So the water heater runs on solar?
and it doesn’t consume as much power because it heats in the small tank? I’ve heard those are expensive to run on the grid...
Where gas is available, it is cheaper than resistance heating.
In mild climates, the heat-pump based hybrid water heaters can be run for a fraction the cost of resistance.
Unless you use a huge amount of hot water, electric resistance heating of water for household use isn't so bad.
If the water was used for baseboard heaters, or if you heated a hot tub (which isn't well insulated), that would get expensive.
I've run a water heat at low wattage (240V element wired to 120V AC) so it just takes more hours to heat up.
PV these days can produce power around $0.05/kWh, with more of its production in the summer months of course.
I've seen some PV direct DC operation of water heaters, but unless they have DC rated controls and safety devices, I don't trust them. Even some heating elements sold for DC with thermostat built in turned out to contain AC components which of course failed.
For larger heating systems like the hot tub, PV to inverters for AC to run heaters would be an off the shelf solution. Because it doesn't adjust power consumption to match PV production, it is going to cycle on and off repeatedly. A battery good for many thousands of cycles (lithium) would be needed.
An electronic control which varied power to match PV production, or multiple elements switched to approximately match, would be more ideal.