ABSTRACT Energy conservation has become a hot topic in America during recent years. With the rising costs of energy, alternative systems that reduce energy consumption are becoming much more popular with the general public. One of the major sources of energy consumption is heating water. Such systems have multiple drawbacks, one of which is the exorbitant up-front costs associated with them. This paper explores the development and analysis of a low cost hybrid water heating system that pre-heats water using aluminum collectors that passively transfer ambient attic heat into the incoming water. When hot water is demanded, the system replaces hot water in the conventional heater with pre-heated water from the attic collectors. Hardware analysis shows that it is feasible to develop such as system for under 500. The aluminum attic collectors in the system design absorb an average 69.8BTU/Foot/Hr. A standard 30 gallon system consists of 20' of aluminum pipe, for a total absorption rate of 1396 BTU/Hour. A simulation study performed on the system design shows that the system can reduce the energy required to heat incoming water by as much as 35%. An average family of four using such a system with an electric water heater can result in a yearly savings of approximately 300 in addition to emitting 2.8 tons less CO 2 . At a cost of less than $500, the new design is much less expensive than other alternative water heating systems such as solar or geo-thermal which can easily cost in the thousands. The new system design provides a viable low cost alternative for consumers that are interested in saving both money and reducing pollution