Setting out its solar thermal roadmap, which was published at the NYSEIA conference in May 2010, the Solar Thermal Consortium (STC) plan focuses on improving uptake of solar thermal technologies through consumer education and incentives, installer training, promotions to attract manufacturers, investments in R&D, and permitting improvements.

Developed by more than 130 industrial, academic and governmental representatives, the Solar Thermal Roadmap creates a path to move New York State toward the equivalent of 1 million solar hot water collectors, or half a million residential systems, by 2020.

While these figures are still dwarfed by the German market, where around 200,000 solar hot water systems are installed annually for example, the measure is deeply significant in the US, where so far federal efforts have largely foundered and, as in many other nations, solar thermal is still the neglected poor cousin of other renewable energies like wind and solar PV.

With individual states left to devise and implement their own renewable energy programmes, the solar thermal plan for New York stands out.

The logic behind such a scheme is irrefutable, the New York Solar Energy Industries Association claims. ‘Sixty percent of the energy consumed in New York State buildings is to provide heat and hot water’, said its president, Ron Kamen, who noted that with the Roadmap: ‘New York is moving to become the national leader in the research, development, deployment and manufacture of solar thermal technologies.’

Focused on solar heat and hot water applications for buildings in New York State, the Roadmap is modeled on global best practices, as well as new ideas from the consortium. Its goal is to develop the New York State solar thermal industry so that the total installed statewide capacity grows from its current estimated level of 6 MWth to 2000 MWth by 2020, with 70% coming from residential and 30% from commercial installations.

The Roadmap’s proposed implementation would save an estimated 6 million US gal. (22.5 million litres) of oil, 9.5 million ft³ (270,000 m³) of natural gas and displace 320 GWh of electricity production annually by 2020, translating into consumer savings of more than $175 million per year, the STC claims.

Barriers To Implementation

While the total U.S. installed solar thermal capacity of some 7.6 GWth is close to the German installed capacity of 8 GWth, the majority of this capacity is derived from swimming pool heating rather than domestic hot water or space heating. On a per capita basis, the contrast is stark, with 100 Wth/person installed in Germany and 0.3 Wth/person installed per person in New York State, a factor of close to 1000. Indeed, the Roadmap acknowledges that the state lags the world in terms of solar thermal usage.

Nonetheless, despite the small base, since heating and cooling makes up around 30% of the total energy use in the U.S., and current total installed solar thermal capacity equates to approximately 0.06% of the entire U.S. energy consumption, there is an opportunity for solar thermal to make a significant impact.

Solar thermal has certainly seen growth in cold climates such as those encountered in the region. For example, in 2008 Canada installed 40 MWth of solar thermal capacity for both space and water heating. Even so, the report does recognise that levels of adoption and market growth are a result of many factors, including energy cost, governmental regulations, aggressive marketing and educational programmes, and incentives.

In New York State the authors contend that solar thermal systems can provide 50%–70% of the domestic hot water used in a typical residence and that the state has an opportunity to expand this sector of the economy and position itself for a strong export base. However, there are significant hurdles to overcome. For example, the technology and its benefits are not widely known by consumers. Furthermore, sufficient industry knowledge and certified installers to support successful installations are lacking, and there are gaps in the value chain from materials to end-user. In addition, potential barriers to development of the industry in the state include poor awareness and perception based on experiences from the 1970s and 1980s. At that time the systems were perceived to be unreliable and with short life expectancies. Poor system integration and installations were primarily to blame for these experiences, the STC says.

Public sector support is also required in order for large-scale solar thermal adoption levels to be achieved. A public education campaign will require the support of both industry stakeholders and public officials to be successful. Governmental support is required initially to make the systems cost effective and to attract manufacturing capability to the state. This requires an educational and lobbying effort on the part of the industrial partners targeted at state, federal and national officials.

The development of a trained workforce is also critical to achieve the goals of the Roadmap. It is vital that the quality of installations is high and that the systems function properly. An installation workforce needs to be developed and trained to ensure that this occurs. Courses are available which can provide this training, but few are currently located in the state.

System costs are another significant barrier to widespread adoption. While there is a segment of the market that identifies environmental issues as the primary driver for adoption, the Roadmap goals cannot be achieved by this segment alone and current system and permitting costs need to be addressed to grow the industry significantly.

The ability to fully realise the potential of solar thermal technologies is currently further limited by long-term technology development. Advanced technologies such as solar assisted cooling, integrated PV/solar thermal systems, and low temperature solar thermal electric generation are potential areas of opportunity. Thermal storage is also an area that, if effectively solved, would allow for additional advancement of the industry.

