A primary factor in identifying the type of system you need is your location. If you are in an area where it could ever freeze –EVER- then you’ll need a “closed-loop” system. Closed-loop systems are also referred to as “indirect” systems. In a closed-loop system, the fluid that is being heated in the solar collector isn’t the actual water you’ll use; it’s a mixture of water and food-grade propylene glycol that doesn’t come into contact with your domestic water. This glycol-water mixture won’t freeze in the collector—a situation that could burst the piping. This sun-heated fluid then gives its heat to your domestic water supply through a heat exchanger.
If you live in a climate that never freezes --EVER-- you can use an “open-loop”, or “direct” system. An open-loop system is slightly less complex than a closed-loop system, and the potable domestic water is itself sent through the solar collectors to be heated directly. There are also “thermosiphon” systems available. These systems rely on the principle that hot water rises. In thermosiphon systems, the collector and an integrated water tank are located on your roof. As the water heats up in the collector, it will rise to the tank above it. The thermosiphon system is a “passive” system, meaning it does not require a pump.
Schematics for 3 different solar water heating systems.