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Solar Hot Water vs Electric Hot Water

Solar ElectricToday we will do a cost comparison of solar hot water and electric hot water in eastern Ontario. This is the second part of the Should I Install Solar Hot Water? series.


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

On average, 25% of your total household heating costs are for heating water. In eastern Ontario, solar hot water systems can produce an average of 50-60% of your household hot water needs.

The typical solar hot water system (EnerWorks 2 panel system) we have been using in this discussion 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, an electric hot water tank is 95% efficient at converting electricity into heat.

The current combined price of electricity in Ontario is approximately $0.095/kWh. This price is the base $0.055/kWh plus all of the other charges that are billed on a per kWh basis.

Therefore, the 2800 kWh of hot water that the solar system can produce will replace approximately 2950 kWh of electricity per year. At $0.095/kWh that is a grand total of $280.25/year in potential savings over a typical electric hot water tank. If you are reducing your electric bill by $280.25/year, it will take you between 14.27 to 16.1 years to recover the costs ($4000 – $4500) of the solar hot water system and start saving real money.

Of course, that is using current electricity pricing which is extremely low.

So, should I never install solar hot water?

Hell no! I’m all for solar hot water and I’m still a little sad that it doesn’t make economic sense given the current market pricing. Now, if the combined electricity price jumped to $0.15/kWh then we would get the approximately $444/year savings required for a 9 year payback of a $4000 investment. Will the prices get to that level? I’m willing to bet it’s going to happen, just not this year. Probably not next year either.

Electricity costs are going to rise. At the same time, as electricity costs rise and more people start to demand solar hot water system, the initial cost of a solar hot water system will likely drop.

Would you install a solar hot water heater if electricity prices went over $0.15/kWh?

No. Unfortunately (well, fortunately) I don’t heat my water with electricity. I use natural gas. Using natural gas to heat is quite a bit cheaper than electricity and that makes the payback period even longer.

Next we are going to look at solar hot water vs natural gas hot water.

Image Credit – Yellow.Cat

3 thoughts on “Solar Hot Water vs Electric Hot Water”

  1. Thanks Jeff, for sharing the good news on government rebates for Solar Hot Water Systems! Would you like to learn HOW to have the best system in Canada installed in your home for ZERO Cost?
    I am a Solar Hot Water Consultant for Globe Solar. I would love to share more details with you. I can be reached thru my site at
    For technical details check the corporate site at
    Today we launched a new site! Keep your eyes on it over the next few weeks as there will be more info added along with postings of upcoming informational sessions in Toronto that will provide details on how to get a system installed for Zero Cost to you! Come out and learn how to share this info with others and make $$$ to boot!
    Follow me on Twitter @solarmaandpa
    Shine On!

  2. There is no such thing as “zero cost”. “Zero cost” means “pay nothing” which means “free”. Since it doesn’t cost anything to run a solar system then I fail to see how this firm is achieving “zero cost” while still staying in business.

    It reminds me of the guys that ring my door bell and quickly say “don’t worry, I’m not trying to sell you anything” and then get surprised when I close the door as soon as they try to ask for money.

    I’ve actually added a sign on my door now that says that anyone that tries to sell me a service or product at my door must pay a $2 fee. I should have some fun with that!

    1. Yeah, the whole thing sounds a little MLM-like but the guy tried a bunch of times to post the comment so I “helped” it slip though the spam filters. Doesn’t really matter as linking from here won’t really do him much good. ;)

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