Authors: Quentin Delorme
Edited by: Mohammed Sakr, Maria Kusuma Dias
Last updated: May 18, 2026
Executive summary
Solar thermal heating converts solar radiation into useful heat for hot water, space heating, district heating, and industrial processes. It is one of the earliest solar energy applications and has matured through advances in collector design, system integration, and thermal storage. Today, organizations deploy solar thermal systems at building and district scales to reduce fossil-fuel demand and support low-carbon heat strategies.
Organizations typically choose between passive approaches (building design that captures and stores solar gains) and active systems that use collectors, pumps, and heat exchangers. Common collector options include flat-plate and evacuated-tube collectors for low-to-medium temperature needs, and concentrating collectors (such as parabolic trough or linear Fresnel) for higher-temperature applications. System designers select direct or indirect circuits, open- or closed-loop configurations, and appropriate controls to manage seasonal variability, prevent freezing, and avoid stagnation during low-demand periods.
Performance depends on local solar resources, temperature lift, operating conditions, and system design. Key metrics such as solar fraction and collector efficiency curves help estimate how much of an annual heat load solar energy can supply. Thermal storage is essential for matching supply with demand; water tanks dominate in practice, while phase-change and thermochemical storage can increase energy density and enable longer-duration storage. Emerging innovations—such as nanofluids and AI-enabled monitoring and control—aim to improve heat transfer, increase reliability, and optimize operation over time.
From an economic perspective, solar thermal systems often require higher upfront investment than conventional heating, but they can deliver low operating costs and reduce exposure to fuel-price volatility. Incentives and financing mechanisms (for example, rebates, grants, low-interest loans, and ESCO models) can improve project viability. Ecologically, solar thermal systems can cut lifecycle greenhouse-gas emissions compared with fossil-based heating, and recycling of metals and glass can further reduce impacts at end of life. Socially, solar heating can support affordability, energy access, and job creation across manufacturing, installation, and maintenance. Policy frameworks, technical standards, and certification schemes also influence adoption by improving quality assurance and market transparency.
1 Description and history
1.1 Historical development and solar thermal heating
Solar thermal heating is one of the earliest applications of solar energy. The idea of using sunlight to produce heat dates back to the nineteenth century, when researchers began experimenting with simple devices capable of heating water using solar radiation.1S. A. Kalogirou, “Solar thermal collectors and applications,” Progress in Energy and Combustion Science, vol. 30, no. 3, pp. 231–295, 2004. Available: https://www.sciencedirect.com/science/article/abs/pii/S0360128504000103 Early research on solar thermal technologies was conducted by scientists such as the French engineer Augustin Mouchot, who investigated the use of solar energy for producing steam and mechanical power using solar collectors in 1878.
One of the earliest practical uses of solar thermal technology was related to solar water heating systems developed to provide domestic hot water in regions with high solar radiation. These systems generally consisted of simple collectors and storage tanks that absorbed solar radiation and transferred heat to water for household use.2U.S. Department of Energy, “Solar Water Heaters,” Energy Saver – U.S. Department of Energy. Available: https://www.energy.gov/energysaver/solar-water-heaters
The development of solar thermal technology continued during the early twentieth century with improvements in collector design and thermal storage systems. Although the widespread availability of cheap fossil fuels reduced their use after the Second World War, interest in solar heating increased again during the oil crisis of the 1970s.1S. A. Kalogirou, “Solar thermal collectors and applications,” Progress in Energy and Combustion Science, vol. 30, no. 3, pp. 231–295, 2004. Available: https://www.sciencedirect.com/science/article/abs/pii/S0360128504000103
Today, solar thermal heating is widely used for domestic hot water production, space heating, and industrial heat applications. Several countries, particularly China and European nations, have installed large-scale solar thermal systems and district heating systems, demonstrating the growing role of solar heat in sustainable energy systems.3W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Online. Available: https://www.iea-shc.org/solar-heat-worldwide
1.2 Solar heating applications
Solar heating is one of the most effective and environmentally friendly ways to harness solar energy. It organizations primarily use it for heating water and indoor spaces in residential, commercial, and industrial settings. Over time, solar heating systems have evolved, adapting to meet diverse needs ranging from domestic hot water supply to large-scale district heating networks. As an integral part of the renewable energy sector, solar heating technologies harness the power of solar radiation to generate thermal energy, which can be stored and used as needed. Solar heating systems are categorized into two main types: passive and active, with each type serving a different role in maximizing solar energy use.
