Typical Costs

Solar water heating systems typically range from $7,500 to $10,000 before any tax credits or utility incentives are applied. Cost depends on the type and size system, and difficulty of installation. Typically, while slightly more efficient, evacuated tube systems will cost 10 to 15% more than flat plate collector systems.

An average solar water heating system is sized to save around 2,200 kWh/year with an average cost around $10,000 before tax credits.

The following treatment of tax incentives does not constitute tax advice and cannot be used to avoid IRS penalties.

Solar water heating system—saves 2,200 kWh/year


Total installed cost

– $3,000

Federal tax credit (30% of $10,000)

– $4,400

Oregon tax credit ($2.00/kWh, $6,000 cap, split into four years)


Final cost to homeowner (after 4 years)

Important consideration: If you have a conventional tank-based water heater, replacing it with a gas tankless water heater is a more cost-effective investment, but going solar is a more energy-efficient option. Here’s why: Tankless water heaters can be 15 to 30 percent more efficient than conventional tank heaters. By comparison, solar water-heating systems typically provide 50 to 65 percent of a home’s hot water — with no-cost sun fuel but with a higher initial investment.