Water has been heated with the sun almost as long as there have been humans, but it is not until recently that more advanced and effective solar water heating systems have become common, and they are still gaining ground. Through the years new systems and new solar collectors have been developed. In Kosovo, however, not much attention has been paid to replace fossil fuels with renewable energy sources and solar water heating systems is a new concept. However, a solar water heating system has been installed at the hospital in Dragash Municipality in southern Kosovo. The system is a pilot project, to see how well solar energy can be used in this area. This thesis examines the existing solar water heating system at the hospital in Dragash. The possibilities of using the fundamental principle of the solar water heating system at the hospital on residential houses in Dragash is looked into. The total annual incoming solar radiation for one square meter is calculated. The environmental, social and economic effects of solar water heating in Dragash is considered and discussed. Economic calculations are made on the effects of installation of solar water heating systems.