Solar Heating and Cooling System Market

Market Overview

The global solar heating and cooling system market size was valued at USD 2.8 billion in 2023 and is projected to reach a value of USD 5.3 billion by 2032, registering a CAGR of 7.5% during the forecast period (2024-2032). The ability to catch sun rays and generate energy for eventual use will provide numerous prospects for the growth of the solar heating and cooling market.

Solar heating and cooling systems use solar energy to provide heating and cooling solutions for homes, businesses, and industries. These systems employ solar collectors or panels to convert sunlight into heat or energy, which can be used to heat or cool indoor rooms, heat water, or power air conditioners.

The expanding integration of low-carbon power production technologies and increased actions by national and international organizations and administrations are driving the expansion of flat plate solar collectors, which are solar devices that use solar energy to generate heat energy. Furthermore, solar is the leading green technology in terms of investment from both public and commercial firms, indicating considerable untapped potential. The ability to catch sun rays and generate energy for final use will provide numerous prospects for the growth of the solar thermal sector.

Highlights

• Combi generates the highest revenue share by type.
• Flat plates dominate the market by collector type.
• Residential topped the market by application.

Market Dynamics

Global Solar Heating and Cooling System Market Drivers:

Strict Government Regulation

Several governments provide financial incentives to encourage solar heating and cooling systems. Rebates, tax credits, grants, and subsidies are some of the incentives available to aid with the upfront costs of purchasing and installing solar systems. In the United States, the federal government gives the Solar Investment Tax Credit (ITC), which covers up to 26% of the cost of constructing a solar energy system, including solar heating and cooling systems. Several states additionally provide additional incentives, such as rebates and property tax exemptions, to encourage solar adoption.

The EEG 2023 is the most significant update of energy legislation in decades. It creates the groundwork for Germany to achieve carbon neutrality. Planning calls for steady and significantly quicker expansion to enhance renewables' proportion of gross power consumption to at least 80% by 2030. This program has resulted in a significant increase in the adoption of solar technologies throughout the country. Governments may provide direct subsidies or grants to help deploy solar heating and cooling systems, especially in areas where solar energy adoption is still in its early stages or where economic hurdles to entry exist. These subsidies may cover some of the installation expenses or provide financial help to qualified households, businesses, and communities.

Additionally, in 2023, the Small-scale Renewable Energy Scheme (SRES) and Large-scale Renewable Energy Target (LRET) are expected to generate a total of 27,900 and 48,800 gigawatt hours (GWh), respectively. This accounted for approximately 28% of total electricity generation in Australia, 12% more than in 2022. Similarly, In Japan, the government implemented a substantial FIT program to encourage the installation of renewable energy equipment, such as solar heating and cooling. Under this arrangement, system owners receive fixed-rate payments for electricity generated by their systems and supplied into the grid, ensuring a consistent cash stream over the system's life.

Global Solar Heating and Cooling System Market Restraints:

Intermittent Nature of Solar Energy

Solar heating and cooling systems use sunlight to generate energy, but their effectiveness can be influenced by weather conditions such as clouds, rain, and snowfall. Solar systems may generate less energy and lower heating or cooling capability in areas with unpredictable weather patterns or frequent clouds. For example, lengthy periods of gloomy skies or heavy rains can reduce solar radiation, resulting in lower energy output from solar collectors and system efficiency. The amount of solar energy produced by solar panels in the United States changes periodically due to the sun's position in the Earth's orbit and the panels themselves. Solar panels typically generate the most incredible energy in the summer, followed by the fall and spring.

Furthermore, the geographic location of a building or installation site influences the availability of solar energy. Regions closer to the equator receive more sunshine yearly and may have higher solar insolation levels than regions farther away. Furthermore, latitude, altitude, and local climate variables can all impact solar energy potential and solar heating and cooling system performance. Because of the Earth's curvature, the polar areas receive the least amount of solar energy. The night lasts six months in the winter. Even in the summer, the sun never reaches its highest point in the sky. Sunlight passes through a thick wedge of atmosphere, making it much less intense.

