Domestic solar water heating system (DSWHS) without auxiliary energy is widely used in loess hilly region of China. However, there is a lack of studies on DSWHS in this region. This article assessed the potential and benefits of DSWHS on the basis of field survey. Results indicate that a DSWHS with evacuated tube collectors (ETC DSWHS), with a collecting area of 2.09 m2 and an average thermal efficiency of 40%, can supply heat of 3661.7 MJ during its valid period of 263 d. A household with an average of 4.9 people consumes annually 11,043.5 kg of hot water supplied by DSWHS. A total of 1238.7 MJ of energy is needed to heat so much water. The actual thermal efficiency of DSWHS is only 13.53%. Clearly, there is a great potential to improve the energy efficiency of DSWHS. DSWHS has low economic benefit because of its low actual thermal efficiency. However, it has enormous environmental benefits and significant social impacts. The 1238.7‐MJ energy provided by it is equal to that provided by 211.6‐kg raw coal, which can emit 454.99‐kg CO2, 3193.79‐g SO2 during use. Rural residents are recommended to use more hot water supplied by DSWHS through increasing the frequency of bathing and cloth washing. The government should further promote DSWHS utilization by driving costs down. © 2017 American Institute of Chemical Engineers Environ Prog, 37: 1781–1791, 2018