Remove all parts from the water heater except for the heating element. This includes the drain valve, nipples, thermostat and wiring.
Remove the outer metal shell carefully, being careful not to puncture or break the interior tank.
Remove the foam insulation around the outside. You may need to carefully cut the insulation with a saw or chip away at it with a hammer and chisel.
Sand paper the tank to remove any rust and remaining insulation.
Spray paint the outside of the tank with high heat flat black barbecue paint.
Screw a six inch galvanized nipple into the inlet hole at the top of the tank on the opposite side of where the tank drain is on the bottom.
Screw in an elbow into the nipple and a 14-inch galvanized nipple into the elbow. Rotate this assembly so the nipple aligns with the drain.
Plug all remaining inlets at the top of the water tank.
Build a container box using the plywood and boards, large enough to lay the water heater tank into on it's side.
Drill two holes into the bottom of the box. Drill one hole in the location of the tank drain pipe and the second at the location of the inlet pipe.
Add insulation to all inside surfaces of the box, securing it with insulating tape.
Place the tank into the insulated box and match up the drain and inlet pipes to their respective holes.
Lay out concrete blocks or pavers spaced so they'll support the four corners of the water heater box. Be sure to position the blocks in a North to South configuration so that the water heater will be facing solar south when put into place.
Stack additional pavers on the North end to provide additional height. Alternatively you can create a leg assembly for the box by nailing boards into an "H" shape.
Place the assembled heater box onto the concrete pavers carefully, making sure the lifted North end is stable. Cover the top with a pane of glass and secure it into place with weather stripping tape or caulk. A patio glass door works well as the cover for water heaters made from recycled electric water heaters.
Attach the incoming water source to the bottom nipple in your water heater, and attach the outgoing hose or pipe to the top nipple. Cold water comes into the bottom of the water heater and rises as it is heated by the sun. Hot water is released out the top.