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Exergy destruction associated with the operation of a solar heating system is evaluated numerically via an exergy cascade. As expected, exergy destruction is dominated by heat transfer across temperature differences. An energy analysis is also given for comparison of exergy cascade to energy cascade. Efficiencies based on both the first law and second law of thermodynamics are calculated for a number of components and for the system. The results show that high first-law efficiency does not mean high second-law efficiency. Therefore, the second-law analysis has been proven to be a more powerful tool in identifying the site losses. The procedure used to determine total exergy destruction and second law efficiency can be used in a conceptual design and parametric study to evaluate the performance of other solar heating systems and other thermal systems.