Costs of Solar Thermal in New York State

The rationale for developing a strong solar thermal industry in New York State comes from three areas: end-user energy cost savings, environmental impacts, and economic development through job creation systems and industry sales.

A model for direct hot water (DHW) systems was developed to determine the potential impact of the adoption of solar thermal technologies, and to investigate incentive and growth levels needed to reach the roadmap goal. Based on industry input, systems were modeled with initial installed costs of $8000 for residential systems and $18,000 for commercial systems. The costs were held fixed for three years and then reduced at an annual rate of 5% thereafter on the basis of increased competition and supply, as well as future technological improvements.

The price of energy in New York State is among the highest in the USA. In 2009, electricity averaged 17.8 US cents/KWh and a four person ‘model’ family would be expected to spend between $390 and $1100 (depending on the fuel source) to provide domestic hot water in 2010. Over the past 10 years energy prices in New York State have increased at a substantial rate averaging 9% and 11% annually for fuel oil and natural gas respectively. A conservative 8% annual escalation in fuel prices is assumed in the model, which by 2020 drives the cost for heating hot water to between $620 and $1700 per household, again depending on the fuel source.

In this analysis, assuming the 8% annual increase in energy prices, by 2020 the savings for a four person model family supplying 50% of their water heating needs from solar are projected to increase to between $310 and $850 annually. Fuel savings, from residential DHW applications alone, show the potential for a dramatic reduction in emissions too. In 2010 the model family with a solar thermal system could save approximately 100 US gallons of fuel oil, 125 therms of natural gas or 3100 KWh of electricity.

According to the model, combined residential and commercial sales start at $5 million in 2010 and rise to $629 million in 2020. Total revenues from 2010–2020 are projected to be $2.6 billion. Furthermore, the analysis is based only on the development of a state-wide domestic hot water market. The potential impact is obviously multiplied when other technologies such as solar space heating, ‘combi’ systems and solar assisted cooling are considered, as well as potential opportunities elsewhere in the US and overseas.

Above: Solar heating systems are a common sight in Germany. Credit: ESTIF

Job creation associated with the solar thermal market development is modeled using current job levels in Europe as a basis. And in Europe, one job is created and sustained for every 1000 ft² (93 m²) of newly installed panel area, the Roadmap states. These jobs include manufacturing, installation and maintenance, and under the developed growth model, in total approximately 24,000 jobs will be created and sustained by 2020, significantly up from the current estimated level of some 36 solar thermal employees. Clearly, the impact of a vibrant solar thermal market is significant to the state.

Solar Thermal Roadmap Recommendations

Recommendations set out in the Roadmap aim to address market barriers in a logical, cost effective manner and are grouped into five main categories including organization; awareness and marketing; institutional issues; workforce development; and, research and development.

The key recommendations are to:

• Create a state-wide educational campaign and electronic resource to inform consumers about solar thermal and its benefits;
• Initiate a solar thermal financial incentive programme to encourage installations by shortening payback time;
• Promote New York State as a location for manufacturers;
• Invest in research and development to create a scientific base which systematically develops next generation technologies; and,
• Clarify permitting procedures and union jurisdiction to simplify installations.

Funding for these solar thermal-focused efforts could come from the Regional Greenhouse Gas Initiative (RGGI), Renewable Portfolio Standard (RPS), the New York State Public Service Commission or similar programmes, the authors say.

Addressing public awareness, the roadmap recommends that a solar thermal website should be created to provide a central resource in the state. And, in order to track consumer awareness and satisfaction, it is recommended that a consumer survey be conducted each year focused on installers, consumers, and the general public. Data from the surveys will be used to determine market conditions — for instance the number of installs, system costs and such like — as well as an indication of consumer satisfaction, and the effectiveness of the marketing campaign.

Furthermore, growth in sales can also lead to job increases beyond installation jobs through increased manufacturing capability within the state, the report’s authors argue. For example, they say, interactions with European manufacturers during the course of developing the Roadmap have indicated their desire to locate manufacturing capabilities within the US.

In order to take advantage of these growth opportunities, it is recommended that within three months a committee led by economic development organizations be formed to develop a statewide marketing plan, for the expansion and attraction of manufacturing capabilities into the state. The marketing plan should address state and US market potential, state incentives, the existing workforce capability and industrial base, as well as R&D capabilities.

Current tax incentive programmes (30% federal, 25% state) for solar thermal systems provide a payback period for the average system of about 11–15 years for modelled residential systems. Payback for commercial systems can be significantly shorter due to accelerated depreciation. It is recommended that an incentive programme be combined with the current tax rebate programme to reduce the payback term further. It is additionally recommended that all available incentives be tied to an installer certification scheme to encourage high installation standards.

