Solar Water Heaters in Latin America - Market Development

Overview

The use and outreach of solar thermal energy differs significantly across Latin American countries. Some countries play a global role, while others have only a limited installation of solar thermal applications like solar water heaters (SWH).

The biggest market in Latin America is Brazil with a capacity of more than 7.7 GWth in 2014 (third globally after China and Turkey). This is demonstrated through municipal building regulations, social housing programmes and the economic competitiveness of solar thermal are favourable in Brazil.

Mexico is rapidly installing new capacities (ranked 11^th in 2013 globally) while SWH markets in other countries, such as: Colombia, Peru, El Salvador and Guatemala, are also picking -up speed – growing even without public incentives.

However, although solar water heaters have emerged as an option for institutional, commercial and service sectors, numbers for the residential sector are still low. An UNEP report from 2015 concludes that there are still significant barriers, such as limited trained personnel, a lack of awareness among the general public and academia, and insufficient standards and certification schemes to ensure quality of solar water heaters.

Latin American Solar Water Heating TechScope Market Readiness Assessment (UNEP, 2015)

Six countries (Colombia, Ecuador, El Salvador, Guatemala, Paraguay and Peru) serve as examples for the Latin American market.

After the introduction of extensive natural gas usage in the 1990s, the SWH market for residential sector decreased considerably and remains low. For institutional, commercial and service sector, however, SWH has emerged as a viable option.

Latin American SWH Markets

From the 6 countries, only Peru is considered to have a good enabling environment. The other 5 have emerging SWH markets that are relatively low scoring (with below 2 out of 5 points).

Support Framework: Peru has national targets for SWH and promoting programmes to ensure targeting those goals. El Salvador promotes an outreach campaign and a loan programme. This is supported by local banks, as is also the case in Colombia.

National conditions: Due to absence of sufficient baseline installation data (no data for 5 out of 6) and the existence of electricity subsidies, all countries scored relatively low. However, the region has great potential for SWH and in 4 of the 6 countries, the markets have grown (Colombia, Ecuador, Paraguay and Peru). The payback period for SWH installation is below 5 years on average.

Financing: Relatively high interest rates and difficulties in accessing SWH financing were experienced in all 6 countries. “The countries in the region may have a diminished ability to independently resource programs that stimulate their SWH market”.

Business climate: Except for Peru, all other countries lack installer certification and industry association. El Salvador and Guatemala have domestic manufacturers while Colombia, Guatemala and Peru are considered to have the strongest business climate.

Recommendations for Further Activities

• Boost data collection efforts (SWH market and installer surveys)
• Export regional best practices in public outreach campaigns
• Coordinate and support a regional SWH clearing house
• Explore the implementation of phased building mandates, starting with SWH systems on public buildings and new housing developments
• Strengthen SWH financing schemes and other fiscal incentives (with support of international partners)
• Explore the creation of a regional SWH testing and certification scheme for the Caribbean
  

Policy Recommendations

The study identified the following actions as possible measures to improve market conditions and overcome barriers:

1. Institutional capacity
   

• Capacity building at government level (creation of institutions or divisions for renewable energy or environmental agency to promote SWH)
  
• Creation of an association for importers, producers and sellers
• The implementation of certification processes and control

1. Legal and regulatory framework

• Mandatory standard technology
  
• Tax incentives
• Sustainable construction: SWH in hotels and hospitals

1. Access to financing (e.g. the “Solar Plan” in Uruguay)
2. Access to information (census based, platforms managed by governmental units)
   
3. Goals or objectives (including relevant market potential studies; NAMA or INDCs)
   

Country Examples

The following text shows experiences with solar water heating in various Latin American countries.

Peru

Although there is no specific regulatory framework in place, there are several instruments promoting SWH. For example, according to the Referential Plan (2009) for efficient energy use 2009-2018, 100,000 electric water heaters shall be substituted by solar water heaters.

Consequently, the solar thermal market in Peru (including both flat plate an evacuated tube collectors) has grown from 47 MWth in 2008 to 95 MWth in 2014. From all SWH installed, over 89% are the glazed flat plate collector type. Manufacturing, importing and distributing enterprises are mostly located in the southern part of the country, with Arequipa being the centre of the manufacturing. This is mirrored by the fact that over 90% of SWH installed are in Arequipa. SWH users are predominantly households (85%), followed by hotels (11%).

For a project example please read:

• Peru:_Solar_Water_Heaters
•  

Brazil

Brazil has a good supporting structure for solar thermal applications. The social housing programme “Minha Casa, Minja Vida” (My House, My Life) mandates the installation of SWH for every poor family. As of 2013, more than 183,000 SWH were installed. The residential sector is comprised of 60% of these installations with the social housing sector contributing 19% of this. The commercial sector and process heat have a smaller market share with 18% and 3% respectively.

Brazil has a National Solar Heating Department (DASOL) that aims to develop the market for SWH and coordinates the different stakeholders within the sector.

The National Institute of Metrology, Standardisation and Industrial Standards Quality has developed certifications for solar heating equipment since 1998. Since 2000, electricity bills include a 0.5% levy to fund SWH. Furthermore, there is the energy efficiency support programme, PROESCO, to provide financing for eligible projects and several subnational mandates and laws. E.g. since 2007, Sao Paulo mandates that at least 40% of all water heating needs should be generated from solar energy. Many municipalities also provide local tax incentives for solar water heating.

Mexico

The SWH market in Mexico grew by a substantial 23% in five years. There are domestic manufacturers, such as Módulo Solar, as well as foreign manufacturers active in the Mexican SWH market. In the 25,000 solar thermal rooves programs, GTZ estimated an average system size of two square meters and costs of 8,900 Mexican Peso (USD 684). Experiences show that the payback period for a SWH system is 8.7 years. Costs, however, may vary.

