1. Solar-thermal systems: current state of the sector and anticipated developments

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1 EUROPEAN COMMISSION JOINT RESEARCH CENTER DIRECTORATE-GENERAL Institute for Energy Energy Systems Evaluation Unit Petten, 8 June 2007 Subject: Report on the Hearing of the Solar Thermal European Technology Platform Participants: European Commission: MOLINA G. (Chair), SABATER I., PETEVES S., TZIMAS E., RIESGO VILLANUEVA J., OSTROM R., MÜLLER J., GIERULSKI K., NAGELE E. AGE: CHWIEDUK D., RUBIO J.A. Solar Thermal Technology Platform (ESTTP) Panel and other experts: ZOELLNER T., WITTWER V., WEISS W., MIERES J.M., ITÓIZ BEUNZA C., HAFNER B., CASASOLA R., ROEPER M., KÖBBEMANN-RENGERS R., HENNIG E. Venue & Date: Rue Froissart 36, CCAB 3C, Brussels, May 7, 2007 (14 :00-17:30) 1. Solar-thermal systems: current state of the sector and anticipated developments The total installed capacity of solar-thermal systems in Europe in 2006 was 13 GW th 1, which produced approximately 0.7 Mtoe of useful heat. Annual installations in the EU reached 2.1 GW th that year, compared to 1.5 GW th in 2005 and 1.1 GW th in 2004, demonstrating the continuous growth of the sector. The average growth rate of installed capacity during the period was 13%, while that realised between 2004 and 2005 was almost 25%. Europe is one of the most dynamic markets for solar-thermal systems in the world, together with China and Oceania. The world installed capacity in 2006 was 118 GW th, with the largest markets being China 2 and Taiwan. The global growth rate during the period was 11% and the global average annual growth rate between 2000 and 2005 was 15%. In the EU, three countries capture 72% of the market, a consequence of long-term financial incentive schemes for the development and deployment of solar-thermal technology: Germany (with 49% of the European installed capacity), Austria (12%) and Greece (11%); followed by France, Spain and Italy, albeit with much smaller markets. The vast majority of solar-thermal systems, 90% of installed capacity in Europe, is for the supply of domestic hot water single family house units, the remaining being an 1 This corresponds to a total collector area of 19 million m 2. 2 The Chinese market was initiated 10 years ago. 1/6

2 equal share of domestic hot water multi-family house units, and, single family house combi-systems that deliver both heating water and space heating. The application mix however varies between countries. In addition, there are few large scale systems installed in Denmark, Sweden, Germany and Austria which deliver heat to district heating networks. Some of them are coupled with seasonal heat storage. The average turn-key cost of a solar-thermal system today is about 1100/kW th for pumped systems in central and northern Europe, and, 600/kW th for thermosiphon systems, which are used typically in southern Europe. The sector sees a significant potential in expanding the market initially in southern Europe and other Mediterranean countries where solar-thermal systems achieve higher energy yields due to the higher solar radiation. Gradually, the market will expand northwards provided that sufficient financial incentives are offered to users (see below). In addition, learning effects and the creation of economies of scale will result in the reduction of system costs that will make the technology more attractive to users. Experts from the technology platform claim that if the installed solar-thermal capacity reaches 70 GW in 2010 and 200 GW in 2030, system costs for small scale forced circulation units installed in central Europe will reach 400/KW th in More specifically, the sector believes that there is a very big potential for the expansion of the market in the building sector, for space heating and cooling/airconditioning applications, depending on the local climatic conditions. The Platform experts stated that, provided that energy efficiency and energy savings measures can halve domestic heat demand, solar-thermal technology can meet all the needs of new and well retrofitted houses in terms of space heating and hot water. The technology that allows a house to rely fully on solar-thermal systems for its heat needs has already been demonstrated; and it was claimed that this technology is currently cost-competitive to heating by fossil fuels, especially when solar collectors are integrated to facades and building roofs (if energy cost are calculated over the lifetime of the solar thermal system). Further improvements in technology, that include the development of new solar facade systems that will incorporate collectors, vacuum insulation and advanced (e. g. phase change) storage media, combined with intelligent heat management systems will improve further the cost-competitiveness of such solar houses. Space cooling is another emerging and very promising application that is based on solar-thermal technology. The additional benefit of solar cooling is that it can simultaneously help alleviating the problems associated with peak loads in the electricity system, as it will offer air-conditioning that will not be based on electricity. The wide deployment of solar cooling however requires the overcoming of technological barriers (see below) before the technology becomes cost-competitive for domestic applications. Finally, future applications will also include the provision of low and medium temperature process heat to the industrial sector. The potential is very large in view of the fact that 67% of final energy use in the EU industry is in the form of heat (currently of the order of PJ). Of this, 43% is high temperature heat (>400 C), and 30% is low temperature heat (<100 C). Currently, the European industry has 2/6

