The solar thermal market has been showing steady growth, but I predict the U.S. industry is on the path for record growth on par with the solar photovoltaic industry. Let me explain why.
Based on the 2010 solar markets trends report, the solar thermal market is not showing fast growth. It saw nine percent growth in 2010 — much faster than the U.S. economy as a whole, but much slower then it’s cousin, the solar PV industry, which had 69 percent growth.
According to the EIA, the US market is strong compared to the world market, which actually shrank. More over, according to a recent SEIA study, about 75 percent of American’s believe that solar thermal technology is good for job’s growth and deserves government support.
I believe that the foundation for increased growth is currently being set and the industry is about to see much faster growth. I’d like to discuss the 7 trends that point toward much faster solar thermal growth. But first, let’s get a little review of solar thermal.
First, here is a snapshot of the industry, how the technology works and the current bottlenecks.
1. The majority of the solar thermal industry is residential.
This is a large difference between the solar pv industry and the solar thermal industry. While solar pv has the largest number of residential installations, pv only represents 29 percent of capacity. On the solar thermal side, residential installations represent around 79 percent of capacity.
Solar Thermal Residential – 79 percent of capacity
Solar PV Residential – 29 percent of capacity
2. Solar thermal is a very simple, efficient and cost competitive technology.
Solar thermal has been around for decades and is extremely reliable. See a video of Bob Ramlow, who wrote the book on solar thermal, explaining how the systems work in three minutes. If you’re more interested in the technology, you can download the Solar Thermal Design and Installation 101 Guide.
Basically, solar thermal collectors use the sun to heat water up so that when it goes through a boiler or furnace, less or no fuel is needed.
3. China dominates the world market.
China manufactures and uses about 80 percent of the world market.
4. The industry is driven by federal policy and fuel prices, and is less reliant on state policy. Thus, it’s a national industry.
Solar thermal numbers are mainly driven by federal policy and the cost of fuel prices they offset — less driven by state policy than PV. Why? It’s a more efficient technology, so the 30 percent ITC is enough. This is useful because it means that the solar thermal market has nationwide appeal until 2016. It is then regionalized based on energy costs — areas with higher energy costs have more demand. Also warmer areas also have better economics because they don’t have to deal with cold temperatures that make solar thermal slightly more expensive.
5. Two Barriers for homeowners: cost and maintenance.
SEIA reports that demand for solar thermal remains strong. When surveying home owners, 46 percent of survey respondents are interested in installing solar thermal with the main objections being the cost of purchasing and maintaining the system.
I’d argue the foundation for solid growth is being set for 7 reasons. Listed here in no particular order
1. Solar thermal SRECs
A few states including Washington D.C., North Carolina and Arizona are experimenting with solar thermal SRECs. This means they are allowing solar thermal production to counted and sold in the SREC market. In the case of Arizona, solar thermal technologies can receive a general REC credit.
If you’re curious what an SREC is, you can read more about them the development of the U.S. SREC market here.
None of the solar thermal SREC markets are hot, nor is allowing solar thermal SRECs to be sold really driving the industry yet. But the foundation is being set. If these policies are successful, I expect to see surrounding states copy them, much like we saw with the solar PV market. Both Washington D.C. and North Carolina are experimenting with solar thermal SRECs.
2. State governments are backing the technology
Solar thermal, due to it’s already high energy and capital efficiency is mainly driven by federal incentives and the high energy costs it offsets – not state incentives. This means that any state support just makes the technology more attractive then it already is. Many states, including Massachusetts, are starting to promote solar thermal because it provides an extremely attractive investment in terms of public dollars spent over fossil fuel reduction and utility bills reduced.
3. Credentialing and training is growing
NABCEP, long known for the solar PV credential is now offering both NABCEP solar thermal entry level and professional certifications. You can find the solar thermal entry level learning objectives here. Note, in NABCEP documentation you’ll see solar thermal or solar hot water being called “solar heating.” This is because solar thermal collectors can be used for space heating, process heating, as well as hot water. I refer to as solar thermal because this is what it’s called in the industry, but all the terms are interchangeable.
Training and credentialing is key for industry growth and workforce development because the industry must be training on how to sell, design and install jobs correctly for proper growth to happen. If you’re looking to get your NABCEP solar hot water entry level certification, there currently is only two approved NABCEP entry level solar heating providers.
4. Financing options are emerging
Financing has created a boom in the solar photovoltaic space and its just a matter of time before the same principles are applied to the solar thermal market. There are a few solar thermal projects that have attracted third-party financing, and a small number of companies focused on financing commercial solar thermal projects, including RedCo Power and Skyline Innovations.
5. Commercial solar and district heating
Large scale commercial solar thermal systems are now being tested when interconnected with a district heating system. Although district heating is less popular then it could be in the US, it very popular in Europe. If selling solar thermal BTUs into a district heating system proves to be cost effective, the demand for residential and commercial solar thermal systems will surely increase.
6. Product innovation are decreasing costs and increasing reliability
The solar thermal industry is much more mature then the solar PV industry. The technology is already well over 90 percent efficient and the construction processes are known and relatively efficient. However, like the solar PV space, renewed interest in the industry is resulting in product innovations that are decreasing costs, while increasing reliability and reporting. This includes the Sunnovations passive pumping system that eliminates all active pumping mechanisms and allows contractors to install a system in one day instead of two. Also, Sunreports has created an awesome output monitor for solar thermal systems that provides very specific measurements on the outputs of the housing that is wirelessly transmitted to a web client. The service seems basic but most solar thermal systems have no such system. The result is that many people don’t know if their system is broken or not working properly.
7. Solar cooling
If you have a heat source, you can cool something. This is something we’ve known for a while but companies are now finding new ways to use the heat generated form solar thermal systems to cool building. The huge plus here is that the buildings with big cooling loads tend to have the most sun. The University of Arizona has installed a solar cooling system, EnerWorks has installed the world’s largest solar thermal heating and cooling system in North Carolina and one of the winners of GE $200 million dollar smart grid competition was a European company called Climate Well. Climate well has trademarked the term “solar cooling” and produces units that connect with flat plate solar thermal equipment, the most basic and reliable collectors, to provide air conditioning to residential, commercial and industrial facilities.
The ability to use solar thermal for air conditioning is going to create HUGE amounts of demand and rapid growth for the solar thermal industry.
Article by Chris Williams, Chief Marketing Officer at HeatSpring Learning Institute. Chris writes about solar and geothermal marketing, sales, design and installation. You can find more interviews with industry experts at HeatSpring TV or contact him @topherwilliams or firstname.lastname@example.org