The California Public Utilities Commission has approved a $350 million dollar program that will encourage state residents to install solar thermal water heaters.

Homeowners will get up to $1,500 in rebates for swapping out their existing heaters for solar ones. Like the credits for installing photovoltaic systems, the rebates will diminsh over time so start early. Commercial buildings and multifamily dwellings will also qualify for benefits.

Solar thermal hot water heaters were big business in California in the 1920s and 1930s, particularly in Santa Monica, Berkeley, and Los Angeles. The spread of natural gas connections, however, drove solar hot water to the margins. Forget conspiracy theories: gas was cheap and is inherently more reliable.

Currently, only around 1,000 solar hot water systems get installed in California a year, according to Ed Murray, CEO of Aztec Solar. 

Approximately 75 percent of the homes in the U.S. could take advantage of solar technology, said Jane Davidson, a professor at the University of Minnesota and the director of the Solar Energy Laboratory. But, oops, there's the price. Solar thermal systems in the U.S. cost about $150 a square foot, she said. Without subsides, they are only currently economical in parts of the Southwestern U.S., Alaska and Hawaii. (In all, a residential system might run you $7,000.)

"In most of the U.S. it is less expensive to use natural gas or electric," she told us last year. Solar thermal heaters are currently far more popular in China, Israel, Greece and other warm weather/energy short countries.

The rebates could also help goose home photovoltaic systems. Why? Some companies such as SunDrum have devised water-filled heat sinks for PV systems. The heat sinks effectively allow PV panels to produce more electricity on hot days by getting rid of ambient heat. The hot water, however, can then be piped through a household water system to provide hot water. It's the solar two-fer, but right now California consumers only get a rebate on the PV portion of the system. Other companies have come up with PV-Thermal systems for commercial buildings.

Tags: california, california public utility commission, hot water, solar, sundrum, thermal