Solar hot water and heating are almost like the bicycle of the energy world. Straightforward, effective, proven technology. Available today, works anywhere, no emissions. Direct (no traffic jams, no grid). Affordable. Simple or sophisticated to suit taste and budget. Yet hardly ever calculated in by energy planners as a real part of the solution! With 128 GW of thermal capacity installed and displacing electricity and gas around the globe, it really is time for solar thermal to take its rightful place on the road.
The world’s total installed solar hot water and heating capacity rise to an estimated 128 GWth in 2007 – this sector has grown by 20% per year over the past two years (these figures do not include swimming pool heating). By far the biggest share of this – some 75% – was installed in China, with Europe’s highly diverse markets in second place. In fact, China’s new installation figure of 23 million m2 in 2007 was almost identical to Europe’s total installations at the end of 2007.
The United States – painfully slow for years despite having a solar resource that any European would envy – has finally experienced two years of substantial growth. Though high conventional energy prices are encouraging interest in what this technology has to offer, most markets are heavily reliant on policy for some kind of requirement or incentive – or both. And when that policy wavers, vulnerable markets suffer.
Encouraging solar thermal
Security of energy supply and climate change have become top political priorities around the world, and renewables are a key solution. Heating and cooling is now a much more high-profile part of Europe’s renewable energy policy debate, but as yet the current EU Directive does not make specific recommendations or requirements of the amount of renewable heating or cooling to be included in national policies. Similarly, solar heating fails to appear in most (if not all) US states’ renewable portfolio standards, despite its potential to displace electric power consumption.
As Eric Martinot reported in our March–April 2008 issue, policies to encourage the uptake of solar hot water/heating technology have grown in recent years, and the introduction of building mandates at state or municipal level is increasingly common. This was pioneered long ago by Israel. Two decades later, in 1999 the City Council of Barcelona adopted its solar obligation. Uwe Trenkner of ESTIF (European Solar Thermal Industry Association) says the Barcelona model came at the right time, with rising energy prices and worries over supply security and climate change creating a receptive political environment. The idea was quickly replicated by other cities, and in 2006 Spain’s national building code introduced a requirement for basic levels of solar hot water and solar PV in new build and renovations across the country.
In 2007, India’s new conservation laws mandated a minimum of 20% solar water heating for residential buildings, hotels and hospitals; Korea also has a requirement in larger buildings. In China, several municipalities or regions have introduced a solar requirement, and a national mandate is being introduced this year.
In May 2008 Germany’s new Renewable Energies Heating Law was passed, requiring all new buildings (from 2009) to include a minimum of 14% of heating/hot water to come from renewable sources, including solar thermal. France appears set to introduce new requirements in 2010; similar mandates are in place at regional or municipal level around the globe.
China – the giant of solar hot water
China’s solar thermal industry started back in the 1980s, largely as a way of providing a low-cost solution for low-income, rural households. The technology and market have matured, having grown at an average of 20% a year. Now China has not only the largest market – with an estimated 93 million m2 of installations serving over 60 million families – but is also the world’s largest producer of solar thermal systems. Of 3000 solar thermal enterprises, 20 have sales of over Yuan100 million (€10 million), according to Hu Runqing of the Energy Research Institute at the National Development and Reform Commission in Beijing. She adds that using 2006 figures, the heat provided by solar thermal plant in China was equal to 14.4 million tonnes of coal equivalent, with solar thermal able to reduce CO2 emissions by 18 million tonnes.
This huge industry grew without any kind of planning requirement to choose solar (though this is changing – see below), nor any kind of investment incentive. The reason behind this growth is the ability of solar to compete with electric and gas heaters in providing daily hot water reliably and at a reasonable price. Carsten Aschoff of SiGer Technologie in Germany notes that 150-litre thermosyphon systems cost €80–300. With investment costs for electric water heaters in a similar price range, and increasing prices for conventional energy (€0.05/kWh), solar is an obvious choice. With a growing demand for hot water as the standard of living rises and new housing is built, China’s solar hot water market seems set to continue rapid development.
With much of China subject to freezing in winter, vacuum tube collectors dominate the market. In the warmer south, flat-plate systems are also in use. Over 80% of systems are close-coupled, direct-cycle systems. Most (90%) of systems are in use for domestic (household) hot water, with 10% in larger applications such as schools or hospitals.
Though the world’s largest user of solar thermal, in per capita terms China ranks behind Cyprus, Israel, Greece, Austria, Turkey, Japan, US, Switzerland and Germany. In 2006, China had about 69 m2 installed per thousand inhabitants, compared with almost 800 m2 in Cyprus – this gives some idea of the enormous market potential still to be exploited in this vast country.
China’s market for solar thermal is in four categories, according to Hu Runqing. The first is the need for economical solar water heating in China’s small/medium towns. Second is the large potential market for small, simple systems for rural areas. The New Village Construction Program has already launched the use of a market for rural solar water heaters, and this is expected to rise as farmers’ incomes and standard of living rise.
