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• Annual dynamic simulations of solar water heating system with and without phase change materials were conducted. • A thorough parametric study was carried out in different climate zones. • Optimization of phase change temperature and design parameters usage amount was performed. • The highest power saving rate using phase change material is 31% in Lhasa. • The highest heat loss saving rate using phase change material is 9.9% in Guangzhou. Recently there have been many reports on the application of phase change materials (PCM) in solar water heating system (SWHS). However, there are some doubts and different views in this field, since the sensitivity of the system to the PCM design parameters and external conditions. In this study, a typical SWHS with a PCM storage tank is proposed to overcome the existing problems. The mathematical model is established and validated against experimental data. Annual simulations have been done under a typical user load and different PCM design parameters (phase change temperature, PCM usage amount) among six cities which have different meteorological conditions. The results indicate that the application of PCM in SWHS can reduce the power consumption of electric auxiliary heater (EAH) and the heat loss, but the benefits vary widely by regions and PCM design parameters. The highest power saving rate is up to 31% in Lhasa which has extremely abundant solar energy, while for the heat loss saving rate the highest value is 9.9% in Guangzhou which is located in the hot summer and warm winter zone. Besides, a parametric study has been conducted to explore the power saving potentials with different PCM design parameters in different regions, as well as to discuss the optimal phase change temperature and the PCM usage amount. This study aims to provide theoretical references and suggestions for the design of the PCM storage tank in SWHS. [ABSTRACT FROM AUTHOR]