The use of a heat exchanger in solar water heating systems reduces the over
all system? efficiency. In this paper, we derive a simple "penalty factor"
that gives the fractional reduction in thermal efficiency imposed by a heat
exchanger immersed in an isothermal integral collector storage (ICS) syste
m. The penalty factor depends only on the effectiveness of the heat exchang
er, the capacitance of the hot water delivered, and the product of the loss
coefficient and aperture area of the ICS. This factor allows the designer
to select an appropriate heat exchanger without extensive simulation or exp
eriments. Application of the penalty factor for a load-side (or on-demand)
heat exchanger, which Operates intermittently at varying flow rates, is dis
cussed and illustrated through example.