3 deployed 30 MW of solar thermal systems which provide PJ of low temperature heat. Besides such conventional low temperature heat systems, the development of concentrated collectors will further allow solar-thermal systems to produce medium temperature heat, hence expanding the potential of the technology. It is stressed however, that, in view of the short payback times sought by the industry and the fact that energy usage is not the main cost element in industry, solar-thermal systems can be profitable only after industrial processes have been optimised in terms of energy efficiency. Lastly, solar-thermal systems will be increasingly used for desalination in a small scale mainly in low power systems. 2. Technology penetration targets and the expected impact on energy policy goals The goal of the solar-thermal sector is to meet 50% of the low temperature heat demand in Europe by 2030, provided that energy efficiency and savings measures will be able to reduce by one-half the European needs for heat; and heat storage with a significantly higher energy density compared to water is available. This goal can be achieved with the introduction of solar-thermal heating and cooling in all new buildings and with the renovation of half of existing buildings and their retrofit with solar-thermal systems by In addition solar thermal heat can deliver thermal process heat for dish washers and washing machines, where currently heat is mostly produced by electricity. The actual penetration of solar-thermal technology in the EU will depend on the role of innovation (see next section) and any political, and financial, initiatives. The penetration target for the technology set by the Platform for 2020 ranges between 90 GW th to 480 MW th, depending on the market environment; and the useful heat that will be generated may range between 5.6 Mtoe and 29.5 Mtoe. For the industrial sector specifically, the potential for 2030 is between 2 and 15 GW th. The long term target of the technology is to reach 3000 GW th, 163 GW th of which will be for industrial applications, and generate 200 Mtoe which is equivalent to approximately 10% of gross inland consumption of the EU in If the aforementioned targets of the sector are realised, the impact on the EU energy policy goals are likely to be significant. The generation of heat is emissions-free hence, CO 2 emissions will be reduced. The consumption of fossil fuels for space heating, oil and natural gas, and of electricity used for space cooling and airconditioning, especially peak load, will also decrease, and the European economy will benefit by developing new business and services, mostly SMEs, and by exporting solar-thermal systems around the world. In the year 2006 about people were working in the solar thermal sector (production, installation and maintenance). If the goal to install 3 kw th (4m²) per inhabitant in Europe (EU 27) can be reached and if an increase of productivity is taken into account, the people employed in the solar thermal sector will rise to jobs by /6

4 3. Interactions with other competing or synergetic technologies and community policies and initiatives Platform experts consider that solar thermal systems will be complementing other RES technologies and energy efficiency measures in the future. For example, the sector has identified synergies with heat pump technology for the provision of low temperature heat and for cooling, with cogeneration systems (CHP) and biomass utilisation for the provision of hot water and process heat, and with photovoltaic systems and CHP for power generation. Furthermore, the Platform has identified and is currently pursuing synergies with other Technology Platforms and sectors to accelerate the broad deployment of the solar-thermal market and to meet the R&D challenges that the technology is facing: The cooperation with the Construction Platform will allow the integration of solar systems in buildings, support the development of new facade concepts with integrated solar collector and storage, of photovoltaic-thermal systems and of retrofitting options. It will also raise the awareness of constructors about the benefits that solar-thermal systems can offer to a building. Closer collaboration with the Chemistry Platform will lead to the development of new materials for, for example, high density storage, improved heat transfer for temperatures up to 250 C, better insulation, advanced collectors based on new polymeric materials and glasses (the latter also in collaboration with the glass industry), and to a better understanding of the materials aging process. Closer interactions with industry will identify the optimal paths for the integration of solar heating concepts; and a closer collaboration with manufacturers will result in the development of advanced equipment such as cooling machines. Looking at the global dimension, China is the strongest competitor to the European industry. Although Chinese technology is currently inferior to the European, it demonstrates a rapid development and it is expected that soon, Chinese solarthermal systems, mainly collectors, will be as reliable as the European ones, albeit available at lower cost. This will have detrimental impacts on the competitiveness of the European solar-thermal industry. It was also noted that currently Europe produces phase change materials leading world wide, but does not produce high storage density materials. These materials are imported mainly from the USA and Japan in small quantities. Therefore, it is essential that Europe acquires the necessary know-how about storage materials and builds the required production capacity. 4. The role of innovation The Platform experts stated that the penetration targets mentioned in Section 2 and any resulting benefits cannot be reached in a business as usual scenario. The experts however recognised that there is a great potential for innovation in the sector, which, when coupled with the right incentives, will lead to the realisation of the aforementioned targets and will improve the position of the European solar-thermal industry among its international competitors. The sector recognises that there is a need for intensive and dedicated fundamental research on a number of key issues. Among them, storage is considered as the most 4/6

