Your hot water heater is one of your most energy-consuming appliances. The first step in using solar energy, for many people, is installing a solar hot water heater. It will definitely cut your electric bill, and pay for itself in 2 to 4 years. If you are interested in trying solar and want to install a solar hot water heater, the following tips can help you on your way. The panels used for solar hot water are different than the photovoltaic panels used to generate electricity for a home. These are heat transfer panels. This is how they work. Water is piped up to them on the roof.