Mark,
When we built the house our plan was to use Solar water heaters to provide hot water as well as radiant heating. We wanted to use a tankless hot water heater to boost the domestic hot water if the Solar was not heating the water enough.
When we looked at the total cost of the solar panels to provide the radiant heating it just did not make money sense for us to instlall. I came to the same conclusion with just trying to heat water with solar. Since the water out of the well was going to be "low" the ondemand electric water heater was an iffy proposition. On demand heaters are rated to heat so many GPMs by so many degrees. So you have to lower the GPMs you use or boost the temperature of the water supply. I was not sure how many GPMs we would use though I'm sure our showers and washers don't use much. BUT I did not want to be wrong and not have hot water either.
So I went with good 80 gallon water heater. It cost the same as the cheaper/smaller water heaters to run but was more expensive up front. I think the label on the tank and my guestimate on the cost works out to be $30ish a month.
Non electric on demand water heaters works much better then electric. They can heat more water, GPM, and to higher temperatures.
The Feds now have a tax rebate on solar water heat. I can't remember what it is though. NC has one as well. When we have some cash I'm going to study the solar water heating as an option again since my gut feel is with the two tax breaks it might make money sense at this point. And the water heater is a large part of our electric bill. We heat with primarily with wood so the summer is what drives up our power bill. If the AC is not on our power bill is $90-100 a month. So $30ish for the hot water is third of our power bill. It would be nice to cut that out of the budget but that also tells me how much I should pay for the solar water heater over 10-15 years.
Anyway, my long winded suggestion would be to check out the solar water heating option, including state and federal tax incentives, and see if that would be an option along with the ondemand water heater.
Later,
Dan