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Market update

August 2022

Until now, underlying clean renewable energy production has, above all, been the fight against global warming.

The European Commission’s proposal for a directive on renewable energy sources of July 2021 (Fit for 55) aims at reducing greenhouse gas emissions by at least 55% from the 1990 level by 2030. The EU’s target is to be carbon neutral by 2050. The European Union has also allocated 30 per cent of its EUR 1,800 billion support instrument for recovery from the corona pandemic for 2021–2023 to climate actions, i.e., for strengthening the EU Green Deal programme. Emission reduction and carbon neutrality targets have been widely set in other parts of the world as well.

In the emission reduction targets, the public discussion has largely focused on electrification with solar and wind power. In Europe, for example, heating accounts for about 50% of total energy use, traffic about 30% and direct electricity use only about 20%, and more than half of Europe’s carbon emissions are caused by heating.

Russia’s invasion of Ukraine has caused global turbulence in the energy sector, the effects of which are particularly visible in Europe. The need to reduce Europe’s dependence on Russian energy has quickly emerged alongside the climate targets. Concern about the price and availability of energy, especially in heat production, has given rise to measures to secure energy supply in preparation for the coming winter, but at the same time, it has increased interest towards renewable energy.

Even though the utilisation of emission-free solar heat in district heating and industrial processes has increased in recent years, according to the International Energy Agency (IEA), only around 11 percent of heating is produced with renewable energy worldwide. In electricity production, renewable energy sources account for about 29 percent, according to IEA. Electrification is a strong trend, but it is clear that the electricity produced solely by means of renewable forms of energy is not nearly enough to replace all fossil energy, nor to meet the needs of the green hydrogen economy of the future. By increasing the utilisation of solar heat in heating, renewable electricity can be utilised more and faster in, for example, electrified traffic.

In May 2022, the EU Commission published an extensive package, the RePowerEU plan, which seeks solutions on how to transition away from Russian fossil energy to clean energy as soon as possible. Among other things, the Commission proposes to increase the renewable energy target of the Energy Efficiency Directive from 40% to 45%. As one concrete measure, the Commission proposes speeding up the permit processes for renewable energy projects.

In the same context with the RePower communication, the Commission announced a solar energy strategy that aims to ensure the utilisation of the full potential of solar energy in order to reach the climate and energy targets of the European Green Deal Programme. The Member States should speed up the deployment of solar electricity and the utilisation of large heat pumps, geothermal energy, and solar heat. The strategy highlights increasing the use of solar heat especially in district heating. 

According to a report prepared on the production of district heat in Narbonne, France, solar heat has the lowest life-cycle emissions among the clean sources of energy (source: Inuk ST Plant CO2 footprint study 2021 / Ademe). No rare earth metals are used in Savosolar’s solar collectors, and the collector materials are completely recyclable. The strengths of solar heat also include the Europe-based manufacturing of solar thermal technology and the smaller need for land compared to, for example, photovoltaic panels. 

In its roadmap announced in June, Solar Heat Europe has calculated that solar heat capacity will triple from 2021 to 2030. This would mean that at the end of the current decade, emission-free solar heat would have replaced around 12 billion cubic meters of Russian gas. At the same time, more than 250,000 green transition jobs would be created in Europe. According to the roadmap, the greatest potential is in industrial process heating, especially in food production, of which around 10 percent could already be covered by solar heat in 2030.

The goal of increasing energy self-sufficiency and reducing emissions further reinforces the need for the joint use of different forms of energy and heat production. The flexibility of energy systems, the optimisation of the use of different energy sources and the possibilities for energy storage will grow in significance. Solar heat is well-suited for various kinds of heat co-generation systems, and it can be cost-effectively stored by means of water reservoirs.

The market for large solar thermal systems with a temperature of less than one hundred degrees has a limited number of skilled turnkey suppliers that operate globally. Savosolar is the technology and quality leader in this segment. 

Savosolar half-year report for January-June 2022