What Should You Buy First? Solar Hot Water or Solar PV?

Solar Hot Water is fast becoming the poor cousin of Solar PV (AKA Solar Electricity). Consumers just seem to prefer solar PV to solar hot water these days. In fact solar hot water has gone from almost zero to 1,000,000 roofs in about 30 years, whereas PV has gone from almost zero to 1,000,000 roofs in less than 6 years. There is now more PV than Solar HW out there! Unbelievable.

It doesn’t help that retailers prefer to sell PV over hot water – for a whole bunch of reasons that I’ll go into in a future blog post.

Here’s a video where I answer the question posed in the title: Should you buy Solar Hot Water or PV first?, But first I answer a much more fundamental question that creates an enormous amount of confusion out there:

And here’t the transcript for the video-phobes amongst you:

Okay so this is a really fundamental question that I get asked. A lot of people out there think the answer is obvious, but there is a lot of confusion about this. The question is:

What is the difference between a solar hot water panel and a solar electricity panel?

They are completely different things okay?

A solar hot water panel often has an integrated tank so it stores the water on the roof with the panel, you can also get them without the tank, where the tank is on ground level.

How do these panels work? It’s really simple, you pump cold water literally through the panel, the sun comes in hits the glass –  hits the water, heats the water –  the hot water gets pumped or is gravity fed to the hot tap. Simple as that.

There are two main types of technology for solar hot water panels. First is the flat plate collector, called… “Flat plate”. The other is a funkier looking technology and I get into all sorts of trouble with so hot water dealers if I say they are more efficient. They are called Evacuated Tube and they’re more expensive, as generally they convert more of the sun’s heat into heat in the water. Hence, why they’re more efficient certainly more efficient at lower temperatures.

So, if you live somewhere chilly like Melbourne or Tasmania, you are probably looking at evacuated tubes wheras if you live somewhere like Brisbane or Northern NSW, evacuated tube is probably a bit over the top.

The second type of solar panel is the type of solar panel that people generally are thinking about when they think about solar – and that’s the solar electricity panel.

You typically put between 6 and 60 of these panels on a roof.  They are much smaller than solar hot water panels and all they do is they take the sunlight in and use a mixture of semi conductors and silicon to convert the sunlight into electricity, so you get sun in and electricity out.

What should you get first?

Another common question when we’re talking about hot water and solar electricity is which type should you get first. The really simple answer to that question, is: it depends how you heat your water at the moment. If you use electricity to heat your water, get solar hot water first and the payback will be between 5 and 6 years and that will probably be a faster payback than solar electricity, which would be between 6 and 10 years.

So get solar hot water first, if you have an electric hot water system at home.

If you have a gas hot water system at home then it’s completely the other way around. Gas heats water really efficiently anyway, so solar hot water will make it more efficient. But the payback if you’re retrofitting solar hot water to an existing gas system will probably be 15 to 20 years whereas if you get a PV system, the payback will be between 6 and 10 years.

So that’s the difference between solar hot water and solar PV and the answer to question which should you get first.


About Finn Peacock

I'm a Chartered Electrical Engineer, Solar and Energy Efficiency nut, dad, and the founder and CEO of SolarQuotes.com.au. I started SolarQuotes in 2009 and the SolarQuotes blog in 2013 with the belief that it’s more important to be truthful and objective than popular. My last "real job" was working for the CSIRO in their renewable energy division. Since 2009, I’ve helped over 700,000 Aussies get quotes for solar from installers I trust. Read my full bio.


  1. Neil Churches says


    I have a reasonably efficient house for a home in Toogoom near Hervey Bay Qld. My setup includes a 2kW PV system, earning $0.44 pkWh, and a Heat Pump for my hot water – although clearly it is connected to and uses mains grid power can you comment on a heat pump’s efficiency compared to a roof-mounted solar HWS?



  2. Back in 2012 a good friend had to replace a an old solar hot water system after storm damage. In early 2013 we both had solar PV systems installed. The replacement solar hot water system was an evacuated tube system sized to meet the demands of a standard four bed home. Fully installed it cost $7000. My PV system is a 4.5kw system with a $0.44 feedin tarif on a very similar standard 4 bed home. Fully installed it cost much the same at $7200. I pay around $200 a year for my hot water which is supplied via an electric storage tank system on off peak.

    After a full year the net income from my PV system was $2200 which includes $1200 of power and $1000 from the excess feed in. My $7200 PV system will be paid off in 3.3 years. If I had invested the same $7000 for a new evacuated solar hot water system it would take 35 years to recoup the cost.

    Obviously the variables will change and the feed in tariffs are not as generous anymore but for me solar PV versus solar hot water was simple choice.


    • Finn Peacock says

      Hi Steve,

      Thanks for sharing your experience! I agree – every day PV becomes more and more economically attractive as a way to heat your hot water, as PV prices continue to drop but solar hot water systems remain stubbornly expensive.

      But $7,000 is a bloody expensive solar hot water system!


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