Conventional water heaters use electricity or natural gas power to heat the water in your home for everything from showers to washing clothes and dishes. Every time you use hot water, that's energy and money down the drain.
A solar hot water heater uses the sun's heat and energy to heat your home's water either by actually using the sun's heat or by collecting energy with solar panels to heat your water. The heated water stays in an insulated tank -- much like with a conventional water heater -- until you're ready to use it [source: Energy Savers]. While they cost more to install than traditional water heaters, you could save 50 to 80 percent on your water heating bills.
The drawback to solar water heaters is that it's often tough to use the sun's energy to heat enough water for a typical home. There's a salon that I like to visit when I'm in south Florida that uses a solar water heater, and if you get an appointment too late in the day, chances are they'll have to wash your hair in cold water before your cut. That's not a huge deal in the salon, but when you're getting ready for work in the morning, a cold shower is a bit more of a problem. That's why many home solar water heaters use a backup system – either electric or gas – as a supplement.