Solar hot water systems buying guide

Solar hot water is now big business, with dozens of manufacturers and hundreds of retail suppliers all keen to get your custom.
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01 .Introduction

Water drop
  • In addition to the federal government's Renewable Energy Bonus Scheme (REBS), which provides eligible householders with a $1000 rebate for installing solar or heat pump hot water systems, most state governments also offer rebates. These government financial incentives are generous, but they have lot of conditions attached - so be wary of ads implying solar hot water can be nearly free.
  • Heat pump and solar hot water systems are great for the environment and will reduce your energy bills, but they usually take several years to pay for themselves.

Solar hot water is now big business. There are dozens of manufacturers and hundreds of retail suppliers, all keen to get your custom. You can choose from several types of system, each with its pros and its cons. And each supplier thinks their system is the right one for you. So how do you decide?

We asked manufacturers for their recommendations for a typical Sydney house, and also sent a Sydney home owner shadow shopping for a new solar hot water system to see what types of system are around and what deals are offered. The quotes varied considerably in price (from about $4000 to nearly $10,000).

It pays to do some homework first, so you can understand and compare quotes. You should:

  • Understand what types of solar hot water systems are available.
  • Know what financial incentives are applicable.
  • Have an idea of what restrictions might apply to your home, such as the amount of sun your roof gets.
  • Know what questions to ask the supplier when they come to give the quote.

Please note: this information was current as of August 2008 but is still a useful guide to today's market. 


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02.Solar heater and heat pumps explained


Solar heaters

Solar panel

The water is heated in solar collector panels on your roof and stored in a tank. Solar systems come in two main types:

  • Thermosiphon systems have both the collector panels and the storage tank mounted on the roof. The liquid in the panels circulates into the tank via the thermosiphon effect (as water heats up, it becomes lighter and rises into the tank). In warm climates, the panels can heat water directly. However, in frost-prone areas, the water can freeze and damage the panels, so frost-tolerant panels which use a heat-exchange fluid with a freezing point lower than water are used. The panels heat the fluid, which then heats the water in the tank.
  • Pumped or split systems have solar panels on the roof but the tank is located at ground level (or elsewhere in the building). Hot water is pumped from the panels to the tank.

Boosters are needed in solar hot-water systems to keep up the hot water supply when there’s not enough sunlight to do the job. Boosters can be either electric- or gas-powered, and are usually incorporated in the water tank.

Heat pumps

Heat pump

Heat pumps don’t use solar energy directly, but because they are very energy efficient they’re classed with solar systems for rebates and other government incentives. Installation is generally similar to installing an electric hot- water system. Heat pumps draw energy from the surrounding air and convert it to heat in much the same way as an air conditioner or refrigerator.

  • Air is drawn into the unit through an evaporator, where a cold refrigerant absorbs the air’s heat.
  • The refrigerant then flows into a compressor, where it’s converted to a high-pressure, high-temperature gas.
  • The gas passes through a condenser in the water tank, heating up the water. The refrigerant gas cools down and is cycled back to the evaporator.

Heat pumps tend to work best in warmer climates, such as coastal regions, but there are models (such as the Dux Airoheat Subzero) designed to operate in cold climates.

Government incentives and rebates

Your first step is to understand what systems are available. See Solar heater and heat pumps explained for an explanation of the different types. Then check out whether you qualify for Renewable Energy Certificates (RECs) - or the federal government solar rebate. The Office of the Renewable Energy Regulator provides a register of products that are eligible for RECs. This handy calculator will calculate for you how many RECs the product you're considering qualifies for.

Various state governments also offer rebates. Queensland, for example, offers rebates of up to $1000. New South Wales, Western AustraliaHobart, South Australia and Victoria all offer rebates, so make sure you check these websites for details if applicable.


Next, think about the installation. If you opt for solar panels, you’ll need a section of roof with good access to sunlight, preferably facing north for maximum exposure. There are considerations if you opt for a thermosiphon system; the roof must bear the load of the water tank, which can weigh several hundred kilograms and might require reinforcing the roof. And if the roof is difficult to access, the supplier might charge more for installation.

Check with your local council about building regulations. Councils are unlikely to object to you installing solar panels, but there may be restrictions. If you live in a strata building, there will almost certainly be limitations on what system you can install.

For most apartment buildings, it’s difficult to install solar panels for individual units, and most units won’t have suitable outdoor space for a heat pump. However, the owners’ corporation could consider a commercial installation for the entire building. Villas and townhouses have more options, but owner’s corporation approval may still be needed.

Getting a quote for solar hot water

CHOICE's 2008 shadow shop confirmed prices vary a lot between suppliers and models, so it’s worth getting a few quotes before deciding on a system. These two quotes from different retail suppliers for two models of heat pump show why.

