Solar Hot Water System: Price, Installation Cost & Rebate Info

Updated on
min reading
House with solar hot water system

Wondering if a Solar hot water system could be right for you? In this guide, you'll learn how solar hot water systems work, which ones are best, how must a solar hot water system costs to install, rebate info for saving money and more. Read on to discover more!

What is a solar hot water system?

A solar hot water system is a system of solar panels that captures energy from the sun to heat your water.

Solar hot water systems differ from regular solar PV systems as they only heat water and do not generate electricity.

A solar hot water system can provide 50% to 90% of the renewable energy needed to heat your hot water. Therefore, most solar hot water systems also have an electric or gas booster that will start up on days without enough sunshine so you can always be sure that you will have hot water to supply your property regardless of the weather.

How Do Solar Hot Water Systems Work?

Solar water heaters are typically mounted on your roof and use solar collectors to trap heat from the sunshine.

Water passes through the heated solar collectors and absorbs their heat. The heated water is then transferred to a hot water storage tank for later use in showers, cooking, laundry, etc.

This type of solar hot water system can be adapted for use as a solar pool heater in winter.

Although all solar hot water systems use the same basic principles, the mechanisms can slightly differ. Therefore, it's best to understand the different types of hot water systems available to you.

  • Here's a list of the 4 main types of solar hot water systems:
  • Systems using flat plate collectors
  • Systems using evacuated tubes
  • Systems using heat pump systems
  • Systems using boosted hot water systems

Flat plate collector system:

Flat plate collectors have copper pipes inside a flat panel of dark heat-absorbent glass. Heat gets trapped by the glass which heats the copper pipes inside. Water is passed through the hot pipes and then stored in a tank.

There are two types of flat plate collector systems

  • Roof-mounted: where the tank is attached to your roof alongside the collectors
  • Split-mounted: where the collectors are on the roof but the tank is on the ground.

Evacuated tubes system:

Evacuated tubes are made of copper pipes wrapped in vacuum-sealed glass tubes. This is different from a flat plate system as each tube is individually wrapped in glass. The copper pipes get heated by the sun which heats the water and gets sent back to a tank for storage. This system is the most efficient thanks to the vacuum-sealed tubes. However, they are also the most expensive solar hot water systems.

Solar Heat pump system:

Solar heat pumps use solar energy to power a heat pump that draws heat from the air. The hot air is used to heat your water. These solar hot water systems are mainly used as a supplement to your grid-connected home as they use a small amount of electricity. However, they use less electricity than a traditional hot water system.

Boosted hot water system:

As mentioned before, most solar hot water systems are boosted systems. They have an extra power pack that turns on in inclement weather and regularly checks that your stored water is hot enough. If not, the booster system will kick in and raise the temperature of the water.

Best Solar Hot Water System Australia

The best and most efficient type of solar hot water system is an evacuated tube system. However, this is also the most expensive system.

In general, all of the best solar hot water systems will have a built-in booster.

Here is a list of the most popular solar hot water systems in Australia:

  • Beasley solar hot water
  • Bosch Heatpump
  • Dux Solar Hot Water & Heatpump
  • Ecosmart Solar Hot Water
  • Edson Solar Hot Water & Heat Pump
  • Edwards solar hot water
  • Envirosun Solar Hot Water & Heatpump
  • Quantum heatpump
  • Rheem solar hot water & Heat pump
  • Rinnai flat plate solar hot water
  • Sanden Eco heatpump
  • Solahart Solar Hot Water & Heatpump
  • Stiebel Eltron heatpump

Average Solar Hot Water System Cost in Australia

The average solar hot water system cost in Australia is between $3,000 and $7,000 upfront for a new system including installation.

However, solar hot water system prices vary depending on the type of solar hot water system you choose.

For example, roof-mounted tank systems are typically less expensive than purchasing a split system. Likewise, systems that use an electric booster are usually cheaper than systems that use a gas booster.

To give you an idea of how much each type of hot water system costs, we would like to show you a comparison between the cost of solar hot water systems and traditional hot water systems.

The table below shows the average hot water system cost in Australia for solar hot water systems vs traditional water heaters:

Average Hot Water System Price in Australia
Type of hot water systemAverage min. priceAverage max. price
Solar – Roof Mounted (electric boost)$3600$4800
Solar – Split System (electric boost)$3900$6000+
Solar – Split System (gas boost)$4900$6800+
Heat Pump$3300 (160 L)$4600 (315 L)
Electric – Storage$450 (25 L)$1900 (400 L)
Electric – Instant$660$1400
Gas – Storage$850 (135 L)$1700 (360 L)
Gas – Instant$750$1800


As you can see, the cost of a solar hot water system tends to be 4 to 6 times higher than the price of a traditional hot water system.

However, it’s important to remember that additional costs such as installation, repositioning your hot water system, or switching energy types can increase how much you pay upfront for a new system regardless of its type.

Solar Hot Water Installation Cost

Solar hot water installation costs can range from $2,500 to $6,000. However, the total installation cost depends on many factors.

Here's a list of factors that affect the cost of solar hot water installation:

  • System Size: Dependent on size of home and household
  • Type of Booster: Gas boosters tend to be more expensive than electric boosters
  • Regional Location: Prices differ by state, and colder areas require more efficient & expensive systems
  • Installation type: Split systems usually cost more as they are installed in separate locations
  • Roof Type & Access: High pitched roofs make for more difficult installations

You should always ask for multiple quotes from different installers before deciding on a company as prices can also vary by installer.

