In a typical solar water heating system, cold water is replenished into the storage tank as soon as the load is served. However, it is possible to determine the water replenishment profile (i.e., the quantity of the cold makeup water to be supplied to the storage tank over a day) that optimizes the overall system. In this paper, the effect of water replenishment on the system sizing is studied and a novel strategy for water replenishment is proposed to improve the design and performance of solar water heating systems. Based on an analytical technique, an approximate water replenishment profile is proposed to size a solar water heating system near-optimally. The problem is analyzed using a methodology called design space approach. Design space of a solar water heating system identifies all possible and feasible designs on a collector area vs. storage volume diagram. For illustration of the proposed methodology, an example problem is solved. It is observed that the annualized system cost can be reduced by 13.7%. For the cost-optimal system configuration, a reduction of 12.7% in the collector area and 10.2% reduction in the storage volume are observed. The proposed methodology is particularly important and advantageous for large commercial and industrial solar water heating systems. (C) 2008 Elsevier Ltd. All rights reserved.