What is the "payback" on a solar hot water system?

The term "payback" is a misconception that shows a false value towards an income generating device. Electric and gas water heaters do not have a payback! When you purchase a more efficient refrigerator, the decision to buy comes not from how long the savings generated will pay you back for your initial investment, but it comes from getting better service for a lower operating cost with a better rate of return. Solar water heating systems do just that. They provide quality hot water at a lower cost than heating with electricity or LP gas with more equity value in your home.
Solar collectors are typically designed to last as long as your home with little or no maintenance. These systems often give a 14% to 20% per year non-taxable rate of return on your money - even for a two person household. It is important to remember that hot water is a constant daily expense; other large household appliances, like air conditioners and heaters, are seasonal expenses.
Hot water is typically 20% to 30% of the annual utility bill. Hot water for showers, dishwashing, and laundry costs about $110 a year per person (when LP gas costs $1.15/gallon or electricity costs 7 cents/kilowatt hour). When electricity is 10 cents/kWh or LP gas is $1.60 a gallon, it will cost about $646 a year to heat water for a four person household. A properly sized solar water heating system can be expected to save this household $450 to $600. And, SunWind Power has several passive and active solar hot water systems to accommodate households from two to ten people, all of which qualify as a non-taxable investment.