Quote from Hydroblunt:
It takes less than 10 years, sometimes less than 5 years to pay back on PV, depending on where you live. Don't worry, with electricity deregulation, you soon will wish you bought them early. Solar panel price is actually decent, it can potentially go even higher. You have to be realistic, it is warrantied for 20-25 years and their potential life is projected to 40 years, if not longer. Just based on electricity you can justify a big chunk of the price, but then there are the other dynamics.
As for pumping water in a water tower, via Hydroelectric style, just not efficient. The numbers do not really work out. Does not make sense on large scale generation either. The water tower technique is the least favorable out of the "old" techniques of preparing for peak loads.
Best schematic created so far is PV with Fuel Cell. Only problem is the fuel cell and the lack of promise for mass fuel cell usage. Other than that, the most logical step is grid connected distributed solar, which helps out during key peak loads, hence decreasing reliance on gas/coal/oil.