Due to the environmental impact of energy usage, consumers need to be encouraged to use renewable energy sources such as solar energy. The indirect heating flat plate integrated collector storage solar water heating system is one of the compact systems for domestic water heating. It incorporates the collection of a solar energy component and a hot water storage component in one unit. The objectives of this study were to investigate the effect of different parameters on the thermal performance of this system with the aim of reducing both the initial and the running costs. The outlet service water temperature was used as a measure of performance, because it is an indicator of the energy acquired from the solar radiation. The continuity, momentum and energy equations of the fluids involved in the system were numerically solved in a steady state condition, using FLUENT software. Three-D CFD models were developed and validated using previous experimental results. A standard k-omega to turbulent model was used in the optimization of the heat exchanger because it produced good agreement with the experimental results. The surface-to-surface radiation model was included. The effect of single and double row heat exchangers with different lengths was investigated. Circular and elliptic cross-section pipes were also examined. Mass flow rates of 500 and 650 L/h were chosen. The results showed that the single row HX of 10.8 m length for both the elliptical and type B tube gave high service water outlet temperature (acceptable for heat exchanger design) and with low pumping power. This resulted in an increase in the thermal efficiency and a significant reduction in both the initial and the operating costs of the system. (C) 2013 Elsevier Ltd. All rights reserved.