A tenfold increase in the solar thermal market could drive system prices down by 29.2%, according to research published by the Solar Trade Association (STA).

The research titled, The scope for cost reduction in a mass solar heating market, calculates that the solar thermal sector could follow the solar PV sector by enjoying significant reductions in installed system costs.

Although the cost reductions experienced by solar PV over the last couple of years have been primarily driven by falling component costs, the STA predicts that the bulk of solar thermal’s predicted savings will be achieved by efficiencies on the installation side.

Commenting on the findings of the research, STA chief executive Paul Barwell said: “Solar heating installs more than doubled in the two years from 2008 to 2010 but have been in decline since then. The launch of the feed-in tariff for on-site electricity has spurred strong growth in technologies like micro-wind and solar PV, but the lack of a similar incentive scheme for heating left solar thermal in the shade. Current solar thermal install rates are almost back at 2008 levels.

“The good news is that the domestic renewable heat incentive (RHI) is now just round the corner and the STA has secured a workable tariff and regulatory framework for solar thermal, so industry now has a great chance of regaining the lost momentum. As costs come down, so too will the tariffs, as the Government seeks to minimise policy costs and stabilise consumer returns. So the message here is not that customers should wait for cheaper systems, but that from a macro-economic perspective, solar thermal is ready to realise its mass market potential and make a major, cost-effective contribution to the UK’s renewable energy objectives.”

The study, authored by the chair of the STA’s solar thermal working group, Stuart Elmes, was originally submitted as part of DECC’s consultation over the domestic RHI rates. Elmes forecasts that, while not able to match PV’s cost reduction of 66% since 2011, solar thermal could achieve a 21.6% reduction in equipment costs and a 35.8% reduction in non-equipment costs for solar thermal, if the technology can replicate solar PV’s success.

Elmes, added: “We should remember that the big drop in solar PV prices is not all about the Chinese kit. The mass market growth in roof-mounted PV generated many other efficiencies, including purchasing power, transportation, competition and innovation. Policy cost controls will keep returns constant, but the reduction in up-front costs will make solar thermal affordable for more and more homes and businesses”.

The STA will be addressing a wide range of issues around solar thermal and the RHI at the Solar Thermal Forum, jointly hosted with the European Solar Thermal Industry Federation at Solar Energy UK, which takes place at the NEC in Birmingham on 8th October.

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