Solar thermal energy is an environmentally-friendly way to provide heat for your home. Solar thermal systems can use either collection tanks that reflect solar energy into water storage tanks that provide hot tap water, or “solar walls” that warm external building surfaces, and circulate air near those surfaces to heat interior rooms.

While these systems are capable of reducing electrical and gas use substantially, many people do not consider them to be viable options for clean household energy because of their cost. The cost of a complete solar thermal system with two panels usually falls between $8,000 and $10,000. This may seem like a steep price, but if you are going to be living in your home for several years, it may be the cheapest long-term heating solution.

Since this system can provide about one-half to two-thirds of a home’s hot water needs that would normally require running the hot water heater, it can save you a substantial amount of money, and eventually offset the initial installation cost. In addition to these savings, however, there are also federal and state tax credits available, which can mitigate the initial amount of money you would spend on the solar thermal system.

The tax credits offered by the federal government for a solar thermal system are equal to 30 percent of the cost of the equipment, up to $2,000. Many states offer tax credits for these systems, which are usually 15 to 25 percent, up to $1,000. This can reduce the cost of your solar thermal installation by as much as one-third the original price. Your state probably has other incentives to use solar thermal power, as well, such as waiving sales tax on equipment, and, in some cases, even offering grants for interested homeowners.

Future innovations in solar thermal usage in the home include using solar power to heat pools and hot tubs during the summer and energy-efficient cooling units that can be powered by thermal energy. These developments will allow solar thermal energy to save you money year-round.