Solar thermal heating and cooling market developments

Solar thermal technology has been used extensively in different regions globally for various heating and cooling applications. These included providing hot water, to heat and cool residential or commercial buildings, to dry products plus to provide heat, steam or refrigeration for industrial processes or commercial cooking. Over the past five decades, the primary application of solar thermal technology globally has been for water heating systems in single-family houses.

The residential segment has accounted for over 60% of the total installed collector capacities. In recent years, the markets have been transitioning to larger-scale systems for water heating in multi-family buildings plus in the tourism and public sectors.

Solar heating and cooling technologies had been sold in over 125 countries globally covering both emerging economies and developed countries. The cumulative capacity of the glazed collectors, including both flat plate and vacuum tube technologies, and the unglazed collectors in operation has increased to over 455 GWth globally. Solar thermal collectors of all types have provided over 375 TWh (1,350 PJ) of heat annually which was equivalent to the energy content of over 220 million barrels of oil but with none of the GHG emissions (REN, 2018).

The top five countries for cumulative solar heating and cooling capacity included China, the USA, Turkey, Germany and Brazil. Amongst the 20 largest markets, significant market growths have been reported in Denmark, Mexico and India. The five leading countries for new installations were China, Turkey, Brazil, India and the United States. The top 20 countries for solar thermal installations accounted for an estimated 94% of the global market. In most of these top 20 countries, the markets have been dominated by the solar thermal flat plate collectors. In China and India, more than half of new additions have been with solar thermal vacuum tube collectors. In the United States, Australia and South Africa, more than half of the new installations were unglazed collectors. Amongst the top 20 markets, vacuum tube collectors have accounted for 75% of new installations with flat plate collectors making up about 20% and unglazed water collectors accounted for the remaining.

China has remained the world’s largest solar thermal market despite recent downturns. China’s operating capacity was 325 GWth (464 million m²). This was just over half ofits 2020 national target of 560 GWth, which was announced in China’s 13th Five-Year Plan for solar applications. The transition in China from small residential solar thermal units to larger projects for multi-family houses, tourism and the public sector has accelerated recently. Larger solar thermal projects have accounted for 68% of China’s annual additions in recent years. This trend was supported by increasing demands for centralised solar space heating systems in southern China, where heating systems have been uncommon thus far and where fossil fuels are expensive. The transition was also driven by new China building codes in urban areas, which mandated the use of solar thermal and heat pumps in new building construction and major renovations as a means to reduce local air pollution. A good example is the significant new interest in solar district heating in the Chinese province of Shandong. The local government announced a subsidy scheme in 2016 to support central space heating systems in public buildings, such as schools, hospitals, nursing homes and daycare facilities. One of the first larger solar district heating plants, completed in 2013, was an 8.1 MWth (11,592 m²) vacuum tube collector system that provides heat for student flats at the Hebei University of Economics and Business.

Turkey’s solar thermal market has remained strong, though the formal market remained fairly stable. Residential demands accounted for over 45% of new installations and have been primarily supplied by vacuum tube collectors. Solar thermal capacity in operation has helped Turkey to save around 10% of its annual natural gas consumptions.

Brazil has continued to rank third for new installations and remained the largest solar thermal market in South America. The decrease in Brazil’s solar thermal market was relatively small considering the country’s ongoing economic problems. These have led to slowdowns of the social housing programme which mandated solar water heaters in new buildings for very poor families. These in turn have resulted in declines in the solar thermal market growths in Brazil.

India continued to grow as the fourth largest market globally with the market bouncing back recently. This has followed a temporary reduction in demands which resulted from the suspension of India’s national grant scheme in 2014. The share of imported vacuum tubes grew strongly. This segment included an increasing number of vacuum tubes backed with aluminium mirrors which are the so-called compound parabolic concentrators. They have been used primarily for industrial process heat applications. The growth in India was supported by a national 30% capital subsidy scheme for concentrating solar thermal technologies, which has reduced the payback times to three to four years for manufacturing businesses.

The USA has become the fifth biggest market worldwide. The US market volumes have been declining gradually in recent years. These have been caused by lower oil and natural gas prices plus the increasing focus on solar PV. The USA has continued to be the largest market for unglazed swimming pool systems, followed by Brazil and Australia. The smaller US segment of glazed collectors saw some additions driven by state-level rebate schemes such as the California Solar Initiative plus solar thermal rebates in Massachusetts and New York State, as well as the solar obligation in Hawaii.

The European Union has been the second largest regional market after Asia. The EU’s cumulative installed capacity in operation has reached over 35 GWth, which represented around 8% of the world’s total capacity. The largest European market has been Germany, followed by Denmark. Other EU markets have been facing serious challenges because of lower oil and gas prices, declining residential demands and reduced interest in solar thermal technology amongst installers. In addition, the EU energy-efficient building regulations have supported the installation of heat pumps in new buildings in Germany and France, which suppressed the markets for solar thermal systems. In Poland, there had been big declines in the solar thermal market. These were caused by a lack of political support for solar thermal and increased competition with hot water heat pumps, which are considered cheaper and easier to install.

However, solar district heating systems in the EU have enjoyed increased attention across Europe, led by Denmark. Denmark has brought into operation 31 new solar district heating plants and systems. The strong market in Denmark was supported by good regulatory framework conditions, including national taxes on fossil fuels, sufficient land for cost-effective ground-mounted collector fields, plus the existence of non-profit, user-owned co-operatives that operate local district heating systems. The Danish Energy Ministry had recently signed a new agreement with district heating companies. The new agreement allowed them to fulfil energy-savings mandates for the period 2016-2020 by extending existing solar district heating plants or by initiating the construction of new facilities. Amongst all existing and new solar thermal plants, Denmark’s new installation has been the world’s largest solar thermal plant, with 110 MWth (156,694 m²) of installed capacity, in the town of Silkeborg. The solar district heating plant was commissioned and brought online by the Danish turnkey supplier Arcon-Sunmark after a record seven-month construction. Denmark has also built the world’s second largest solar thermal plant which is the 49 MWth (70,000 m²) district heating field in Vojens.

The successes in Denmark have promoted new project development activities in other central European countries, especially in Germany and Poland. A good example is that Germany’s first record-size solar district heating plant, in 11 years, came online in August 2016, when 5.8 MWth (8,300 m²) of vacuum tube collectors began supplying to the municipal district heating network in Senftenberg. Germany has installed a combined total of 9 MWth (12,921 m²) in four new systems. These have helped to increase the district heating capacity in Germany to 39 MWth. Spain’s plans to install in Barcelona new large-scale solar thermal installations did not materialised. These were mainly due to a lack of affordable space for the collectors in the dense urban area. In total, Europe has been home to 290 large-scale solar thermal systems with a total of 1.1 GWth (1.58 million m²). These made up around 3% of the total operating solar thermal capacity of the EU region.

The globalisation of solar heating and cooling technologies to emerging economies and developing countries has continued with sales picking up in several new emerging markets. These included Argentina, the Middle East and parts of eastern and central Africa. In Argentina, new solar water heater installations have grown strongly in recent years. A good famous example is that the Argentina President has ordered a new 260-litre solar thermal thermosiphon system to be installed for his Presidential residence in Argentina. Rising electricity prices and solar building obligations have also helped to drive up new demands in these new emerging markets.