Global Solar Heating and Cooling System Market Opportunity:

Rising Energy Demand and Urbanization

As the world's population and economies grow, so does the energy demand. According to the International Energy Agency (IEA), worldwide energy demand is expected to rise by 25% by 2040. Population expansion, economic development, industrialization, and urbanization contribute to increasing energy demand. Furthermore, urbanization is a significant source of energy demand, as more people relocate to cities in quest of more excellent economic opportunities and higher living standards. According to the United Nations, the worldwide urban population is predicted to reach 68% by 2050, with most of this expansion occurring in emerging countries. Metropolitan regions are hubs of economic activity, consumption, and energy use, resulting in increased energy demand for buildings, transportation, and infrastructure.

As a result, increased energy demand and urbanization create a tremendous opportunity for solar heating and cooling systems to address urban buildings' heating and cooling requirements. Buildings consume considerable global energy, with heating and cooling accounting for a significant fraction of energy use in residential, commercial, and institutional buildings. Solar heating and cooling systems provide a sustainable and renewable energy option that reduces fossil fuel dependency and the environmental impact of building energy usage.

Regional Analysis

Europe Dominates the Global Market

The global solar heating and cooling system market analysis is conducted in North America, Europe, Asia-Pacific, the Middle East and Africa, and Latin America.

Europe is the most significant global solar heating and cooling system market shareholder and is estimated to grow at a CAGR of 7.3% over the forecast period. The European Commission is on its way to achieving 20% of its energy demand from solar by 2030. Many European countries have been prosperous in fully integrating solar power on-grid or in a standalone type. Countries such as Austria, Germany, and Denmark have taken significant strides in integrating solar thermal, especially heating. On the other hand, Poland and Spain are some of the fastest-growing solar thermal markets, according to the European Solar Thermal Industry Federation. Heating and cooling comprise 46% of Europe's energy system, for which the EU is constantly funding programs in terms of solar thermal integration. Greece and Cyprus are also contributing to the region's 2020 landmark.

Furthermore, SolarPower Europe anticipated that the EU's solar generation capacity will reach 259.99 GW by 2023, maintaining its long-standing leadership in solar energy. Solar installations climbed by 40% between 2022 and 2023, resulting in 55.9 GW of new solar power across the EU27. This enabled over 17 million more European homes to be powered by solar in 2023. Furthermore, the solar heat for industrial processes (SHIP) sector is predicted to expand by 2023, with many multi-MW plants under construction in Belgium, Spain, and Croatia. These projects will employ solar process heat over 100°C, potentially expanding the market segment by sevenfold.

Asia-Pacific is anticipated to exhibit a CAGR of 7.8% over the forecast period. The Asia-Pacific region includes China, Japan, India, South Korea, Australia, and the rest of Asia-Pacific. India and China are critical regional actors because of their large populations and energy demands. Solar power in India is a rapidly growing business part of India's renewable energy portfolio. Building energy consumption accounts for more than one-third of India's overall energy consumption; therefore, the government is pushing individuals to switch to solar thermal systems to reduce domestic energy consumption. India is anticipated to have the most urbanized population by 2050.

Additionally, more than 70% of the buildings that will exist in India by 2030 have yet to be constructed. As a result, there will be a higher demand for energy-efficient residential and commercial buildings. Furthermore, an increase in local clean energy producers is expected to tap into the potential of solar energy from buildings to fulfill future energy demands. The governments of emerging nations in this region have taken significant steps to create long-term solar energy power facilities, providing enough opportunity for the solar heating and cooling market to flourish.

North America is expected to see moderate growth in the market, with the United States leading the way. California, a leader in renewable energy adoption, has launched programs like the California Solar Initiative (CSI) to encourage solar heating and cooling systems. The CSI provides incentives and rebates to residential and commercial clients that install solar thermal systems for water heating, space heating, and cooling. The CSI and other supportive policies have resulted in tremendous growth in California's solar heating and cooling business, with thousands of installations contributing to energy savings and environmental advantages.

In Latin America, Mexico and Brazil are the countries that want to develop district heating systems that will use renewable energy. This will undoubtedly fuel the expansion of the regional solar heating and cooling system market. The Middle East and Africa, which receive the most sunlight, are expected to take full advantage of this in the coming years. This is evident from the region's recent investments in solar electricity.