The third market is for high-performance, high-quality solar water heaters – for China’s large urban centres and for the export market. If the quality of solar water heaters is good enough and issues of building-integration are resolved, this is an area that will expand. Fourth comes the market for solar space heating and for large industrial hot water systems.
Aschoff estimates that, at present, 85% of China’s installations are low-price thermosyphon, 5% are high-spec individual systems, and 10% are large-scale.
With the introduction of China’s Renewable Energy Law in January 2006, awareness of all renewables technologies grew, says Hu Runqing. More than 10 local governments introduced regulations requiring real estate developers to install solar water heating in all new buildings, especially on those of less than 12 storeys. These have given an extra push to the development of solar thermal, and central government is due to introduce similar legislation.
In September 2007, China published its Middle and Long Term Development Plan for Renewable Energy. According to this document, the cumulative area installed (18 million m2 new in 2006) will reach 150 million m2 in 2010 and 300 million m2 in 2020. Hu Runqing reports that China’s solar thermal industry believes the levels will in fact be significantly higher than these targets.
Exports of solar hot water equipment from China were valued at US$260 million in 2006, mainly from vacuum tubes, vacuum tube collectors and systems. Through international collaboration and testing for overseas markets, the quality has improved over recent years. Alongside its exports into markets in Europe, the Chinese are keen to co-operate with developing countries that want to expand the use of solar. ‘The Chinese product and industrial development roadmap is suitable for developing countries, and easy to copy’ says Hu Runqing. Aschoff agrees: ‘Chinese solar technology is simple, efficient and cheap …To go to China and learn from the Chinese solar technology and industry should be key for everyone in the solar thermal business.’
Writing in its annual report on solar thermal markets, ESTIF’s President Gerhard Rabensteiner says developments in Europe in 2007 were mixed. The total market for new installations of glazed collectors in the 27 EU Member States and Switzerland was 9% lower than in 2006, with 1.9 GWth of new capacity being added (2.7 million m2 of collector area). This brought the total capacity in operation in Europe at the end of 2007 to 15.4 GWth (22 million m2 of collector area). However, the various national markets continue to show considerable variation in their performance.
In many countries demand for solar heating and cooling solutions increased during 2007 at double-digit rates: in both Italy and the Netherlands growth exceeded 30%. And some markets virtually exploded: Slovenia saw a 74% increase in capacity over the previous year, and the Irish market tripled in volume.
But in the same year, Germany saw a huge decline of its domestic solar thermal market: new installations were down by 37% compared with 2006. Austria also showed a slight decline of –4%. Several factors, for example the increase of the VAT rate in January 2007, contributed to the decline in Germany.
Two factors are key to understanding this market, says Rabensteiner. ‘First, we have to realize that we are selling heating and cooling systems. This means that when the overall demand for such systems declines, the market is also affected. As most customers purchase a solar thermal system when they are changing their heating system, the strong decline of the heating equipment market had also a negative impact on solar thermal sales.’
He says a second factor was more surprising to many in the sector: following the very public discussion on climate change issues, many consumers wanted to change their energy usage. But this did not show in sales. ‘What we slowly learned was that consumers were overwhelmed with the many options offered to reduce energy demand, and that they need more time to decide.’
This makes the immediate market development in Europe difficult to forecast. Nonetheless, Rabensteiner is optimistic: ‘The long-term forecast is much easier – and very positive: The EU is about to agree on a Renewable Energy Directive, which will – for the first time – fully cover the heating and cooling sector. At the same time, even the most conservative financial institutions and renowned economic research institutes have agreed that high oil prices are here to stay.’
Some key markets
ESTIF reports that due to a series of factors, the German domestic market for solar thermal products shrank by 37% in 2007 compared with 2006. At 658 MWth, the newly installed capacity (940,000 m2 of collector area), remained just below 2005 figures.
The decline was strongly influenced by the overall heating equipment market, which decreased by approximately 30%. However, sales in the first four months of 2008 picked up by 33% so the industry is cautiously optimistic of ending the year with a growth of more than 30%.
Austria, too, saw its domestic solar thermal market decline, albeit much less than in neighbouring Germany. New installations dropped by 4% to 197 MWth (281,000 m2). But per capita sales in Austria still top those of any other European country apart from Cyprus: per thousand Austrians, 24 kWth of new solar thermal capacity were added in 2007 – three times as much as in Germany and six times as much as the European average of 3.8 kWth/1000 capita.
In Spain 183 MWth of capacity were newly installed during 2007 (262,000 m2), 50% more than in the previous year. As most buildings constructed in 2007 were planned before the new building code came into effect, the solar obligations have not yet had a significant effect on the market. The impact should start to show in 2008.
