For a solar thermal system, increasing the heat transfer area can increase the output temperature Of the system. However, this approach leads to a bigger and bulkier collector. It will then increase the cost and energy needed to manufacture the solar collector. This study is carried out to estimate the potential to design a smaller solar collector that can produce the same desired output temperature. This is possible by using nanofluid as working fluid. By using numerical methods and data from literatures, efficiency, size reduction, cost and embodied energy savings are calculated for various nanofluids. From the study, it was estimated that 10,239 kg, 8625 kg, 8857 kg and 8618 kg total weight for 1000 units of solar collectors can be saved for CuO, SiO2, TiO2 and Al2O3 nanofluid respectively. The average value of 220 MJ embodied energy can be saved for each collector, 2.4 years payback period can be achieved and around 170 kg less CO2 emissions in average can be offset for the nanofluid based solar collector compared to a conventional solar collector. Finally, the environmental damage cost can also be reduced with the nanofluid based solar collector. (C) 2013 Elsevier Ltd. All rights reserved.