This paper investigates the effect of the physical location of the auxiliary source of energy in thermosyphon solar water heaters and shows that the performance of the system can be optimised with respect to the geometry of the system components. The investigation has been based on a domestic thermosyphon solar water heating system, which was simulated using the TRNSYS programme. The annual solar fraction of the system, at the weather and socioeconomic conditions of Cyprus, is, at best, approximately 77% with an in-tank auxiliary heater configuration and 86% with an external auxiliary heater. It is demonstrated that the arrangement with the external auxiliary unit has a higher collector efficiency and results in a higher annual solar fraction. In the case of in-tank auxiliary, the system performance increases with the height of the auxiliary position from the bottom of the storage tank; with the auxiliary at the bottom of the storage tank the annual solar fraction is approximately 59%, compared to 77% when the auxiliary is located at the top of the tank. The system performance also depends on the height of the collector return from the bottom of the tank.