A large number of stakeholders were interviewed and/or responded to questionnaires regarding the requirements for developing local capacity around solar water heaters. These included project developers, component manufacturers, service providers, energy authorities and representatives of national and global associations dedicated to solar water heaters or renewable energy in general. The study also draws on the public reports of relevant companies, including annual reports, technical specifications and equipment handbooks, and public price lists. Heating and cooling consume the most energy of all end uses, accounting for nearly half of global final energy consumption. Most of this is generated from fossil fuels. In 2019, fossil fuels and non-renewable electricity met more than 77% of heating and cooling demand (IRENA, IEA, REN21, 2020). The energy consumed for heating and cooling is thus a significant contributor to air pollution and carbon dioxide emissions: heating and cooling accounted for almost 40% of energy-related emissions in 2018, a share that has remained almost unchanged for the past decade, owing to the continued dominance of fossil fuels (IRENA, IEA, REN21, 2020). Half of the energy consumed for heating and cooling is consumed in industrial processes, while another 46% is used in residential and commercial buildings – for space and water heating and, to a lesser extent, for cooking. The remainder is used in agriculture for greenhouse heating and for drying, soil heating and aquaculture (IRENA, IEA, REN21, 2020). Given that heating water accounts for about 18% of household energy use (US DOE, n.d.), on average, and that demand for hot water is growing with household incomes, the decarbonisation of heating and cooling in general, and water heating in particular is thus a key element of the on-going energy transition needed to limit the rise in global temperatures to well below 1.5°C (IRENA, IEA and REN21, 2018, 2020).

China had the largest number of newly installed solar water heaters (glazed and unglazed), at
almost 25 GWth in 2018, followed by Turkey and India with around 1.3 GWth. Brazil installed
875 megawatts thermal (MWth), and the United States, 623 MWth. Figure 2.2 shows the installed
capacity by 2018 of the ten countries that installed the most solar water heaters in 2018 (MWth). Since
China imbalances any cross-country comparison by its sheer size, looking at recent additions per capita
and cumulative additions per capita completes the picture. For example, looking at newly installed
solar water heaters per 1 000 inhabitants in 2018 reveals that several small countries and territories
with smaller populations made important strides in deploying the technology (Figure 2.3). Resource
potential cannot be the main driver of deployment, given that Denmark, a country with poor solar resources, ranks among the top ten.

Policy instruments driving the deployment of solar water heaters

Although often cost competitive, solar water heater deployment requires policy support. The barriers are
manifold. For instance, low levels of awareness by households about modern hot water generating
systems based on renewables hinders deployment. Homeowners tend to choose a known option. As
a result, the deployment of solar water heaters has been largely supported by a mix of policies in
many countries. These include direct policies such as targets, programmes, obligations and mandates,
and financial incentives such as subsidies and low-interest loans to lighten the burden of the high
initial cost (relative to cheaper alternatives such as gas boilers). In addition, enabling policies such as technical standards and certificates and training and retraining measures help create an enabling environment for the development of a solar water heater sector. Broader enabling policies are discussed in Policies in a Time of Transition: Heating and Cooling (IRENA, IEA and REN21, 2020).

Targets provide a clear indication of the intended deployment and timeline envisioned by the government. They inform industries and consumers alike, and often become key drivers of policy, investment and development. Targets for solar water heaters are set in terms of the number of systems, collector surface or thermal capacity. Ambitious solar thermal targets and low system prices have driven the impressive growth of solar water heaters in China. The country’s 12th Five-Year Plan (2011-2015) included a target of installing 400 million m² of cumulative solar water collector surface. It was exceeded by more than 10.5%. By 2020, the end of the 13th Five-Year Plan period, this number
was expected to have doubled to 800 million m² (NDRC, 2016).


As countries move towards their renewable energy targets and ramp up efforts to reduce carbon emissions, heating water using renewable energysources should be considered as a part of this
effort. Estimates for the near future see the global market for solar water heaters cross USD 4 billion
by 2024 (Global Market Insights, 2017). Next to the environmental benefits, this presents ample
opportunities for socio-economic value creation and employment. The deployment of renewable energy leads to jobs in different sectors, of different qualifications and duration. This study focuses on direct employment, which refers to employment that is generated directly by core activities without considering the intermediate inputs necessary to manufacture, install and operate solar water heaters. Other types of employment are indirect employment, including in upstream industries that supply and support core activities, or even more comprehensive induced employment, encompassing jobs resulting from additional income being spent on goods and services in the broader economy (such as food, clothing, transportation and entertainment).

Worldwide employment (direct and indirect) in the solar heating and cooling sector was estimated at around 817 620 jobs in 2019. The largest number of jobs were in China, Brazil, Turkey and India. China accounted for about 83% of the global employment in the sector, with 670 000 jobs, followed by Brazil with 43 900 jobs, Turkey with 21 600 and India with 20 690 jobs (IRENA, 2020b) (Figure 3.1).

Sales and distribution
In the sales and distribution phase, distributors and wholesalers transport solar water heaters from manufacturers to households, creating many opportunities for value creation. In this analysis, the term wholesale refers to the purchase of solar water heaters from the manufacturers (including imports for imported equipment) and distribution involves the sale of systems to final customers using multiple
channels. Distribution also encompasses the transport of solar water heaters from the warehouse to the
installation site, including logistical arrangements. Components can be conveyed in a typical pickup
truck, with no special handling required apart from proper packaging to avoid breakage or scratching.
Selling and distributing solar water heating systems for 10 000 single-family households requires 44 160 persondays (around 10% of the total requirements along the value chain) (Table 4.4). The wholesale activity requires 30% of the total person-days, while the retail distribution of systems is the most labour-intensive activity, involving an estimated 30 960 person-days (70% of the total).

Renewable sources of energy are key for the energy transition. It is widely acknowledged that the
expansion of renewable energy not only supports climate goals and other environmental protection
objectives, but also increases energy security, decreases dependence on fossil fuels and enables energy access. In addition, the deployment of systems that harness renewable energy supports economic
growth, creates employment opportunities and enhances human welfare. Domestic value creation
can be maximised by leveraging and enhancing capabilities in existing industries along the value chain, or developing them. While efforts to deploy renewable-based systems have generally focused on power generation, there is a growing global consensus on the need to shift attention to end-use sectors. The transport and the heating and cooling sectors account for more than 30% and almost 50% of global energy consumption, respectively. Therefore, utilising renewables in these sectors is key to accelerating the pace of the global energy transition. For heating and cooling, renewables are becoming increasingly cost-competitive relative to the alternatives, in particular for heating water. In contexts characterised by an insufficient energy supply and high reliance on fossil fuels, or where inefficient electric boilers are common and peak power loads need to be dropped, solar water heaters represent a promising solution. Their deployment is labour intensive, presenting opportunities for local job creation, and for the establishment of businesses focused on the sales, distribution and installation of systems. These opportunities for value creation are amplified by the fact that the requisite activities can build on existing capacity.


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