Solar water heating works efficiently even in cloudy areas. Home Power Magazine recently ran an article that gives a simple overview of solar water heating systems (well, relatively simple).
In the article, they examine various popular systems that have proven themselves reliable.
Some systems are “open loop” (the domestic water itself is directly heated) and some are “closed loop” (a heat transfer fluid is heated by the collector and the heat is passed on to the domestic hot water by means of a heat exchanger). Some systems are “active,” using moving parts such as pumps and valves, and others are “passive,” using no mechanical or moving parts.