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

$10,000

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)

$2,600

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.

Typical Costs

The cost depends on the size of the system, manufacturer, and the ease of installation. For smaller systems under five kilowatts (kW) in size, the average cost before incentives is about $3,600 for each kW of capacity. Larger systems typically cost less per kilowatt.

A 5,000 Watt (5 kW) sized system is fairly typical for many homeowners. For the average Oregon household (which has an electric bill of around $100/month annually), this would account for between 40-50% of the household’s annual energy use.

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

Cost Examples

Grid-tied solar electric system receiving a utility incentive

PGE Customer  – 5,000 Watts

$18,000 Total installed cost*
-$ Energy Trust incentive ($0.64/watt for customer owned system)
$ Amount homeowner pays to contractor
-$ Federal Tax Credit (30% of $13,440)
$ Net cost to homeowner

Pacific Power Customer  – 5,000 Watts

$18,000 Total installed cost*
Energy Trust incentive ($x/watt for customer owned system)
$x Amount homeowner pays to contractor
Federal Tax Credit (30% of $x)
$x Net cost to homeowner

Get an estimate of the cost and benefits of getting solar: If you live in PGE or Pacific Power territory you can using Energy Trust of Oregon’s Solar Calculator to estimate how much it will cost to install a solar electric system for your home and how much electricity you can expect to produce. Additionally, if you live in Washington County you may be able to use Mapdwell Solar System to see how much energy you can save and what it would cost to go solar.

Utility Customers outside Energy Trust of Oregon territory (not served by PGE or Pacific Power) – 5,000 Watts

$18,000 Total installed cost*, Amount homeowner pays to contractor
– $4,800 Federal tax credit (30% of $16,000)
$13,200 Final cost to homeowner

Several electric utilities in Oregon besides Pacific Power and PGE provide incentives or loans for solar electric systems (not shown in this cost example).  Is your utility one of them?

The Database of State Incentives for Renewables and Efficiency (DSIRE) has a comprehensive list of utility incentives across Oregon. (When on the DSIRE site, we recommend using the filter tool and selecting “Solar Technologies” Technology category and “Rebate Program” in the Program Type category.) Once you determine if your utility has an incentive, you’ll want to incorporate that into the second example.

*Solar electric system costs vary and depend on size. The 2017 average installed cost for a five kilowatt grid-tied system was $3.60 per watt.