What You Need to Know About Solar Water Heating

Is solar water heating right for my business?

Virtually any business that uses hot water can save with solar water heating. It’s best for businesses or properties that use a substantial amount of hot water—such as those that use water for manufacturing, laundering, dishwashing and sanitization. Additionally, solar water heating systems can be used for heating and cooling buildings, industrial and heat processes, heating swimming pools and more.

How much does solar water heating cost and how much will I save?

Purchasing a solar water heating system is an investment—the cost is usually more up front, but the savings in the long run can be substantial and will offset the cost over its lifetime.

The cost of the system and how much you save depend on several factors including the following:

  • The amount of hot water you use.
  • The type and size of the solar water heating system.
  • Your geographic location and ability to capture the sun.
  • The price of natural gas.

On average, if you install a solar water heater, your cost to heat water is reduced by 50–80 percent and your payback can be as little as a few years. To get a better sense of costs and savings, a local contractor can help you assess your hot water needs, design a system and calculate your rebate, tax credit and return on investment (ROI) as well as help determine financing options.

Are there any incentives available?

Yes. The California Solar Initiative (CSI) Thermal program through PG&E provides incentives up to $800,000* to eligible business and multi-family customers that install a solar water heating system.** The incentive amount is based on the size and performance of the system—how much natural gas (therms) is saved. The more water you heat with the sun, the bigger your rebate. The contractor is usually responsible for determining the incentive amount and submitting the rebate application.

You may also qualify for a 30-percent federal tax credit (minus the rebate amount) for the installed cost of the system. After 2016, the federal tax credit will be reduced to 10-percent. Consult your personal tax advisor to find out more information.

Additionally, there are many ways to help finance the installation of a solar water heating system, including commercial bank and credit union loans, Property Assessed Clean Energy (PACE) and other third-party financing options such as Power Purchase Agreements (PPAs).

*Final rebate amount will be based on the estimated savings as determined by your contractor.
**Must currently heat water with a natural gas water heater or boiler. Customers who heat their water with electricity or propane are not eligible.

What else do I need to consider?

  • Before installing a solar water heater, you can drive down the size and cost of the system by first reducing the overall hot water consumption of your business through energy-efficiency upgrades and measures.
  • You also must ensure your business has adequate roof space exposed to the sun and space for a separate solar storage tank near your existing water heater or boiler.
  • Solar water heating systems are reliable and can last up to 20-25 years. In addition, if installed properly, they require very little maintenance to keep them running smoothly.

How do I find a qualified contractor?

The first step is to use our search tool to find a licensed contractor. PG&E recommends getting at least two to three estimates or bids. There is no obligation and you can compare costs, systems and savings from different contractors. You can verify the contractor has an active A, B, C-10 or C-46 license by checking the Contractors' State License Board (CSLB) website. Also, be sure to ask about experience and check references before making your final selection.


Take the Next Step

  • Learn more about installing solar water heating and how to find a local contractor—all in our free kit.

Residential Solar Water Heating

  • Discover how a hybrid solar water heating system will save you energy and money on the home front, too.
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