From an article Dan Michelsen, president of Performance Energy, in the Wausau Daily Herald:

When you hear the words solar energy, what comes to mind? Most people think of electricity. But the most mature and affordable solar technology is solar water heating.

People have been building and using solar water heaters since the 1800s. In fact, the very first mass-produced, commercially available water heaters were powered by the sun. The design and reliability of solar water heating equipment has improved over the years. A modern thermal collector can easily achieve 90 percent or more efficiency. And solar hot water systems can often operate for decades without needing repairs.

How it works
Because of our severe winters, solar water heaters designed for year-round use in Wisconsin must circulate an anti-freeze solution through the collectors. This heated fluid is pumped through a heat exchanger, where the solar heat is transferred to the domestic hot water. The heated water is typically stored in a tank that feeds into the existing hot water tank.

In sunny weather, the solar storage tank can often reach 150 degrees. Supplying the heater with water this hot keeps it from coming on. This saves a great deal of energy. But even if the storage tank reaches only 80 degrees to 90 degrees, the solar water heating system has raised the temperature of the water more than half way to the typical use temperature of 120 degrees and has saved more than half the energy.

For safety, the plumbing code requires an anti-scald valve to keep the domestic hot water from becoming dangerously hot. . . .

Focus on Energy provides reward checks to help Wisconsin residents with the cost of installing solar water heating equipment. Each reward is based on projected energy savings. A family of four installing a solar water heater typically receives a reward of $2,500. The federal government provides an unlimited 30 percent tax credit to help make renewable energy equipment more affordable.