German Solar Thermal Market Declines Significantly Amid Challenges

Germany: The solar thermal market in Germany has faced a significant downturn, with sales of solar collectors dropping sharply from nearly 500 MW in 2022 to 263 MW in 2023, continuing into the first quarter of 2024 with a decline of over 50% compared to the previous year. This negative trend defies earlier years of growth, prompting concern among industry stakeholders. Despite efforts from some suppliers to maintain stable sales, overall market conditions remain challenging.

Several factors contribute to the market contraction. Economic stagnation has halted new construction projects, a key segment for solar thermal installations. Changes in subsidy policies, including a transition in administration of the Federal Funding for Efficient Buildings (BEG) scheme, have disrupted subsidy applications, leading to consumer uncertainty and a decline in new installations. Moreover, shifting consumer preferences towards other renewable energy technologies, such as photovoltaics combined with heat pumps, further diminish the demand for solar thermal systems.

Looking ahead, the industry faces structural challenges as heat pumps increasingly dominate the market, both in new constructions and as retrofits under new legislative requirements. Despite these challenges, there are signs of potential stabilization, such as recent government actions to increase subsidies for biomass boilers and a slight uptick in subsidy applications in May 2024. However, manufacturers remain cautious, adapting production strategies amidst uncertain market conditions expected to persist in the coming years.

Source: Solar Thermal World