Installing a solar-powered swimming pool heater ranges from $2,500-$7,000, but averages $3,000-$4,000. Extremely low operating costs will repay that expense in 1.5-7 years, depending on local fuel prices. Solar pool heating is the most cost-effective use of solar energy for many climates, according to the US Department of Energy, which gives a detailed description of solar pool heaters and selection tips.
Solar-powered home water heaters cost $1,000-$3,500 (including installation) but have extremely low monthly operating costs and can be used in any climate, according to the US Department of Energy.
The cost for a solar heating system can vary widely. A simple do-it-yourself window air heater collector to heat one room can be made for several hundred dollars. Depending on the type, size and configuration, having a contractor install a complex system to heat several rooms or an entire house can be $25,000-$100,000 or more. The most cost-effective solar heating systems usually provide 40-80% of a home's heating needs; it's often impractical to supply 100 percent of the heat needed and most building codes and mortgage lenders require a back-up heating system, according to the US Department of Energy.
To provide electrical power, a small-scale solar energy system producing about 1 kilowatt costs $10,000-$15,000, and provides a fraction of the average home use; a 2 kW system meeting most of the power needs of an energy-efficient home is $16,000-$20,000; and a 5 kW system providing all the energy needs of most conventional homes runs $35,000-$45,000. Prices vary based on building and system configuration, the type of equipment selected and other factors. Generally it costs less to install a system in a new home rather than remodeling an existing one, although it can be practical to install a solar system while replacing the roof.
Completely remodeling a traditional non-energy-efficient home to convert it to all-solar-systems (lights, heat, water and electricity) can run $100,000-$200,000 or more and is rarely done on older houses.

What should be included:

The Department of Energy describes different types of solar systems, with selection tips.
Many solar modules now look similar to roof shingles, blending in with a home's exterior; This Old House gives an overview.
Generally, large solar systems are better suited to warmer climates with a high solar fraction, which is the typical percentage of daylight hours with a cloudless sky. The Southwestern US typically has a solar fraction of 80 percent; in the Northeastern US it's about 50 percent.
Check with your local building department; usually a permit is required to install a solar heating or energy system, even a solar water heater.

Discounts:

As an incentive, the federal Energy Policy Act of 2005 allows homeowners a tax credit of 30 percent or up to $2,000 of the cost of a solar system; often there are also state or local tax credits or rebates.

Shopping for solar panels:

Nextag.com compares prices for do-it-yourself solar pool heater kits.
The Colorado Solar Energy Industries Associations provides a guide for hiring a solar contractor.
Search for solar installers through the American Solar Energy Society or search the member directory of the Solar Energy Industries Association to find contractors, distributers or manufacturers by state.
Get written estimates from at least two companies. Find out how long they've been in business, and what training or certification they have. Ask to see pictures of previous projects; request and contact references.

Article updated February 2007