Sun Strikes It Hot: What's Happening in the Global Solar Thermal Markets?

Partly because it needs to be produced near to its place of use, making it less tradable than electricity, heat as a commodity is generally regarded as somehow lower status than electricity. Even more so, it seems, with renewable heat - wood pellets and solar thermal just don't seem to have the high-tech appeal of shiny PV, nor the majesty of wind turbines. Meanwhile, while the electricity industry still searches for a truly applicable form of energy storage, heat lends itself well to storage on many scales. It shouldn't be underestimated.

Solar heat has become a surprisingly big player. According to the 2011 report from the IEA solar heating and cooling programme Solar Heat Worldwide (authored by Werner Weiss and Frank Mauthner), the solar thermal collector capacity in operation worldwide at the end of 2009 was 172.4 GWth. Across the 53 countries covered in the report, the annual yield of these water-based collectors was 141,775 GWh, or 510,338 TJ (the relatively small amount of air-based solar thermal is excluded). This corresponds to an oil equivalent of 14.4 million metric tonnes and an annual CO₂ saving of 46.1 million metric tonnes.

Though the final numbers for 2010 are not in, capacity was expected to have reached 196 GWth by the end of 2010, producing 162,000 GWh of output. This level of capacity is very close to that of wind power globally (194 GW), which admittedly has a greater yield than solar thermal. However, the contribution made by solar thermal heat far exceeds the capacity and output of solar PV, geothermal power, or any other 'new' renewable (though biomass and large hydro contribute more).

While most of the installed capacity is currently used for production of domestic hot water - the simplest solar thermal application - the scale and range of applications is becoming much more diverse. In some European countries solar combi-systems are widely used to provide space heating in addition to hot water, and district heating by solar is also expanding. Plus, the potential for solar process heat (for commercial/industrial uses where hot water is needed) is starting to be exploited. Figure 1 (shown overleaf on page 47) shows the distribution by application in the top 10 markets.

By the end of 2009, some 59 percent of the world's solar thermal (101.5 GWth), was installed in China, with Europe accounting for 32.5 GWth. The US and Canada had a combined capacity of 15 GWth. Much of this (over 80 percent in the US) is unglazed collectors for pool heating. These three regions together account for 86.4 percent of the global total.

Counting all solar thermal (including the unglazed collectors widely used in the US for pool heating), China, the United States and Germany are world leaders in total installed area/capacity. Turkey has retained its position as world number four. However, if unglazed collectors are removed from the calculation, Turkey and Germany are almost equally placed, behind China.

The remaining installed capacity is made up by various countries including Australia and New Zealand (5.2 GWth), Central and South America (4.7 GWth), the Asian countries of India, South Korea, Taiwan and Thailand (4.6 GWth), Japan (4.3 GWth), the Middle East represented by Israel and Jordan (3.5 GWth) and a handful of African countries (1.1 GWth), namely Namibia, South Africa, Tunisia and Zimbabwe.

NEW INSTALLATIONS

When it comes to new installations, 2009 was a year of impressive growth for solar thermal, with an extra 36.5 GWth of new capacity being added. This means that collector installations were up by over 25 percent on the previous year. (If the predictions in the IEA report are correct, at least 23 GWth will have been added in 2010 as well.)

And, 80.6 percent of those 2009 additions (29.40 GWth) were installed in China, with the remaining 10.2 percent installed throughout Europe. The remainder was spread between the US/Canada, Australia/New Zealand and Central/South America (about 2 percent in each of these three regions), with the rest of Asia, the Middle East and Africa making up the remainder.

The report says that Australia reported a 78.5 percent growth in annual installations of glazed water collectors in response to a new financial incentive scheme, while in Mexico, the total number of glazed water collector installation grew by 31.5 percent - mainly due to a broad market campaign for solar water heaters, with low interest rates helping.