Solar thermal technologies are widely used for residential and commercial applications, particularly for domestic hot water production and space heating in buildings.2U.S. Department of Energy, “Solar Water Heaters,” Energy Saver – U.S. Department of Energy. Available: https://www.energy.gov/energysaver/solar-water-heaters,4International Renewable Energy Agency (IRENA), Solar Heat for Industrial Processes. IRENA Technology Brief E21, 2015. Available: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_ETSAP_Tech_Brief_E21_Solar_Heat_Industrial_2015.pdf These systems can significantly reduce organizations’ demand for conventional energy used for heating.
Beyond residential and commercial buildings, solar thermal energy can also be used for district heating networks and industrial processes. Many industrial processes require low-to-medium temperature heat, which can be supplied by solar thermal systems. Typical applications include sectors such as food processing, textile manufacturing and chemical industries.4International Renewable Energy Agency (IRENA), Solar Heat for Industrial Processes. IRENA Technology Brief E21, 2015. Available: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_ETSAP_Tech_Brief_E21_Solar_Heat_Industrial_2015.pdf
For these applications, technologies such as flat-plate collectors and evacuated tube collectors are commonly used because they are well suited for low and medium temperature ranges (~80–120°C). For higher temperature requirements, concentrating solar collectors, such as parabolic trough or linear Fresnel collectors, can be used to produce higher-temperature heat for industrial processes.4International Renewable Energy Agency (IRENA), Solar Heat for Industrial Processes. IRENA Technology Brief E21, 2015. Available: https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2015/IRENA_ETSAP_Tech_Brief_E21_Solar_Heat_Industrial_2015.pdf The choice of solar thermal technology depends on factors such as the required temperature level, system integration, and economic conditions.
1.3 Solar resource and system performance
The success of solar heating systems depends largely on geographical location and climate conditions. Solar radiation is most abundant near the equator, but technological advancements have made solar heating viable even in cooler and less sunny regions. Improved collector designs and thermal storage solutions have increased the efficiency of solar heating, making it an option for a broader range of climates. Solar heating systems can meet the heating needs of various applications, including domestic water heating, space heating, and industrial processes.
To evaluate solar thermal systems under different climatic conditions, several performance metrics and system design parameters are commonly used. System performance is primarily measured through the solar fraction, which represents the share of the total annual heating load supplied by solar energy.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf In addition, standardized collector performance curves are used to describe the instantaneous efficiency of solar collectors as a function of temperature difference and solar irradiance. These curves allow comparison between different collector technologies and help estimate system performance under varying operating conditions. According to Duffie and Beckman model5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf, collector efficiency can be expressed as:
η=η_0-a_1 (T_m-T_a)/G-a_2 ((T_m-T_a)/G)^2
where η_0 represents the optical efficiency and a_1 and a_2 account for thermal losses. Figure 1, created with Python, illustrates these efficiency curves for common flat-plate and evacuated tube collectors (with typical coefficients), showing how collector performance varies with the ratio of temperature lift to solar irradiance.

Figure 1: Collector efficiency curves for flat-plate and evacuated tube collectors as a function of (Tm-Ta)/G
As shown in figure 1, efficiency decreases as the temperature difference between the collector and the ambient air increases due to higher thermal losses. Flat-plate collectors generally achieve higher efficiency at low temperature differences, while evacuated tube collectors maintain better efficiency at larger temperature lifts thanks to superior insulation. The dashed curve further illustrates that efficiency drops when solar radiation reaches the collector at larger incidence angles. This is the effect of the incidence angle modifier.
Accurate system design requires analyzing heat-load profiles, available area, storage capacity, and distribution temperatures to size collectors and storage tanks appropriately. Designers must also consider stagnation conditions, which may occur when solar collectors continue to receive solar radiation while heat demand is low, potentially leading to excessive temperatures within the system.
1.4 Main and current technologies
1.4.1 Passive and active systems
Two primary types of solar heating systems dominate the market: passive and active.
• Passive Solar Heating involves leveraging the design of buildings to capture and store solar energy. Building features such as south-facing windows and thermal mass materials are used to absorb and distribute solar energy. These systems are simple, cost-effective, and require minimal maintenance, making them an ideal solution for new construction projects.
• Active Solar Heating relies on mechanical systems, such as pumps, solar collectors, and heat exchangers, to capture and transfer heat. This technology is more complex than passive systems but offers higher levels of control and efficiency. Active systems are particularly useful in retrofitting existing buildings and can be combined with other heating distribution systems.
