A solar water heating system uses the sun's energy to heat water. Solar water heaters cost more to purchase, but the operating cost is lower because the sun's energy provides most of the heat. Electricity may be used to operate pumps, and to provide backup heat during long periods of cloudy weather.

A well-designed and properly-sized water heater can reduce water heating costs by 80 to 90 percent. For a family of four or five, the estimated energy use is 50 to 100 kWh per month. Savings may be higher or lower depending on: number, size, and placement of the solar panels; weather conditions; and hot water consumption.