Despite significant advances in the technology field, solar collectors still make a very modest contribution to the total energy consumption for water heating purposes. One of the major factors explaining this delay is that relevant investment decisions are based on market prices which do not reflect positive environmental impacts and other benefits associated with the exploitation of solar energy. This paper presents a cost benefit analysis for evaluating solar water heating systems in comparison with competitive conventional technologies in Greecer. The major external benefits included in the analysis are energy saving, avoided environmental impact and job creation. The results show that In the specific Greek conditions, the use of solar collectors results in considerable net social benefits if substituted for electricity and Diesel but not for replacing natural gas.