TYPES OF APPLICATION AND TECHNOLOGY

As Solar Heat Worldwide reports, the most sophisticated markets for different solar thermal applications are found in Spain, Germany and Austria due to their continuous R&D activities. They include systems for heating water, systems for space heating of single- and multi-family houses and hotels, large-scale plants for district heating and a growing number of systems for air conditioning, cooling and industrial applications. By the end of 2009, 115 solar-supported district heating networks and 11 solar-supported cooling systems with an installed capacity of 350 kWth (equivalent to 500 m²) were installed in Europe. The total installed capacity of these large-scale systems is equal to 166 MWth.

Canada and Saudi Arabia have also installed large systems. The district heating system installed at Drake Landing in Canada has an installed capacity of 1.6 MWth (2293 m²). The world's largest system, with a capacity of 25.4 MWth (36,305 m²), was commissioned in April 2011 in Riyadh, Saudi Arabia.

As the IEA study points out, because Chinese installations overwhelmingly use evacuated tube collectors, the growth rates by type of glazed water collector in 2009 are high for vacuum tubes (an increase of 34.5 percent) and almost stagnating (increase of 2.4 percent) for flat plate collectors. Though the IEA figures don't include 2010, all the evidence suggests that this pattern continued in 2010 as well. This means that many of the flat plate collector manufacturers in Europe faced a challenging economic year in 2009, and again in 2010, following on directly from the tremendous growth rates in 2008.

SOME MARKETS IN DECLINE

Following an extremely buoyant 2008, 2009 saw some key markets - most crucially the 'workhorse' market of Germany - experience a sharp downturn in new installations. In 2009 Germany saw a fall of 23.1 percent in newly installed capacity of glazed collectors compared with the previous year; sales in Japan fell by 31.8 percent, and in the United States installations of glazed water collectors decreased by 8.5 percent.

As latest figures from the European trade organization ESTIF (Solar Thermal Markets in Europe, June 2011) reveal, that trend continued throughout 2010 too in established markets. Of the markets with over 200,000 m² collector area (Germany, Italy, Spain, Austria, France and Greece) all but Greece and Italy took a tumble last year - and in markets of this size that has an impact that ripples throughout the industry.

Said ESTIF president, Robin Welling: "The solar thermal industry has experienced the full impact of the 2008 financial crisis as the construction sector has been particularly affected by the economic recession that followed. We expected to derive some benefit from the combined implementation of the binding renewable targets and higher energy performance standards - but this process is only beginning!"

Following the 2009 drop of 23 percent, Germany's market dropped by almost 29 percent in 2010, meaning the market for new installations (805 MWth) was almost back to its 2007 level, and close to half the record level installed in 2008. The spikes and troughs of Germany's growth curve for solar thermal reflect policy uncertainty, and for the last two years credit restrictions and relatively low fossil fuel prices have taken their toll. Most specifically, by failing to give clarity on financing, a new 'market stimulation programme' has had the opposite effect from the one intended. In its June 2011 report, ESTIF called the 'devastating' effect of this policy especially disappointing given Germany's history of providing good support measures for renewables, not least the renewable heat obligation (Waermegesetz).

Austria, too, saw its installation levels drop - by 21.4 percent in 2010 according to ESTIF, bringing it back to 2007 levels (though the first months of 2011 saw an encouraging upturn). The explanation here is of a maturing market, with purchasers/investors needing some kind of motivation, such as higher gas prices or improved support mechanisms, to get them to take the step of installing now, rather than delaying a decision until later.

The Greek and Italian markets increased slightly (Italy by 3.2 percent), with the Italian market confirming its 2009 level (around 500,000 m²). Its installed capacity of 1.87 GWth secures Italy's place as number two in Europe, in terms of total installations. Italy has also set itself a highly ambitious solar thermal target for 2020, intending to expand from under 2 GWth installed by end of 2010 to over 25 GWth by 2020. By comparison, Germany plans to double its capacity from 9.7 GWth at end of 2010 to just over 20 GWth by 2020 (see section on National Renewable Energy Action Plans, below).

In Spain, two years of falling numbers have seen the market contract almost to 2007 levels.

