A method is presented for the estimation of solar energy and market potential for water heating in the residential sector. The model was developed under a Geographical Information System and provides the tools to handle the spatial and time discrepancies of solar radiation and energy demand. A geographic database with climatic data is used for estimating efficiencies and monthly/annual coverage of water heating load. Financial analysis is conducted on the basis of the energy production cost and the Net Present Value of the investment. Different financial scenarios are considered and the expected energy yields from a large-scale deployment of solar thermal systems in the residential sector of Greece are assessed.