Since not all of the solar-heated water will be used immediately, the system needs to be able to retain the heat in a storage tank. The storage tank is normally separate from and in addition to your existing water heater, which is kept as a backup heater to raise the temperature of the solar-preheated water if necessary. 

For each square foot of collector area, you should have 1.5-2 gallons of storage capacity to prevent overheating in summer.  Residential storage tanks are typically 80 gallons.  They only store water – they do not heat it. 

If the tank is large enough (typically 120 gallons) it is possible to use one tank for both storage and backup heat.  Such a combined tank has one electric heating element near the top of the tank, which keeps the water at the top at the desired temperature (usually 120°F).  The volume of water in the tank below the electric element acts as the storage capacity for the solar water heating system. 

A “batch” solar water heater is a very simple system that consists only of a tank (no collectors, no circulation).  The tank itself is heated directly by the sun, warming the water inside.  A very low cost do-it-yourself batch heater can be constructed.  A manufactured batch-style heater is an Integral Collector Storage (ICS), which stores 30-50 gallons of water in large diameter serpentine pipes inside an insulated solar collector.  The ICS collector is connected between the cold water supply and the backup water heater.