1.4.2 Solar collector technologies
Common types of solar collectors include:
• Flat-Plate Collectors: Simple, reliable, and cost-effective, these collectors are widely used for residential applications, such as domestic hot water systems.
• Evacuated Tube Collectors: More efficient in colder climates, these collectors are ideal for applications requiring higher temperatures, such as commercial or industrial heating.
• Concentrated Solar Thermal Systems: These systems use mirrors or lenses to focus sunlight onto a small area, creating high temperatures suitable for large-scale industrial processes.
Examples of concentrating collectors include parabolic trough and linear Fresnel systems, which use reflective surfaces to concentrate solar radiation and improve thermal performance in applications requiring higher temperatures.1S. A. Kalogirou, “Solar thermal collectors and applications,” Progress in Energy and Combustion Science, vol. 30, no. 3, pp. 231–295, 2004. Available: https://www.sciencedirect.com/science/article/abs/pii/S0360128504000103
Figure 2 presents a comparison of the typical thermal efficiency ranges of different solar collector technologies operating at low temperatures (25-50°C). It shows that the evacuated tube collectors generally exhibit higher efficiencies, while flat-plate collectors display slightly lower but comparable performance. Concentrating collectors (parabolic trough and linear Fresnel) operate efficiently in different temperature ranges usually and therefore show lower efficiencies under these conditions.6Swiss Energy Research for the Energy Transition (SWEET), “DeCarbCH Wiki Technologies – Solar Energy,” 2025. Available: https://www.sweet-decarb.ch/wiki-2300-1,7A. Maraj and A. Londo, “Comparison of the energy performance between flat-plate and heat pipe evacuated tube collectors for solar water heating systems under Mediterranean climate conditions,” Journal of Sustainable Development of Energy, Water and Environment Systems, vol. 7, no. 1, pp. 87–100, 2019. Available: https://www.sdewes.org/jsdewes/pid6.0228,8S. Jahangari and P. Esfanjani, “Thermal and optical efficiencies improvement of the linear Fresnel collector with a modified absorber,” Solar Energy, vol. 301, p. 113918, 2025. Available: https://www.sciencedirect.com/science/article/abs/pii/S0038092X25006814,9C. Tzivanidis and E. Bellos, “Thermal and optical efficiency investigation of a parabolic trough collector,” Case Studies in Thermal Engineering, vol. 6, pp. 226–237, 2015.

Figure 2: Efficiency comparison of different collector types (data from6Swiss Energy Research for the Energy Transition (SWEET), “DeCarbCH Wiki Technologies – Solar Energy,” 2025. Available: https://www.sweet-decarb.ch/wiki-2300-1,7A. Maraj and A. Londo, “Comparison of the energy performance between flat-plate and heat pipe evacuated tube collectors for solar water heating systems under Mediterranean climate conditions,” Journal of Sustainable Development of Energy, Water and Environment Systems, vol. 7, no. 1, pp. 87–100, 2019. Available: https://www.sdewes.org/jsdewes/pid6.0228,8S. Jahangari and P. Esfanjani, “Thermal and optical efficiencies improvement of the linear Fresnel collector with a modified absorber,” Solar Energy, vol. 301, p. 113918, 2025. Available: https://www.sciencedirect.com/science/article/abs/pii/S0038092X25006814,9C. Tzivanidis and E. Bellos, “Thermal and optical efficiency investigation of a parabolic trough collector,” Case Studies in Thermal Engineering, vol. 6, pp. 226–237, 2015.)
1.4.3 System configurations and design choices
Solar thermal systems operate by capturing solar radiation through solar collectors and converting it into heat. The generated heat is transferred to water or another working fluid circulating in the system and then delivered to a storage tank where the thermal energy can be stored and later used for domestic hot water, space heating or industrial applications.
