Households.

Electric storage is by far the costliest, and least efficient, hot water system. However it’s also the system used by around 50% of Australian households. If you’re using one, it makes sense to firstly replace it with a more efficient system before thinking about solar panels.

Solar sizing

Let’s say you’re starting with an electric storage system and you’re thinking of going with a 5kw solar PV system. You then decide to switch your hot water system to something more efficient. All of a sudden your electricity consumption has dropped, which means you’ve got one of two choices:

  • keep the 5kw system and use the freed up capacity to power other appliances, or store it in a battery to use later; or
  • reduce your solar PV system size to match the drop in your electricity consumption.

If you decide to reduce your solar PV system size, here’s how much you could save in doing so:

Electric Storage Gas instantaneous Solar / Electric Heat Pump
Original Solar PV Size 5kw 5kw 5kw 5kw
New Solar PV Size N/A 2kw 3kw 3kw
System Cost Savings* $0 $3,093 $1,988 $1,988

*Difference between 5kw system and 2kw / 3kw system prices according to Solar Choice average solar PV system prices in February 2017. The “New Solar PV Size” figure assumes an average of 4kwh of electricity production per day, per kw of solar PV capacity.

Using your solar power

With the exception of gas instantaneous, the other three featured hot water systems use electricity and have a storage tank. With a storage tank comes the need to keep the water in it constantly warm.

In the case of electric storage and heat pump hot water, these will need a non-stop supply of electricity to maintain water temperature in the tank. If you’ve got solar PV, that means a portion of the power you produce during the day will always go towards keeping these systems running.

Solar-electric hot water systems are a bit different. During the day, they use heat from the sun to keep water in the tank warm, with little help from the electric booster. That means very little of your solar PV production will be used for water heating, so you should consider using it to power other appliances during the day, or storing it in a battery, instead of sending it back to the grid where feed-in-tariffs are low.

Roof space

If you’ve got solar PV and solar hot water, roof space can become tight. Ideally you want to get maximum output from both, which means installing them on a north-facing aspect, or on a west-facing aspect as a fall back option. The problem is that roof space on homes is getting smaller, as smaller block sizes mean homes have to expand upwards, not outwards.

If roof space is at a premium, you may need to look at high-efficiency solar PV panels, and high efficiency solar hot water collectors, in order to get the most output from a small roof space. This could add several thousand dollars to your overall installation costs. Alternatively, look at heat pump and gas hot water systems, which are cost-effective and do not take up any roof space.

Reviewing your hot water system

You don’t need to wait until you install solar PV, or until your current system dies, to review your hot water system. Changing from electric hot water to any of the other alternatives immediately can slash your electricity use, and any savings can pay back your upfront costs in as little as 3-4 years.

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Aravind Krishnan


  1. Hi,

    My partner and I are contemplating the pur hase of a solar ele ticity generating system. Our decision has been complicated by the breakdown of our solar hot water unit.
    Solarhart have quoted $2300 to fix the hot water system and arou d $4000 to replace it.

    We have been told that we can use solar power panels to heat hot water as well through the use of a Carbontrack device. This appears to be a cost effective solution whereas buying new solar power and solar hot water systems would be too expensive.

    Any thoughts on this decision would be appreciated.


    1. Hi Kieth,

      These days solar PV (‘solar electric’) systems are pretty affordable and arguably less complicated to install than a solar hot water system – which requires plumbing work. For $4,000 you should be able to get a decent 3kW solar system – possibly 4kW.

      Solar PV is more versatile than solar hot water – and yes you can ‘divert’ excess solar electricity into your hot water tank using management systems like CarbonTrack or a hot water diverter.

      Hope this helps.

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