The long-duration of national programs has been the driving force behind the expansion of the local market of solar water heaters (SWHs) in Taiwan in the last two decades. This study examines the potential market for SWHs using the statistical data from end users and the 2010 Population and Housing Census. The current effective utilization rate of residential SWHs in terms of potential number of systems installed is estimated to be 11.8%. The analyses also show that the current national subsidy program has recently lost its momentum in expanding the market. Therefore, regional subsidy programs should become the main force in influencing the growth in sales. In addition, SWHs of larger scale would be particularly effective in industries. To promote such applications, a combination of performance-based and direct subsidy schemes or tax deductions can be offered to end users to promote the applications of SWHs in the commercial sector. Solar-assisted cooling systems are considered to be another potential application of solar energy, which is associated with energy saving and power consumption in commercial and residential buildings. A short review of the R&D activities is also given in this paper. (C) 2012 Elsevier Ltd. All rights reserved.