  • Dux Airoheat (250 L), total cost $3340. The base price, including installation, was $6160. The supplier offered a discount of $1020 for the RECs (30 RECs at $34 each) and said our home owner would also get the NSW rebate of $800. The final cost included the federal rebate of $1000, which only applies when you’re replacing an electric hot-water system.
  • Siddons Solarstream (327 L), total cost $1875. The base price was $4125, less $1450 for RECs (29 RECs at $50 each). The supplier didn’t include the $1000 federal or $800 state rebate, or installation, but they could recommend suitable plumbers. Installation would probably cost about $1000, which would be offset by the federal rebate if you qualify, bringing the net cost to about $1875.

The second option might turn out cheaper, but you’d need to arrange the installation yourself. The first option includes installation, but note the lower price quoted for RECs ($34 vs $50). It’s worth comparing the value of RECs offered by different suppliers, as RECs discounts will be an approximation; the actual value will be based on the market rate when you buy the hot-water system.

Suppliers usually need about 30 minutes to assess your home. Retail suppliers are often connected with just one or two brands, but most brands have a wide range of products, so suppliers should be able to quote on a range of different types and models.

They should also be familiar with RECs and rebates and how they apply to you, but you need to read up on them too. Our Sydney shadow shopper has a gas hot-water system, which means he doesn’t qualify for the federal rebate (it only applies when you replace an electric system), but one supplier’s representative offered to sign a declaration that the old system was electric so he could get the rebate! We don’t recommend you try to get away with a trick like that.

Questions the supplier should ask you

  •  Your hot water needs — how many people live in the house? How much showering and hot clothes washing do you do each day, and what time of day do you do it? (Typically, one person uses about 50 L of hot water per day.)
  • What sort of hot-water system do you currently have?
  • Is gas connected to the property?

Questions you should ask the supplier

  • Is installation included in the quote?
  • How long will it take from placing an order to complete installation?
  • Is RECs buyback included, and if so, at what price for the RECs? 
  • Will they help you apply for government rebates?
  • Can you keep your existing hot-water heater as part of the new system? It might be possible to incorporate it as a booster for the solar hot-water system. However, you wouldn’t be eligible for RECs, because they only apply to completely new installations.

Our shadow shopper called for quotes from 10 retailers listed in the Yellow Pages and received a range of recommendations and prices similar to those below. Installation costs were usually included, and added from $100 to $1600 to the base price.

The cheapest quote that included installation and RECs discount was for a Dux electric-boosted system (either a 330L thermosiphon or a 315L split system), which came to $3900. The most expensive was for a Dux gas-boosted split system for $9640 (these quotes don’t include federal and state rebates, as our shadow shopper’s current gas water heater disqualified him).

Other quotes were for Rinnai, Conergy, Apricus and Siddons systems (including thermosiphons, split systems and heat pumps) and ranged from $4400 to nearly $7000.

Manufacturer suggestions

We also asked manufacturers to suggest solar and heat-pump systems for a hypothetical Sydney house, occupied by two adults and two children, which has good access to sunlight and a gas connection. Most suggested a range of options; the following prices don’t include installation costs, RECs discounts, or government rebates.

  • Apricus gas-boosted split system with a 20-tube solar collector panel and a 264 L ground-level tank. Base price $4737, eligible for 30 RECs. An alternative would be an electric-boosted system for $3585, eligible for 23 RECs.
  • Conergy suggested several models, from a thermosiphon (with 297 L roof-mounted tank) for $3200, eligible for 36 RECs, to gas and electric-boosted models and a heat pump with 320 L tank for $4835 (23 RECs).
  • Dux 170 L gas-boosted split system, costing $3500 to $4000, eligible for 22 RECs. They suggested a larger tank of 250 L should be considered if space permitted, which may cost more but would be eligible for 40 RECs.
  • Ecosmart heat pump with 259 L tank, costing $4100, eligible for 30 RECs.
  • Quantum Energy heat pump with 270 L tank, costing about $3500, eligible for 27 RECs.
  • Rinnai suggested several models, including a gas-boosted thermosiphon (330 L) for $5050 (40 RECs) and an electric-boosted system for $4245 (32 RECs).
  • Solahart has a range of models, but said its thermosiphon systems remain the most popular for retrofitting to existing homes. Its cheapest suggested thermosiphon is for a ‘non-freeze’ area, has a 300 L electric-boosted tank and costs $3518 (30 RECs). Other models include a gas-boosted thermosiphon designed for poor-water and ‘freeze’ areas; it costs $5982 but is eligible for 42 RECs.

Solar contacts

Manufacturers and distributors

Some manufacturers not only supply hot-water systems, but also offer an installation service, while others offer installation through third-party retailers. Check the websites for details.

Government offices

For state and council rebates, see your state and local government websites.

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