A fixed rebate model would pay a fixed amount based on system size and capability, as well on the primary heating source. Such an incentive programme could include residential as well as commercial, industrial, institutional, and agricultural consumers, though they may be structured differently. The incentive programme should be designed to sunset as system costs decline and energy prices escalate, the authors say, adding that such a model is attractive as it decreases the upfront out of pocket expenses, which may be a barrier to adoption.

Incentives could also be tied to utility companies. For example, the Long Island Power Authority (LIPA) Solar Rebate Program is designed to offset electric usage through the adoption of renewable energy sources. This is particularly attractive to those consumers which use electricity to provide heat and hot water. LIPA reports that since 2000 it has paid out approximately $59 million in incentives resulting in more that 2400 installations (mostly PV) on Long Island and the creation of over 50 companies to conduct those installations. PV system costs have dropped to 35% through this programme and a combination of state and federal incentive schemes, and such programmes could be expanded or developed to include gas and oil customers, the Roadmap document says.

Addressing a number of key institutional issues, the Roadmap also recommends that a permit system is developed so that a single permit can be applied for and granted for an installation. Such a permiting process would simplify installation procedures and reduce costs, while still ensuring that the installation complies with relevant zoning and building requirements.

It is also recommended that certain levels of renewable energy be mandated directly into the building code. Generating a significant proportion of a building’s energy from clean sources is clearly possible given current technologies and it is proposed that all new buildings over 10,000 ft² (929 m²) in area must generate 10%–20% of their energy from onsite renewables.

To encourage minimum installation quality standards state financial incentives could eventually be offered for systems that are installed by professionals who have passed – as a minimum – an entry-level solar hot water certification exam. The North American Board of Certified Energy Practitioners (NABCEP) does currently offer a solar thermal certification test, though any requirement to sit this exam would most likely exclude the majority of the exisiting installers and restrict the initial growth of the industry, the authors argue. Currently there is no ‘entry-level’ exam, though NABCEP is reportedly developing one. Thus, in order to prevent a bottleneck in installation certification it is proposed that New York develop a staged programme of certification.

To properly train and qualify New York installers and inspectors, the preparation of a multi-faceted education scheme is another sensible goal, the authors say. Although there are many educational offerings already, a more robust and comprehensive educational programme and some governmental support for it are recommended.

In addition, despite the significant advances in solar thermal, further R&D is also needed to continue to reduce system costs, improve quality and performance, and develop new technologies.

While New York State has a substantial R&D base, there are few research groups within the state that directly focus on solar thermal. To facilitate the development of a R&D base within the state, the creation of a Solar Thermal Center of Excellence (COE) is recommended in the Roadmap.

The centre would encompass a collection of researchers with varied technical skills and interests aligned with solar thermal needs. Participants would be spread over a number of institutions and this would allow for the leveraging of existing expertise. In this way the state would nurture a developing specific research base. The authors argue that the cluster should be developed and funded based on existing models in the state for academic/industrial partnerships.

Funding for the Solar Thermal COE would initially come from the state. The funds would be used for administrative purposes and to support initial research efforts.

Research would be awarded through a competitive proposal process, with matching funds required from industrial sources. Over time, however, the funding for the centre would predominantly come from industrial sources. The development would also help to attract new industrial capability to the state as it would allow for strong academic/industrial collaboration supporting the local development of new technologies, the Roadmap says.

The creation of a solar thermal system certification testing centre is also recommended by the analysis, which points out that New York State Energy Research and Development Authority (NYSERDA) currently has an effort underway to develop small wind (less than 100 kW) and PV certification testing centres. A similar operation could be developed for solar thermal. Currently there is a bottleneck in the system certification process as the number of systems being submitted is greater than the available capacity. It is expected that within three years the certification centre would be fully self-sufficient with revenues from testing funding its operations.

While 42 million solar thermal systems have been installed worldwide, the US has been slow to adopt this technology. However, sentiment is changing. As the nation’s focus on renewable energy continues to grow, the expectation is that the adoption of solar thermal technology will, too.

Consequently, leading international solar thermal companies are looking to establish production facilities in the US and the Roadmap’s authors believe that an organized effort to promote the industry could position the state as the solar thermal leader. They note that most states will be aggressive in trying to attract new business, especially given the recent business climate, and New York State aims to win first mover advantage to secure its share of a new industry that will create manufacturing, jobs and investment.

The STC is led by the collaborative efforts of Clarkson University’s Center for Advanced Materials Process (CAMP), the NYSTAR Center for Advanced Technology (CAT); the New York Solar Energy Industry Association (NYSEIA); The Solar Energy Consortium (TSEC) and Droege & Company, an international management consultancy firm.