Although many solar water heaters were installed just after the oil crises, the installation decreased rapidly and keeps small amount recently. However, the government expects to have four times as many as current solar water heaters by 2010 to reduce primary fuel consumption for mitigating global warming. The objective of this study are to investigate possible installation of solar water heaters in each prefecture in Japan and to estimate the potential of energy saving by the technology. The installation in a detached house is modeled to minimize the pay back year from the economical point of view taking place specific solar irradiation into consideration. The result shows the pay back years range from 7 to 1.1 Assuming monotonously decreasing relationship between the pay back year and installation possibility, the installation and the effect of primary fuel reduction is estimated. Since the aggregated installation over Japan is less than the target, sensitivity analysis with respect to the cost of solar water heaters was conducted to investigate requirement of the cost reduction to attain the target. The results indicate that the cost needs to be reduced down to 60% to 20% of the current level.