Solar Hot Water vs Natural Gas Hot Water

Natural Gas FlameToday we will do a cost comparison of solar hot water and natural gas hot water. This is the third part of the Should I Install Solar Hot Water? series. Yesterday we looked at Solar Hot Water vs Electric Hot Water.


Currently in eastern Ontario, you can have a solar hot water system installed for about $4000-$4500 after all of the rebates and incentives. While this is a huge discount from the roughly $9000 regular cost, does a solar hot water system actually make sense financially?

The Numbers

The typical solar hot water system (EnerWorks 2 panel system) we have been using in this series can produce about 2800 kWh/year of hot water here in eastern Ontario. This of course is when it’s installed in an ideal location/orientation.

According to the ACEEE, a high efficiency natural gas water tank is 65% efficient at converting natural gas into heat.

The current combined price of natural gas in Ontario is approximately $0.3022/m3. That’s $0.2354/m3 for the gas with a price adjustment of -$0.0616/m3 plus delivery of $0.1285/m3.

Now, price per cubic meter is fine and dandy but we need to convert to kWh to make this easier. A quick Google search tells me that 1 m3 of natural gas is roughly equivalent 10.5 kWh (it varies but we need a number to work with).

This is a little more difficult than the electric hot water example so I’ll show the steps so I don’t screw anything up and so you can check my math. :)

Our example 65% efficient natural gas hot water heater needs to consume 4300 kWh to produce the equivalent 2800 kWh/year that the solar hot water system can produce.

2800 kWh / 0.65 = 4300 kWh

4300 kWh is approximately 410m3

4300 kWh / 10.5 kWh per m


  = 410m


And 410 m3 costs about $124 at current market prices in eastern Ontario.

410 m


 * $0.3022/m


 = $124

Therefore, if you are reducing your natural gas bill by $124/year, it will take you between 32.24 to 36.29 years to recover the costs ($4000 – $4500) of the solar hot water system and start saving real money.

Over 30 years to recover the initial investment? The lifespan of a solar hot water system is only “over 20 years” which means you could easily still be paying for the thing after it’s been replaced.

Of course, that is using current natural gas pricing which is extremely low. It dropped more than $0.10/m3 as of April 1, 2009 and the summer prices are usually much lower.

When would it make sense to install solar hot water with a natural gas system?

Using the examples above, the combined natural gas price would have to reach almost $1.00/m3 before a solar hot water system could pay for itself in 9 years. $0.50/m3 is definitely a possibility in the near future (if I remember correctly, last winter was just shy of $0.40/m3) so the payback period starts to get closer to what it currently is with electric hot water heating.

Now, for my particular house, I’ll don’t think I’ll ever install a solar hot water system for domestic hot water. We have a Polaris high efficiency gas hot water tank that we use for both our domestic hot water and for heating the house. That puppy is 95% efficient. At today’s natural gas prices, it would take about 50 years to recover the initial investment in a solar hot water system.

In a future post, I’ll explore the difficulty of designing a solar hot water system to augment a combined natural gas heating system like we have.

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3 thoughts on “Solar Hot Water vs Natural Gas Hot Water

  1. Jeff Tilton

    Nice series. Natural gas is still the cheapest way to heat your home/water in this region. There might be some reasonable alternatives for new construction though… like ground source heat pumps. However, you can’t beat the $/joule of gas….at least not yet!

    I wonder where the 5% energy loss on the electric heater is … resistive heat is normally 100%. I presume they may be including heat loss to the air around the tank — this is not really lost since it displaces space heating in most months. I suppose it could also be heat loss into the cold water supply. HWT’s in this region are Open-Loop systems and as the water heats up is expands back into the supply lines. I would think that this would be less than 5% though…..

    1. Jeff Ivany Post author

      I never really put much thought into how cheap natural gas is until I started running these numbers. As long as you live somewhere that has natural gas available then it’s your best choice.

      I’m not sure why the ACEEE says the electric tank is only 95%. That seemed very low to me. It’s the only “semi-official” site I could find at the time that had efficiency ratings for both electric and natural gas. Most of the energy calculators you can find online use at least 98% if not 100%.

  2. Keith Hanlan

    If you need to do the conversions from oil, it’s interesting to note that the energy in 1 litre of heating oil is almost exactly the same as that in a cubic meter of natural gas. It’s a complete coincidence of course but it makes it easy to the gas/oil comparisons because you need only concern yourself with the unit prices. Currently, heating oil prices in Ottawa are close to $0.90 – triple that of natural gas. About 8 years ago, it was only about double.


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