The market for solar thermal systems (STS) in Europe has witnessed significant developments at all levels in the last four years, according to a recent research report from Frost & Sullivan.
Policy-makers, market participants and end users have shown a keen interest in STS, ensuring a high growth potential. Due to its tremendous long-term growth prospects, this market has attracted several new participants that are playing a central role in promoting the industry.
Frost & Sullivan says that the European STS market earned revenues of over 958.9 million euros in 2008 and estimates this total to reach 2.2 billion euros in 2014. The technologies covered in this research include passive solar thermal systems and active solar thermal systems.
‘Currently, the key driver for the market in Europe is government support for STS in the form of financial subsidies, tax credits and regulatory reforms,’ says Frost & Sullivan Research Analyst Hammam Ahmed. ‘The market for STS is highly responsive to fluctuations in the provision of governmental support.’
For instance, the Italian market witnessed strong growth levels following increased government subsidies for STS. On the other hand, the German market declined significantly as a direct result of a temporary disruption to these subsidies and recovered as soon as they became available again, Frost & Sullivan notes.
High growth in the STS market, particularly over the last four years, has attracted several new participants that are promoting the industry and making STSs accessible to a wider customer base.
Cost is the primary hurdle confronting the STS market, the report adds. Despite the financial incentives that solar thermal installations receive, the overall price is still high and the recoup period can go up to 20 years in some regions.
Additionally, an STS is only a complementary alternative and not a substitute for a traditional hot water system. Therefore, it is not a viable investment option for most end users, especially in countries where conventional energy prices are low.
‘In many countries, particularly in northern Europe, the solar yield can be as little as 40 percent,’ explains Ahmed. ‘Additionally, the up-front cost of a solar thermal system continues to be expensive.’
Companies should work on developing low-cost and effective solar thermal systems, particularly in the current economic conditions in Europe, Frost & Sullivan says. On the whole, with escalating competition, both manufacturers and installers will be forced to reduce prices and the overall price of STS will go down.
SOURCE: Frost & Sullivan