Policies: La Comisión Nacional para el Uso Eficiente de la Energía (Conuee) coordinates all activities in the SWH sector and leads the solar water heating programme 2014-2018. In this programme technical and scientific capacities (installation and design) are increased and SWH are installed.

Standards: The CONUEE publishes standards, certification and testing methodologies for solar thermal systems. In order to receive financing from the Hipoteca Verde loan program, systems need to comply with the DTESTV (i.e. Dictamen Técnico de Energía Solar Térmica en Vivienda). A significant proportion of the current SWH systems in Mexico were financed through this loan scheme.

Testing: Mexico has four laboratory testing facilities that perform national certification tests based on DTESTV quality standard.

Association: National Association of Solar Energy

• https://energypedia.info/wiki/Water_Heating#Mexico:_25.2C000_Solar_Roofs_Programme
• The SWH programme in Mexico (in Spanish): http://www.gob.mx
• The UNEP SHW initiative in Mexico (in Spanish): http://www.gob.mx
• The certification of SWH products in Mexico (in Spanish) http://www.gob.mx
• Mexico: Ongoing Struggle over Legally Binding Standards: http://www.solarthermalworld.org/content/mexico-ongoing-struggle-over-legally-binding-standards
• The German cooperation in Mexico (in German): https://www.giz.de/de/downloads/giz2013-de-energie-ist-entwicklung-mexiko.pdf
• Feasibility Study on “Leasing for the financing of solar thermal systems at MSME” http://www.sparkassenstiftung.de
  

Chile

Chile’s solar thermal market grew by 55% (from 4.8 MWth to 40.7 MWth) between 2006 and 2011.However, as of 2011, Chile’s SWH market penetration was still relatively small with only 2.35 kWth /1000 people. As of December 2013, Chile also did not have a dedicated target or loan programme for SWH installations.

Costs: Glazed, flat plate collectors constituted 100% of the residential SWH market during 2013. The typical collector area is 2 - 4 m² with a tank size from 200 -300 litres and average cost of US$ 1,900. This results in a calculated payback persio of 5.3 years.

Certification: While Chile lacks international or regional certification and labelling it does have: solar thermal standards, testing facilities, a national standards body, and national certification and labelling. The Chilean Association for Solar Energy (Asociacion Chilena de Energia Solar or “ACESOL”) aims to unite the public and private solar power divisions.

• More information regarding Chile’s current SWH program can be found on the Ministry of Energy website: www.programasolar.cl
  

Argentina

• http://www.solarthermalworld.org/content/argentina-presidents-system-order-and-planned-energy-price-hikes-boost-solar-thermal

Nicaragua

• http://www.solarthermalworld.org/content/nicaragua-soft-loan-fund-eur-4-million-project

Further Information

• Solar Water Heaters Worldwide - Market Development
• Solar Water Heaters – Project Examples
• Solar portal on energypedia
  
• All solar heater articles on energypedia
• Solar Thermal Technologies
• Solar Water Heater
• Many articles on solar thermal technologies in Latin America can be found on the solar platform Sopelia: http://www.energiasolar.lat/en/tag/solar-thermal-energy-in-latin-america/
• REN21, ‘Renewables 2015. Global Status Report. Annual Reporting on Renewables: Ten Years of Excellence’, 2015, http://www.ren21.net/wp-content/uploads/2015/07/REN12-GSR2015_Onlinebook_low1.pdf
• Abdelhai, Amr, and Alejandro Espin. Solar Water Heating Techscope Market Readiness Assessment. Reports for Colombia, Ecuador, El Salvador, Guatemala, Paraguay, Peru. UNEP, Devision of technology, industry and economics, and OLADE, Global Solar Water Heating Initiative, 2015. http://www.solarthermalworld.org/content/swh-techscope-market-readiness-assessment-six-latin-american-countries
• Abdelhai, Amr, and Wilson Rickerson. ‘Solar Water Heating Techscope Market Readiness Assessement.’ UNEP, Division of Technology, Industry and Economics, Global Solar Water Heating Initiative, 2014. http://www.solarthermalworld.org/sites/gstec/files/story/2015-03-04/swh_techscope_assessement_report.pdf
• Forum on Quality Assurance for Solar Water Heaters, San José - Costa Rica, 29 June 2015 to 30 June 2015: including identification of key actors in some countries, status quo of standardization about SWH in the region, experiences about SWH testing laboratories, and some experiences from Chile, Uruguay, and Costa Rica https://www.ptb.de/lac/index.php?id=6608 and http://bit.ly/2gloxxE
• Shannon, Steven Jacob. ‘Placing Technology: Examining the Emerging Use of Solar Water Heaters in Oaxaca, Mexico’, 2011. https://repositories.lib.utexas.edu/handle/2152/ETD-UT-2011-08-4200. This study is an examination of the (broadly envisioned) process that has led to the emerging us e of solar water heaters in Oaxaca de Juárez, Mexico. In 2007, Mexico launched a major policy initiative designed to encourage the use of solar water heaters in the residential sector throughout the country. As this policy has been implemented, over one hundred thousand solar water heaters have been installed on new homes and many people are beginning to encounter this technology for the first time. This policy has been successful in placing solar water heaters on the rooftops of new homes, but problems with how some of them are functioning threaten the long-term prospects of diffusion of the technology. The study shows that while solar water heaters have the potential to carry positive environmental and economic benefits at the household level, there are also many potential and actual scenarios in which the technology can have detrimental effects.