One of the best applications for solar power is generating your household's hot water. Unlike solar electricity, you do not need a huge array of solar panels to generate all the hot water you want. A single thermal flat panel solar collector will suffice. It's cheap too, basically just a box full of black pipes with a piece of glass put over top to trap heat inside -- no expensive silicon.
We had a professional install a solar hot water system when the old gas water heater tank sprung a leak. It cost $3K out-of-pocket for the installation labor and components. A $1K state tax credit and $500 SRP incentive rebate brought out-of-pocket cost down to $1.5K for the system and components. Since a new water heat tank was needed anyway, this really wasn't too terrible. Eventually, this allowed for completely shutting off natural gas service, eliminating a $60 per month on-going expense. The system thus "pays for itself" in less than 3 years!
Cloudy Days - Not a Problem
The first thing that pops into people's minds is, "Well, yeah, but what happens when a stint of cloudy days hit? We're not going to put up with cold showers!" Solar hot water systems these days are designed to use electricity as a backup heating source when solar energy is not available.
The new water heater tank is twice the size of the old gas one. Half way down, there is a traditional electric hot water heating element. All the way down at the bottom of the tank, a coil of copper tubing provides solar powered heat via heat exchange with anti-freeze fluid that is pumped through the coil and the solar hot water collector panel on the roof. When a cloud day hits, the pump is automatically turned off. The bottom half of the water heater tank is thus no longer heated by solar power. The low temperature water now causes the electric heating element to turn on and heat the top half of the tank. Since hot water is drawn from the tank from the top side, plenty of hot water is still available when it's cloudy outside.
On sunny days, the coil of tubing inside the bottom half of the tank heats the entire tank of water up to 160 degrees Fahrenheit. This is much hotter than the temperature the electric heating element is set to (about 130 degrees), thus the electric heating element stays off for the most part on sunny days. Occasionally, if a bunch of people take showers all at once, the top half of the tank might cool down enough that the electric heating element will kick on, but that's good. Never runs out of hot water.