Electricity plays an important role in the contemporary life, and it has become indispensable nowadays. Reducing the peak electricity load and increasing the load factor have been considered as one of the main tasks that have to be accomplished by both electricity generation-side and demand-side managements.The residential sector of Libya consumes over 31% of the total sold electricity, and 29.8% of that is delivered to the electric water heating load. This is an inefficient way of electricity utilization. Usually, the electricity supplier in Libya used to increase the local generation capacity or import electricity from neighboring countries. Both solutions did not resolve the problem. This work attempts to investigate the effect of replacing electric water heaters in the residential sector of Libya by solar water heaters on reducing the electricity peak load and increasing the load factor. The results show that on average 3% of the peak load demand can be saved. This is equivalent to 149.5 MW of reduced power. The study also revealed that the annual amount of energy saved is up to 2.55TWh, and the load factor is improved by 2% (i.e. from 65% to 67%). This saved energy is equivalent to a power plant with a nominal capacity of 448 MW considering a load factor of 0.65.