“Installers need conditions to provide a good service at a fair price”
Sun & Wind Energy
The growth rate of solar thermal energy has been declining for years. Is there hope for the coming years? S&WE spoke to Pedro Dias, Secretary General of the European Solar Thermal Industry Federation (ESTIF).
S&WE: Mr. Dias, what do you expect from the solar thermal market in Europe in the year 2017?
Pedro Dias: During the last years, several important solar thermal markets faced reductions in their annual sales. Nonetheless, some of those markets have shown signs of stabilisation. We expect that such stabilisation will occur in other markets. We also expect that applications for domestic hot water in multifamily houses, solar heat for industrial processes and in particular solar district heating perform better than the single-family houses segment.
S&WE: What are the most important factors to determine the market in 2017?
Dias: We identified mainly three factors which will have a relevant impact on the solar thermal market in 2017: the evolution of fossil fuel prices, the effect of the EU Heating and Cooling strategy (HCS) and the energy labelling implementation, specifically for package label, which aims at providing an indication on the performance of the entire system rather than its components separately.
Several entities have forecasted an increase of fossil fuel prices over the coming years. It is though unclear how much this will be felt in 2017. The upward trend can already have an impact on consumers’ perception, when deciding about purchasing their new water or space heating system. But it is clear that low fossil fuel prices, together with the lower initial investment costs for carbon-based technologies (oil, gas, coal), have been hurting solar thermal and other Renewable Energy Sources (RES).
It is possible to identify some signs of EU Members States looking differently at the renewable heating and cooling technologies. We need to remember that the Heating and Cooling Strategy, launched in February this year, has helped to reveal the untapped potential of this sector. With 2020 approaching, several countries are looking into alternative ways, besides renewable power generation, to reach their 2020 RES targets and reduce CO2 emissions. The heating and cooling sector, consisting of mainly decentralised demand and decentralised supply, does not face the systemic challenges for its integration as electricity from RES does. It faces different challenges, which have to do also with that decentralised nature, namely engaging consumers in programmes to renovate their water and space heating systems with renewable heating and cooling. But public authorities are also better aware of other benefits, such as reduction of energy imports and creation of local jobs. These factors combined make us confident that countries which have not yet implemented concrete measures addressing this sector will start soon to do so, while others will rethink the mechanisms they have used before.
One aspect, of which the impact in the market is not completely clear for the moment, is the energy labelling for space and water heaters, in particular the package label. This regulation came into force in September 2015. After one year, it is clear that there is little knowledge about it among consumers and a limited interest of stakeholders, namely installers, in applying and promoting it. And at this stage we don’t see clear signs of change for 2017.
S&WE: What can the industry generally do to achieve a market revival?
Dias: The solar thermal industry has been reducing prices of their products, while maintaining quality. This is an important first step to promote its competitiveness on the market. The price of energy provided by solar thermal is competitive today, in terms of Euro-cents per kWh. Though this message is not sufficiently promoted.
At the same time, it is important to reduce downstream costs. Some manufacturers are trying to simplify the installation, so that this reduces time and risks for installers, hence promoting a reduction in installation costs.
On the other hand, it is important to acknowledge new market demands, such as the concept of the energy as a service and the interactivity with consumers. Regarding the later, more applications are interacting with smart objects. Solar thermal should also explore the connectivity with other systems to provide consumers and installers with real-time data and as such detect performance issues in the system used. This is already happening in the market for larger systems and tends to reach further smaller ones.
S&WE: What demands should the industry address to policy?
Dias: The industry expects from the policy level that they address the main market barriers, such as the initial investment costs, consumer awareness and availability of qualified installers with sustainable, effective and stable measures.
One of the identified challenges is related to the initial investment costs required by solar thermal solutions. The fact that energy costs from solar thermal are competitive is attenuated by the need to make a substantial initial investment. Today, considering the economic situation in several countries and the prevailing scepticism, it is important to find alternatives which attenuate the impact of this initial investment, allowing consumers to benefit from future energy savings. This can be done via better financing models, support schemes or other mechanisms.
It is also important to address awareness among consumers. This awareness should go beyond the perception of environmental benefits and focus also on the economic benefits of solar thermal, such as low energy costs, independent from fluctuations in the energy market. It is also important to help consumers build confidence in these technologies. This can be done through public campaigns or with regulations or support programmes.
Regarding installers, it is important to reduce bottlenecks in the market caused by the availability of qualified installers. At the same time, it is important that installers have the conditions to provide a good service at a fair price.
Finally, we would like to stress the need to consider some recommendations from the EU Heating and Cooling Strategy and the positive effects that solar thermal and other renewable heating and cooling technologies can provide. It is evident that countries which implemented carbon taxes have accelerated the shift towards renewable energy and the investment in energy efficiency measures. A lot of elements can be improved regarding the promotion of renewable heating and cooling solutions for buildings, such as the inclusion of clear references on space and water heating demand and alternatives in the Energy Performance Certificates (EPCs) or putting in place decarbonisations plans coordinated between national and local levels.
S&WE: Politicians prefer heat generation from electricity. Is there an effective strategy against such efforts?
Dias: First we need to consider what kind of electrification we are talking about, if we talk of efficient (sensible) electrification or wild (rapid) electrification.
The efficient electrification is happening, not at a very fast pace but it is happening and it is logical in moderate levels. We see more heat pumps in the market and they have a role to play when they can work all year long at reasonable performance levels. This type of electrification will coexist with renewable heating and cooling options, such as solar thermal, they can even complement each other and be positive for consumers.
The main problem is the push for wild electrification. There is, from the power sector (all players, from coal to RES), a desire to push for a strong expansion of electricity into the transport and heating sectors. For their purposes, efficient electrification of heating is likely not strong and fast enough. That is why we see already references to direct heating, in some cases under the cover of RES, but really aiming at increasing power demand, serving the objective of reactivating stranded assets such as co-generation, coal or gas power plants, some still new, that have been closed down in the last decade. At the same time, a strong increase in power demand would open more room for new investments in power generation, and not only from Renewable Energy Sources.
Often we see simple messages take over the debate. Electrification is also a simple message. For instance, RES electricity needs more storage but power storage is expensive. Though thermal storage is cheaper, so let us promote power to heat. Indeed, a simple message. But is it a correct one? And would it deliver what it is theoretically supposed to do, namely promote more renewable electricity in the system?
So the most efficient strategy to address the issue of electrification of heating and cooling is to discuss it openly, to broaden the debate. It is to bring these discussions to the floor, and argument around it with concrete numbers, addressing economic, environmental, technical and societal challenges related to these systemic changes to our energy system.
The interview was conducted by Jens-Peter Meyer.