Solar hot water heaters can be a great way to heat water for your home and save some money while doing it.

These heaters can be used in any climate and their only fuel is sunshine.

But, as with some environmentally friendly purchases, you first have to spend a little more money upfront. Thanks to tax incentives, as well as the money you end up saving on fuel, you usually do end up saving money in the long run.

The U.S. Department of Energy’s Energy Efficiency and Renewable Energy  (EERE) reports that the amount of money you save depends on the amount of hot water you use, your location, incentives and the cost of fuel.

On average, the agency reports that a solar water heater can cut your water bills by 50 to 80 percent! An added bonus is that people with these panels are protected from fuel shortages and price hikes (when it comes to heating their water.)

Arlen Dau of Rhode Island installed solar tubes on his house last July. Already, the tubes combined with more insulation and other fixes have reduced his fuel usage by 40 to 50 percent. By next year, he hopes to not really need fuel oil for nine to 10 months.

“I can’t express how great it feels to check the system on a 30 degree day and find we are producing 130 degree water from the sun,“ says Dau.

Dau received state and federal tax incentives for installing the tubes, as well as a tax rebate. These covered about half the cost of the tubes.

The incentives for people installing solar panels or tubes will be even higher this year since incentive limit was lifted. To find out which incentives you qualify for, check out the Database for State Incentives for Renewables and Efficiency’s chart.

Don’t worry if you don’t live in the warmest area. If your home has unshaded areas or faces south, it can be a good candidate for a solar water heating system.

“If you have a house with a clear shot of the sun, this is one of the best value/cost home improvements you can make,” adds Dau. “Beyond the cost recovery, this system’s savings will be with us for many years – long after we have forgotten the initial cost. And, should we ever sell this home, I feel it is easily worth another $10,000 in home value.”

If you want to estimate how much a solar water heating system can save you each year, the EERE has a system to help you determine the possible savings.