Solar energy technology has led to the development of a number of solar appliances used for lighting, electricity, cooking and solar thermal systems. The most hopeful among them is the solar thermal system, to achieve the energy necessity for different applications at domestic as well as at the industry level. In this research work an attempt has been made to design and analyses solar thermal system for hot water supply to Minilik II Hospital new building. The selected solar collector and the heat storage are also designed based on: the amount of hot water supplied to the hospital throughout the day and the energy needed to heat the demanded hot water. Mechanical system of hot water distribution in the hospital, building structure, array of solar collector and thermal storage system of the project will be investigated.rnTransient performance of the system is computed using a numerical heat transfer model of a single glass cover flat plate collector solar water heater with riser and header type active system. The various design parameters are gathered from the inside country solar water heater manufacturers and dealer companies and also from the world experience. The meteorological data for simulation was prepared by taking the average of six years starting from 2010 - 2015. From the annual contribution of solar energy to the heating load and solar fraction the estimated values of investment cost, the unit solar energy cost and the pay-back period of the system was calculated.rnIt was found that for Minilik II hospital of total daily hot water consumption of 30.475 m3, a total of 108 collectors with two storage tanks of each capacity 18.3 m3 are needed with initial capital cost of 1,006,865 Birr per project, which will cost a total of 1,864,054 Birr per project through-out its life time and the life cycle cost saving will be Birr per project. The unit price of solar thermal energy is 0.033 Birr per KWh and the payback period of the project is 2.2 year.rnSince the unit cost of solar energy (0.033 Birr/KWh) is less than the unit cost of electricity (0.46 Birr/KWh) in Ethiopia, therefore water heating by solar energy is a viable alternative to heating by electricity and fossil fuel (furnace oil).