5 important technical bottleneck for the further expansion of the solar-thermal market. There is a pressing need for research and development on storage media with high storage densities, able to store enough heat to meet the requirements of a house for at least a week or better a month. To this end, thermo-chemical and phase change materials need to be further developed, which will also benefit other sectors and technologies where energy storage plays a crucial role. Furthermore appropriate system designs and control strategies have to be developed in order to achieve the maximum benefit from these new storage technologies. In addition to materials for heat storage, advanced materials need also to be developed for other parts of a solar thermal system: new polymeric materials and glasses with improved optical properties for collectors, improved heat transfer materials for temperatures up to 250 C, as well as insulation, both for the solar thermal system as well as for buildings. Major system components that need to be further developed include advanced collectors that can be used for medium temperature applications, low cost collectors with long lifetimes for integration in facades, combined photovoltaic-thermal systems, more compact small scale systems for hot water preparation, kit systems, and cooling machines (chillers). Lastly, the issue of reliability needs also to be addressed to guarantee the behaviour and efficiency of solar thermal systems throughout their lifetime. Finally, the experts emphasised on the lack of skilled professionals, from qualified installers to technologists/scientists. 5. Platform recommendations for Actions to be considered in the SET-Plan During the hearing it was emphasised that additional measures need to be adopted to promote the expansion of the solar-thermal market. The Platform experts stressed the need for clear political signals that would enable large investment in the sector. In addition it was recommended that legislative and administrative barriers which limit or prevent the deployment of solar-thermal technology need to be addressed and proactive measures need to be proposed. One of the problems identified was the resistance of power utilities to the further expansion of the sector. The introduction of obligatory measures for the installation of solar-thermal systems in new buildings was debated during the hearing. It was mentioned that although obligations would be a suitable measure for the introduction of solar-thermal systems, this may not necessarily be the optimal path for the expansion of an already existing market. In the latter case, the provision of long term incentives, possibly lasting during the lifetime of a system, may be a more appropriate option, depending on the status of the market and the regulatory conditions. Hence, it was highlighted that clear national support schemes should be introduced that may vary between countries depending on specificities and the evolution of the sector in each country. The difference with the incentivisation of the photovoltaic sector was also mentioned, as the solar-thermal sector cannot benefit from schemes such as feed-in tariffs. To overcome these barriers, intelligent investment mechanisms are needed for a quick 5/6

6 and broad market penetration, which necessitates the involvement of the banking sector. The expansion of the solar cooling market will also benefit from the presence of a business model. The development of an experimental business model on a regional level was then proposed to help the analysis of the evolution of such a market. The experts also stressed the need for an increased R&D effort in the areas highlighted in the previous section in order to increase the attractiveness of the technology and to protect the competitiveness of the European solar-thermal industry. It was also noted that most of the financial support coming from the EU is given for demonstration projects and not for fundamental research. In EU countries the amount of funding that the industrial sector typically invests on R&D does not exceed 5%, possibly ranging between 1% and 3%. Platform experts recognised that this needs to increase to 10% and matched by an equal amount from the EU to have a significant contribution to the innovation cycle of solar-thermal technology. 6/6