However, Spain is currently experiencing a slow-down in the construction sector, which may also have an effect on how the technical building code (CTE) is applied. These factors make it difficult to forecast where the market will end in 2008, says ESTIF.
Between 1998 and 2007, the market in mainland France grew by almost 40% per year. With just 16% growth over the previous year, 2007 itself remained somewhat behind this average. 179 MWth were newly installed in 2007 (255,000 m2), accounting for 9% of the total EU market. Another 49 MWth (70,000 m2) were added in the French Overseas Departments and Territories. At 2.9 kWth/1000 capita, the market in mainland France is still below the European average.
Even though the national law requiring the use of solar thermal has still not been implemented in most municipalities, Italy has seen a strong rise in the demand for solar thermal heating solutions. 172 MWth of solar thermal capacity were newly installed in 2007 (245,000 m2), 32% more than in the previous year. But with just 2.9 kWth per 1000 capita – exactly the same as France – Italy remains one of the most promising markets for strong growth in the coming years.
Of all the new installations in the EU countries in 2007, 10% were in Greece and 2.5% on the small island of Cyprus. Neighbouring Turkey, too, has high usage.
The US market for solar water heating installations mushroomed in 2006 and 2007, due to a combination of federal tax credits introduced in 2006 (and due to expire at the end of this year) and increasing conventional energy prices. Figures from the Interstate Renewable Energy Council show a growth of 240% in total new installations in 2006 (approximately 87 MWth) over 2005. If Hawaii – which until 2005 used to account for about 50% of all new installations (about 20–25 MWth/year), is excluded, that was a growth of 400% in 2006 over 2005. The trend continued upward in 2007, with new installations topping 100 MWth (just under 30 MWth of this in Hawaii). That puts the 2007 non-Hawaii market at just over 70 MWth of new installations, compared with the 15–18 MWth/year typical before 2006.
Hawaii has always a been a US leader in solar hot water (California and Florida are the other leading states), and new legislation introduced in May 2008 will require all new homes built after 2010 to have solar hot water systems.
With the solar industry lobbying hard, it’s to be hoped that the tax credits will be extended into 2009 and beyond so that the industry can maintain steady and sustainable growth levels. As many have pointed out, however, election year is a difficult one for passing legislation. Whether the ‘pain’ of high energy costs alone is sufficient to maintain growth of this sector in the US remains to be seen. There is certainly enormous scope for this technology.
Solar hot water systems currently account for about 8% of all water heater sales in Australia, and about 400,000 systems are in use on homes, according to the Australia’s Clean Energy Council. In May 2007 the federable government introduced a rebate plan for both solar and heat pump hot water systems – AUS $252 million (US$244 million) over five years. With much of the country’s hot water being heated by electricity, heating water accounts for about 27% of residential greenhouse emissions, so solar has much to offer in terms of emissions reductions. Unlike the situation in China, however, where an electric water heater and a solar system are much the same price, the upfront cost for solar is higher. Without a rebate, says the Clean Energy Council, a typical household system will pay for itself within 7–15 years. Australia has a number of solar thermal manufacturers, and annual domestic sales were reported for 2005–2006 as approximately AUS $111 million (US$107 million) (46,000 units sold), plus AUS $34 million (US$32 million) (6000 units sold) of exports.
Figure 1 shows the other key world markets, which unfortunately we cannot cover here.
Figure 1. New installations worldwide from 2007 (based on preliminary data, May 2008)
Courtesy: Werner Koldehoff
Two of the early solar thermal markets – Israel and the United States – were born in the oil crisis of the 1970s. One survived, one crumpled. With the world as a whole much more informed and aware of energy issues, and almost 30 years of technical advances in solar thermal technology, the foundations are in place for an increased rollout.
Like consumers, says ESTIF’s Gerhard Rabensteiner, policymakers and corporate managers are struggling to find the answers to the new questions of energy. But the solar thermal sector has already formulated a clear vision: by 2030 the 100% solar heated house will be the building standard. ‘We believe that it is only a question of time, until this vision becomes reality’, concludes Rabensteiner
Hu Runqing of the Energy Research Institute at the National Development and Reform Commission in Beijing was a speaker at World Sustainable Energy Days, Wels, in spring 2008.
Carsten Aschoff of SiGer Technologie and Werner Koldehoff were both speakers at the 1st Solar Thermal Industry Forum, Munich, in June 2008 (in association with Intersolar 2008)
Gerhard Rabensteiner introduced ESTIF’s latest Solar Thermal Markets in Europe. Trends and Market Statistics 2007 (published June 2008)
Eric Martinot wrote in REW March–April 2008 – Renewables 2007 – Global Status Report
Uwe Trenkner wrote in REW November–December 2007 – Best practice – Solar obligations becoming mainstream
US data from Larry Sherwood, writing in Solar Today (July 2008)
Jackie Jones is Editorial Director of Renewable Energy World magazine
e-mail: [email protected]