Overview

Current energy dialogue in the U.S. is centered on the solutions that reduce energy costs as well as the carbon pollution from the electricity and transportation sectors. However, a third sector is missing from this dialogue: the thermal energy that is used for heating and cooling applications.

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The heating and cooling of air and water are essential parts of our everyday lives. However, these services come at a substantial cost, with approximately 44% of energy consumption in the U.S. directly attributable to heating and cooling.[1] The residential, commercial, and industrial sectors spend over $270 billion annually on heating and cooling.[2]

Solar heating and cooling (SHC) can play a significant role in providing an economically viable and environmentally sustainable long-term solution to these essential heating and cooling needs.  SHC draws from an inexhaustible energy source while displacing fossil fuels and electricity otherwise needed for heating and cooling.  As a cost-effective, mature and low-risk technology, SHC is deployable throughout the U.S. thanks to our vast solar resources.

A Vision for Growth

There are currently 9 GW_th of SHC capacity installed in the U.S., which ranks 36th in the world in installed capacity relative to its population.[3] Each year approximately 30,000 SHC systems are installed in the U.S., generating an estimated $435M in annual revenue.[4] However, with the installation of 300 GW_th of SHC by 2050, equivalent to the deployment of 100 million SHC panels, enormous benefits for homeowners, businesses and taxpayers will be generated. At this scale, nearly 8% of the total heating and cooling needs in the U.S. can be met by SHC.  Key benefits would combine to nearly $100 billion in annual positive economic impacts, including:

• $61 billion in annual energy savings resulting in $421 in additional per capita disposable income
• $19.1 billion in deferred electric and natural gas infrastructure expansion and repair
• $2.1 billion in increased federal tax revenue through job and economic growth
• $1.4 billion increase in annual manufacturing GDP
• 50,250 new American jobs corresponding to a $3.8 billion increase in annual wages. Since these positions are largely installation-driven, they cannot be outsourced. Employment in the SHC sector currently exceeds 5,000 jobs.

Key societal impacts include:

• The avoidance of 226 million tons of CO₂ emissions annually - the equivalent of taking 64 coal plants permanently offline.
• Distributed SHC generation mitigates localized environmental damage related to the drilling, extraction, transportation and storage of fossil fuel.
• A 4.3% national criteria pollutant emissions reduction.
• Increased resiliency against natural or man-made disasters through localized energy resources.

The Right Policy Drives SHC Deployment

There is widespread support for SHC-related policy initiatives:  94% of Democrats, 75% of Republicans and 89% of Independents rank solar energy favorably.  Furthermore, 78% of Americans support direct federal incentives for solar development.[5]

The two key policy actions required to achieve sustainable market growth and the installation of 300 GW_th of SHC by 2050 are specific long-term targets for SHC and financial incentives. Long-term targets with clearly defined goals can take many forms - including Renewable Portfolio Standards (RPS) with SHC eligibility, Renewable Thermal Standards and building mandates. 

The three main types of financial incentives are tax credits, rebate/grant programs and Renewable Energy Credits (REC). Successful financial incentives allow businesses to make investments under predictable, long-term economic conditions. Capital expenditures (CAPEX) for SHC systems are often higher than conventional fuel systems, while operational expenses (OPEX) are much lower since the fuel is generated and supplied for free. There is no price volatility with solar energy, so given the lower OPEX it is often easier for businesses and families to budget fuel expenses over the long term with SHC installed.

Similar to the SunShot Initiative, the Federal government should also take a leadership role in reducing SHC soft costs to achieve cost competitiveness with conventional fuels. Other supporting programs include consumer awareness campaigns, research and development for innovation, demonstration projects and workforce development.