How to Install a Solar Hot Water System

If you want to install a solar hot water system at your property, it’s important to find an accredited installer.

Many of the solar hot water rebates are only available if the system is installed by an accredited installer from the Clean Energy Council list. Also, you will want to ensure your solar hot water system is properly installed.

We recommend you get several quotes from different installers. Regardless, of the installer you choose, the process for installing a solar hot water system will be the same on installation day.

Here are the steps to installing a solar hot water system:

  1. Mount the solar collectors on the roof
  2. Install water storage tank and heat exchanger
  3. Install pipes to transfer fluid
  4. Install water transport pipes
  5. Install the controls system
  6. Insulate the entire system

Solar Hot Water System Rebate Options

There are several solar hot water rebates to help reduce the cost of purchasing and installing a new solar hot water system.

These include:

  • Federal government STC rebates
  • State-backed solar rebates

Small-scale Technology Certificates

There are many rebates for solar panels and solar batteries, but there are fewer rebates for solar hot water systems. The STC systems offers both.

The Small-scale Technology Certificate Scheme is a federal incentive to assist residential households with the cost of small-scale (under 100kWh) renewable technologies in an effort to reach the renewable energy target.

Households receive a set number of these certificates (STCs), which are calculated based on the size of the hot water system, the number of years until the STC scheme is phased out, and the solar zone where the hot water system is installed. STCs can then be sold to buyers through an open market at a negotiable price, or through the STC Clearing House at approximately $40 per certificate.

State-backed Solar Hot Water System Rebates

Here's a list of Solar Hot Water System Rebates offered in each state:

  • Queensland: State-backed interest-free loans & $200 from energex for adding their system to an economy tariff.
  • New South Wales: No state-backed solar hot water heater rebates
  • Victoria: Solar Homes Program offers a $1k rebate & Victorian Energy Upgrade Scheme offers up to $700.
  • Western Australia: Solar Hot Water Heater Subsidy Scheme (closed to new applicants)
  • South Australia: REES: Retailer Energy Efficiency Scheme offers up to $2k & Adelaide City Government offers $1k rebate.
  • Tasmania: Tasmanian Energy Efficiency Loan Scheme (closed to new applicants
  • Northern Territory: Smart Energy Grants program

How much can I save on my energy bills with a solar hot water system?

Water heating alone accounts for around 25% of the average Australian household’s energy usage. If your annual energy bill is $1,200, that’s $300 a year just on hot water!

If you live in a warm climate, switching to a solar hot water system could deliver anywhere from 50% to 90% of your water-heating needs from the sun alone thereby reducing the cost of your hot water. Therfore the cost to heat your water would also be cut from 50% - 90%. With a rebate you could save even more.

Another benefit to the solar method is that apart from heating your water, solar panels trap energy like wind turbines and hydroelectric systems, and can be used for electricity as well. Depending on your setup and if you generate more energy than you consume, you could be eligible for a solar feed-in tariff which could save you even more money.

Common Problems With Solar Hot Water Systems

It’s important to keep up with regular maintenance of your solar hot water system, in order for it to run efficiently and remain operational for many years to come. Sometimes, however, issues may arise. You can find a list of the most common problems with solar hot water systems and ways to fix them, here. It’s important to remember that if you’re having problems with your hot water system, it’s best to leave it to be fixed by a professional.

Common problems & solutions for solar hot water systems*
My solar hot water system is not producing hot waterEnsure the panels are correctly positioned to receive the most sunlight, and that they are clean and free from debris. You can also check the thermostat to make sure it’s set correctly, and ensure the sensor wires are connected properly.
My solar hot water system is making weird noisesCheck to be sure there is no sediment debris or deposits in the pump. You can also check the bearing and apply lubricant if necessary. If these don’t fix the issue, you might need to replace the pump.
Fluid is leaking from my hot water systemCheck for any loose connections or broken pipes. Make sure the temperature or pressure valve is working correctly or replace it with a new one. You can also check that there is no broken glass from your collector, and adjust the thermostat to reduce pressure on the system.
My solar hot water heater stopped workingIf your system stops working, it’s probably due to a loose connection. Trace the wire to the loose connection, cut out the defective piece of cable, and reconnect the cables.
My solar panels are having problemsIf your panels are broken, you might need to replace the glass or the entire solar panel. Check to ensure the coating or absorber paint isn’t deteriorating and repaint if necessary. If condensation is collecting on the glass, create a small hole on the bottom of the panel.

*Always contact a certified and experienced solar panel installer for maintenance or repair. To repair your solar hot water system on your own is to do so at your own risk.

Retrofitting solar hot water systems

If your current electric or gas hot water system is still working smoothly and still has a long life left, there are solar hot water retrofit kits available. These kits can turn your home into a gas or electric boosted solar hot water system, utilizing your current hot water system to reduce your electricity or gas consumption and greenhouse gas emissions without the cost or hassle of a completely new system. If you have a biomass heater for your water, these kits may not work for you.

More about Renewable

Need Assistance?

We're Here to Help

At Your Service!

A Selectra Energy Specialist is Available to Help:

1300 560 964 
Standard Rate Number
Monday to Friday: 10am - 7pm

Free Callback