Before you decide which kind of system you're going to install, it's important to understand the basic terms used to describe them.

Open and Closed Loops

An open loop or direct system is the simplest: the domestic water actually enters the solar collectors and is heated by them before heading back to the storage tank.

A closed loop system keeps the domestic water supply separate from the collectors. Instead, a solar fluid makes the trip between the collectors and the storage tank(s), carrying the sun's power to a heat exchanger. The heat exchanger transfers the energy from the solar fluid to the domestic water supply without the two coming into direct contact.

Active and Passive Systems

Active systems use a pump to push fluids around the pipes. Consequently, they require some kind of external power source to supply electricity, whether grid-based or renewable.

A passive system does not need any pumps. Instead, it uses the natural properties of hot and cold liquids to generate flow through the pipes. Passive systems have relatively very few moving parts, which makes them cheaper to install, easier to maintain and more reliable. However, the lack of constant pressure in the system means they often under-perform and require extra care in the planning phase to optimize efficiency.

One- and Two-Tank Systems

All solar thermal systems have at least one tank, to store the domestic hot water supply. In a one-tank system, the storage tank is as big as possible and has a backup heating element installed. Ideally, the tank should be very large – the same size as both tanks of a two-tank system combined. The heating element normally runs on electricity or natural gas from the grid and ensures a constant supply of hot water when the solar collectors aren't producing enough energy.

The main problem with single-tank solar thermal installations is habitual hot water usage. If a family uses a lot of hot water late in the afternoon or in the evening, the backup heater will kick in overnight to ensure there's enough hot water in the morning. When the sun comes out the following day, a lot of its energy is wasted because the water is already warm. In addition, the power bills mount up from all that extra overnight heating.

One-tank systems work well in regions where the sun is reliable and where homeowners take their habits into account, though most people end up with a two-tank system for the flexibility and reassurance of having a failover.

Two-tank systems are generally a much better choice in most climates. The second tank is a standard, grid-tied electric or gas water heater and is plumbed in series, after the solar thermal tank, to minimize the amount of non-renewable energy used.

In a two-tank system, domestic hot water runs into the solar thermal tank first. If the sun is shining and the solar collectors are operating, the water is heated. The water then passes on to the grid-tied tank. Hopefully, the sun's energy was enough to heat the water to the desired temperature but, if not,