The paper analyses the impact of installation of the solar heat system in the building of the Institute for Care of Mental Disabled Persons „Drin Fojnica” on its energy consumption, energy costs and air emissions. During 2019, solar collectors were installed on the roof of the Institute’s main building, as a support for heating of hot sanitary water (HSW). Heating of HSW before installation of solar heat system was performed by the electric boilers out of heating season and by heat from the coal boiler during heating season. This way of HSW heating caused high energy costs for the Institute. Since there was no data on baseline energy consumption for HSW heating, the calculation of heat demand for HSW was performed based on the number of users and water consumption per user. Based on the calculation of heat production from the solar collectors and secondary heat sources for HSW (out of heating season the electric boilers, during the heating seasons the coal boiler) the annual energy balance of the system for HSW was obtained. The energy balance was the basis for calculation of decrease of coal and electricity consumption, annual cost savings for heating of HSW, financial indicators of investment in the solar system (payback period, net present value and internal return rate), reduction of air pollutant emissions (sulphur dioxide, nitrogen oxide and particulate matter) and carbon dioxide. Financial savings achieved by the solar system amount is about 8,500 BAM per year. Direct emissions of air pollutants were reduced by 27.12% and indirect by 29.02%. The payback period is 5.8 years.