Solar hot water systems are used all over the world in huge numbers. However, because natural gas has been relatively inexpensive in the United States, we are way behind. Now, considering global warming, air pollution, increasing demand for natural gas and troubling international politics, solar hot water systems are becoming logical and necessary. The LAAQMD has stated, "Next to car-pooling, solar water heating is the most cost-effective way to reduce air pollution." The installed cost of solar water heaters has increased (and will continue to increase) every single year since 1986 due to increases in material and labor costs. As a simple, mature and highly efficient mass produced technology, it is impossible for a "breakthrough" that will lower the cost. It is only a matter of time before solar water heaters are required, not just desired. The Federal Solar Tax Credit of an unlimited 30% now applies to solar water heaters making NOW the best time to get a system.
There are at least 5 types of solar systems commonly used to heat hot water in Southern California: Integral Collector Storage ("Batch" or ICS for short), Thermosiphon, Active Direct, Active Indirect and Drainback. We are expert at all of them, and do install each for the appropriate application.
However, the "drainback" type system is the most common residential system we recommend for one big reason: it is trouble-free for the homeowner. Thanks to a little extra hardware, "drainback" systems are the only type that can never suffer freeze damage nor overheat. Furthermore, they look excellent (like an 8' x 8' skylight) and have only one moving part: a pump.
A solar water heater usually does not replace your water heater. Normally it is plumbed as a pre-heater, collecting solar heat all day so it can replace the hot water you withdraw from your water heater that night and the following morning. Solar also can act as a pre-heater with some tankless water heaters, which will not even come on if the solar hot water is hot enough! A solar water heating system is usually sized to replace around 70 to 80 percent of your annual hot water needs... much greater than the usual 25% savings from a tankless water heater alone. Together, they will save around 85% compared to a regular water heater.