Today, the markets for active solar systems in Northern Europe and North America are mostly local. The systems are mainly manufactured in the same country as they are sold, and they are mainly sold on an individual basis by a local installer. The price of the systems can vary substantially.

How to reach price reductions

A large part of the total costs of an active solar system consists of marketing expenses, as the systems will be sold one by one and also because the market is so little. Today, many small manufacturers have to meet the demands of a small market; therefore, they have a higher production price per unit.

The costs of solar water heating systems are often considered to be the major barrier to the development of the solar heating market. However it has been found that this barrier can be reduced through bulk purchasing. In addition, two recent market studies (see ref 7,8) have shown that there are other barriers which have to be recognized and which can be turned into market opportunities. Collector costs today are partially influenced by manufacturing techniques which are often small-scale and can benefit from automated production. As the solar water heating market grows, it is expected that the market will be dominated by rationalized industrial manufacturers and small manufacturers will occupy niche markets. This is expected to result in further cost reductions for solar water heaters, which in turn will provide solar energy at prices comparable with those of fossil fuels and well below the cost of electricity in many of the IEA countries.

Since solar installations are often characterized by relatively high investments and low operating costs, it may be appropriate to evaluate the economics on the basis of full financial analysis over the product life-cycle rather than a simple investment break-even analysis. The life-cycle of currently available solar systems approach 25 years. Even at lower life-cycles of 10 years, today's solar heating costs in some markets are already comparable with fossil fuels, whereas in other countries the costs are up to twice as expensive, depending on the climate, market structure, and taxes on fossil fuels.

One important condition for lowering solar costs is international trading (see ref 9). Market barriers need to be removed and international standards and codes developed, helping to internationalize and rationalize the trade in solar equipment.

CO2 Impact

The amount of CO2 is decreased by the use of solar heating. How much CO2 emission you avoid by using solar depends on the fuel you substitute.

In Denmark, a solar heating plant in the countryside will typically replace oil boilers, and that means that a 4 m² system used by 4 persons will save between 400-550 litres of oil per year, which will reduce CO2 emissions by 1,5 tonnes per year.

If you substitute for coal-fired electricity heat, you spare the environment approximately 1 kg of CO2 for each kWh the solar heating system delivers!

Gas is a far cleaner fuel than oil and especially coal. Substituting for gas, the savings are about 0.25 kg/kWh.

References:

7. Heimo Zinko, Johan Bjarklev and Peter Margen, "The market potential for solar heating plants in some European countries". CEC APAS-RENA Project CT 94-0057. ZW Energiteknik AB, Sweden, March 1996.
8. Heimo Zinko, "Solar Heating in Northern and Central Europe - The Solar Heating Market": CEC - THERMIE B; ZW Energiteknik AB, June 1997, ZW - 97/07.
9. Hans Westling, Promandat AB, "Co-operative Procurement - Market Acceptance for Innovation Energy Efficient Technologies". B1996:3 NUTEK/IEA, Stockholm, Sweden 1996.