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Solar thermal market shows sounds growthMarch 2009

Solar thermal markets around the world are showing healthy growth rates, new research by BSRIA shows. Various factors have continued to encourage the growth of the solar thermal market. These included including increasing energy costs, changes in building regulations and government incentives.

Like many markets, the solar thermal market is affected by the depressed economic climate; therefore a smaller growth rate is expected in the next few years. Nevertheless, on average, the market continues to grow, indicating a constant shift towards renewable energies.

The Chinese solar thermal market continued to boom. As a consequence, the growth started to attract a significant number of unorganised suppliers whose products are of poor quality and infringe intellectual property rights. Nonetheless, it is thought the role of these suppliers in the market is becoming less important in the future.

The US market witnessed a 40% increase in sales of installed solar water heaters in 2007. The surge was aided by the continued federal solar tax credits by the US government; however growth was hampered by the downturn of the economy.

The BSRIA study shows that globally, flat plate collectors have proved to be the most popular choice, apart from China and Korea, where vacuum tubes are the preferred system. In China, the share of 'U shape' glass vacuum tubes remain steady at about 84%, but East China is a growing area for flat plate collectors. Flat plate collectors also lead the way in the Hungarian market, but are closely followed by vacuum tube collectors. Both types are thought to be nearing towards a balanced share in the market.

In terms of material, almost all countries opt for either a u-shaped or heat pipe type of vacuum tube collector. Regarding other types of collectors, these are only popular in Turkey, France and Switzerland. Coxial vacuum tubes dominate the French market, as they are perceived to be more efficient, the market share was expected to reach 55% in 2008.

Combi-applications for sanitary hot water and space heating are popular systems in Germany, Austria and other northern European countries. However, this is not the case in southern Europe, China, and the US, where systems are only used to supply sanitary hot water.

The average residential size of a system of solar thermal collectors in South Korea is usually much larger than in other countries as the residential projects are normally collective solar thermal systems.

At present, copper is the preferred absorber material, but rises in the price of copper are forcing many manufacturers to start using aluminium because it is cheaper. Turkey appeared to be the only country in the study that was already using a high percentage of aluminium over copper, accounting for an 88% share of the market.

Thermosiphon products tend to be most popular in countries with a hot climate almost all year round. Such countries include Portugal, Brazil, Greece, parts of China, Turkey and Spain. Besides climatic factors, thermosiphon systems are also preferred due to their simple functioning as there is no need for pumps or controls.

Most of the European countries studied as well as the U.S. and Korea, are dominated by demand for forced circulation collections. In the UK they account for 90% of the market. Drainback types are almost negligible or hold a small share in most markets with the exception of the U.S. where they account for 20% of the market.

Prices for solar thermal collectors have risen in the past few years resulting from rising raw material costs. However, there is potential for prices to decrease as competition increases in the market. On average the price of solar collectors in the UK remains higher than in continental Europe.

In China and Korea, the major players in the market prefer to distribute their products mainly through regional wholesalers. Only a limited amount of products are sold directly to customers.

Normally the favoured distribution channel in the European solar thermal market is through installers and plumbers, with the exception of the UK, France, Germany and Greece where the preferred route is through wholesalers. This is also the case in the U.S. market. In Croatia, the direct sales channel (via own shops and online) closely follows the installers and plumbers route. The distribution channel in Turkey is complex and unstructured. The main players tend to have their regional sales offices/dealers and from these stocked offices they tend to serve all the dealers and installers in that region.

In terms of supply, China is home to a large number of solar collector manufacturers for both evacuated glass and flat plate collectors. Although China continues to be the world largest market with double digit growth, about a dozen Chinese companies are focused on exports, increasingly targeting growth markets in Europe and the Americas.

BSRIA's world renewables study was published in November 2008 and covers a total of 18 countries for electric heat pumps and 18 markets for solar thermal. Each report contains information on market size and segmentation, market trends, a strategic analysis, sales by application and distribution channel.