Segmental Analysis

The global solar heating and cooling system market is segmented based on type, collector type, and application.

The market is further segmented by type into Heating, Cooling, and Combi.

Combi systems, also known as solar combi systems or solar thermal combi systems, combine sun heating and cooling capabilities to provide space heating and cooling solutions in buildings. These integrated systems use solar collectors to absorb solar energy for heating and cooling, providing year-round comfort. Solar thermal technologies have been created to produce energy for hot water and space heating. These combi systems are in more demand for residential applications. In this case, the collector is larger since combi systems provide two loads. The combi system includes an auxiliary energy source, such as biomass, oil, gas, or electricity. However, combi system installation necessitates a unique skill set that must be taught to contractors.

Heating systems use solar energy to warm and comfort buildings by heating air or water for space heating or household hot water. Solar heating systems typically comprise solar collectors that capture sunlight and convert thermal energy to a heat transfer fluid (such as water or antifreeze), which is then cycled throughout the heating system. In residential applications, solar heating can supplement or replace traditional heating systems such as boilers or electric heaters, lowering energy expenditures and carbon footprint.

Based on collector type, the market is fragmented into Flat plate and evacuated Tube.

Flat plate collectors are among the most popular solar collectors in heating and cooling systems. These collectors are formed from a flat, rectangular absorber plate composed of a high thermal conductivity material like copper or aluminium, which is then covered in a transparent cover (typically glass) and insulated backing. Sunlight travels through the glass cover and is absorbed by the absorber plate, which converts it to heat. The heat is subsequently transferred to a heat transfer fluid (such as water or antifreeze) that circulates through tubes or channels within the collector. Flat plate collectors are well known for their simplicity, durability, and cost-effectiveness, making them ideal for various residential, commercial, and industrial settings.

Evacuated tube collectors are rows of parallel glass tubes, each with an absorber tube covered with a selective coating that improves solar absorption while reducing heat loss. The gap between the absorber tube and the outer glass tube is evacuated, forming a vacuum that functions as insulation, reducing heat loss by conduction and convection. Sunlight passes through the outer glass tube and is absorbed by the absorber tube, heating the heat transfer fluid (often a liquid or gas) that circulates within the Tube. Evacuated tube collectors are noted for their high efficiency, especially in colder climes or low-light settings, where vacuum insulation helps to retain heat and reduce thermal losses. These collectors are widely used in residential and commercial applications that require great efficiency and performance. Still, they are more expensive than flat plate collectors due to their more sophisticated design and manufacturing process.

The market can be bifurcated by application into Residential, Commercial, Industrial, and Institutional.

Solar heating and cooling systems have industrial applications in buildings such as manufacturing plants, warehouses, and other industrial environments. Solar systems in industrial applications can offer process heating, room heating, hot water generation, and cooling for many industrial processes and operations. Solar thermal systems can help industries with high-temperature processes, such as food processing, chemical production, and metal smelting, generate steam and run heat-intensive applications. Solar heating and cooling systems assist industrial operations in reducing fuel consumption, improving energy efficiency, and lowering greenhouse gas emissions, contributing to financial savings and environmental stewardship.

Additionally, companies have yet to fully explore the potential of solar heating and cooling systems in industrial applications, particularly for process heating. There are several cases where solar heating systems are used, but only in low-temperature environments. As technology advances in product development, solar heating systems will become more realistic for medium temperatures up to 250°C.

Commercial applications include solar heating and cooling systems in buildings like offices, retail stores, hotels, restaurants, and other non-residential businesses. Solar systems in business settings provide the same functions as residential systems: space heating, hot water heating, cooling, and air conditioning. Commercial buildings can have higher energy demands and larger heating and cooling loads than residential ones, making solar systems more effective in lowering operating costs and environmental impact. Solar heating and cooling solutions can be included in new construction projects or retrofitted into existing commercial structures to improve energy efficiency and sustainability.

Recent Developments

• May 2024- Trane Technologies accelerated growth with Leading Sustainability Performance.
• May 2024- Daikin announced five commitments to accelerate California's goal of installing six million heat pumps by 2030.