Some of the newer markets, below 200,000 m² but above 50,000 m², fared rather better in terms of percentage growth. Some developing markets, still below this group, consisting of Portugal, Poland, Switzerland, Czech Republic, Denmark and the United Kingdom, grew by a total of 8.8 percent, with a combined increase of 40,000 m². However this is not quite enough, points out ESTIF, to compensate for the decrease recorded in those larger markets.

INSTALLATIONS REVEAL MARKET PENETRATION

Solar thermal capacity is often measured on two scales: first, that of a country or region's total installations in square metres of collector or megawatts thermal (MWth); second, the amount installed per capita, which allows better comparison of levels of market penetration. Like Germany, the tiny island of Cyprus has long been a leader in solar thermal installations. In 2010 it had 2.86 GWth capacity (compared with Germany's 9.7 GWth), but a massive 623 kWth per capita compared with Germany's 118 kWth per capita.

NATIONAL RENEWABLE ENERGY ACTION PLANS

By February 2011, all EU member states had presented their National Renewable Energy Action Plans (NREAPs) for achieving their share of Europe's goal to source 20% of its final energy consumption from renewable energy. Countries had been asked to consider renewable heating and cooling, but - in spite of a vigorous campaign - no formal requirement was included for a specific proportion of heat measures. Consequently, the NREAPs from the 27 different member states show extremely diverse approaches to solar thermal. Four countries (Estonia, Finland, Latvia and Romania) did not include solar thermal at all, while five others (Bulgaria, Denmark, the Netherlands, Sweden and the UK) presented extremely modest targets. (In some cases the official target is not in line with actual installations being made, says ESTIF.)

According to Xavier Noyon, ESTIF secretary general, analysis of the consolidated NREAPs 'reveals that over the next decade the share of solar thermal should rise by 15 percent per annum.'

The NREAPs focus on energy delivery, rather than installed capacity, and the NREAPs have calculated yield in terms of thousands of tonnes of oil equivalent (ktoe). By and large, NREAPs of the established solar thermal markets are expecting strong, but not spectacular, growth rates over the decade 2010 to 2020. However, a few are expecting really dramatic increases, as a look at the NREAPs (on the European Commission website) reveals. (The key markets are listed in order of solar yield in 2020):

• Italy expects a rise of 1400 percent, from 113 ktoe to 1586 ktoe
• Germany expects a rise of 300 percent, from 440 ktoe to 1245 ktoe
• France expects a rise of 700 percent, from 130 ktoe to 927 ktoe
• Spain expects a rise of 400 percent, from 155 ktoe (approx) to 644 ktoe
• Poland expects a rise of 2400 percent, from 21 ktoe to 506 ktoe
• Greece expects a rise of160 percent, from 216 ktoe to 355 ktoe
• Austria expects a rise of 210 percent, from 127 ktoe to 269 ktoe

Solrico has just completed its third ISOL survey, which aims to act as a barometer of market/industry confidence by surveying solar thermal businesses in 16 key markets worldwide. It reveals an upward trend in market optimism in China, Brazil and India. India's Solar India Mission, launched in 2009, targets the installation of 20 million m² of solar thermal by 2022, and strong financial support measures have been put in place to help achieve this. In the United States, according to the latest report from SEIA/Greentech Media, Hawaii, California and Arizona are likely to be the three states seeing significant growth, thanks to state incentives.

Back in Europe, Solrico reports that confidence in the already slowed markets has not yet improved - what's more, optimism in Europe's Mediterranean markets, where Greece, Portugal and Spain have all been experiencing economic woes, is also reduced. Confidence in the Czech Republic market, buoyant early in 2010, has plummeted since the withdrawal of its support programme in October.

Solrico reveals that the most attractive markets for solar thermal - averaged over the three surveys - are (in descending order) China, Poland, Turkey, India, Greece and Brazil. Meanwhile, Germany is cautiously optimistic, but has suffered a significant loss of confidence.