A common distinction is made between direct and indirect systems. In direct systems, potable water circulates directly through the solar collectors where it is heated before being stored or used in the building. In indirect systems, a heat-transfer fluid, typically a water-glycol mixture, circulates through the collectors and transfers heat to the domestic water through a heat exchanger. Indirect systems are commonly used in colder climates because the heat-transfer fluid helps prevent freezing.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf,10National Renewable Energy Laboratory (NREL), Solar Water Heating Systems. NREL Technical Report, 2004. Available: https://www.nrel.gov/docs/fy04osti/34279.pdf
Another important design distinction concerns open-loop and closed-loop configurations. In open-loop systems, the working fluid circulates through the collectors. These systems are simple but are generally suitable only in climates where freezing is not a major concern. In contrast, closed-loop systems operate in sealed circuits with expansion vessels to accommodate the thermal expansion of the fluid as it circulates between collectors and the heat exchanger.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
Some closed-loop installations use drain-back configurations to improve system reliability in climates with variable temperatures. When the circulation pump stops, the fluid drains to a storage reservoir, leaving the collectors empty. This prevents water from freezing inside the collectors and avoids excessive temperatures during periods of low heat demand.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
The thermosyphon system relies on natural convection instead of mechanical pumps. Heated water rises naturally from the collector to a tank located above it, while cooler water flows back down into the collectors. Because they require no pumps or electronic controllers, these systems are simple and reliable solutions commonly used in small residential applications.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf,10National Renewable Energy Laboratory (NREL), Solar Water Heating Systems. NREL Technical Report, 2004. Available: https://www.nrel.gov/docs/fy04osti/34279.pdf
Modern installations also incorporate measurement, monitoring and verification (M&V) systems as well as digital control technologies. Sensors and data logging systems are used to monitor temperatures, solar irradiance and energy flows. These tools allow operators to evaluate performance verifies energy savings and ensure efficient long-term operation.
1.4.4 Hybrid solar thermal systems
Solar thermal systems often operate most effectively when integrated with other heating technologies. These hybrid systems combine solar thermal energy with conventional or renewable heating technologies to ensure a stable heat supply when solar radiation is insufficient.
One common integration involves condensing boilers, where solar collectors are used to preheat domestic hot water before it enters the boiler. This reduces fuel consumption and improves the overall efficiency of the heating system.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
Solar thermal systems can also be combined with heat pumps, to form solar-assisted heat pump systems. In such systems, collectors provide a low-temperature heat source that improves the coefficient of performance of the heat pump (COP). This configuration increases the share of renewable energy used for heating while reducing electricity consumption.11K. Sezen and A. Gungor, “Comparison of solar assisted heat pump systems for heating residences: A review,” Solar Energy, 2023. Available: https://www.sciencedirect.com/science/article/abs/pii/S0038092X22008714
Another emerging technology is the photovoltaic-thermal collector (PVT), which simultaneously generates electricity and heat from the same solar surface. In PVT systems, while the photovoltaic cells convert part of the solar radiation into electricity, the thermal system recovers heat from the panel to use it for domestic hot water, space heating or heat pumps. PVT systems improve the overall utilization of solar energy compared with separate photovoltaic and solar thermal installations.12B. Riffat, “A review on hybrid photovoltaic/thermal collectors and systems,” International Journal of Low-Carbon Technologies, vol. 6, no. 3, pp. 212–241, 2011. Available: https://academic.oup.com/ijlct/article/6/3/212/681067
Modern hybrid solar thermal systems often incorporate advanced control systems that manage the operation of the heating installation itself. These smart control systems regulate the interaction between solar collectors, thermal storage tanks and auxiliary heating technologies. For example, the controller can prioritize the use of solar heat, manage the charging level of thermal storage, and coordinate auxiliary heating devices such as boilers or heat pumps when solar energy is insufficient. By optimizing the operation of these components, the control system helps maximize the solar fraction, which represents the share of heat demand supplied by solar energy. In addition, these control systems help protect system components by preventing overheating, excessive pressure, or other operating conditions that could damage collectors, pumps or storage tanks.13M. Shaban and A. E. Kabeel, “Optimizing photovoltaic thermal solar systems efficiency through advanced artificial intelligence driven thermal management techniques,” Applied Thermal Engineering, vol. 247, p. 123029, 2024. Available: https://www.sciencedirect.com/science/article/abs/pii/S1359431124006975
Researchers increasingly study hybrid solar heating systems in the context of smart grids, where heating technologies can interact with electricity networks. In such systems, heat pumps can operate when renewable electricity production is high, while thermal storage tanks allow solar heat to be stored and used later when heat demand increases. This coordination with smart grids can improve energy management and support the integration of renewable energy technologies into the broader energy systems.14Z. Tian and S. Zhang, “Large-scale solar district heating plants in Danish smart thermal grid: Developments and recent trends,” Energy Conversion and Management, vol. 189, pp. 67–80, 2019. Available: https://www.sciencedirect.com/science/article/abs/pii/S0196890419303759
1.5 Thermal storage
Thermal storage plays a vital role in balancing the intermittent nature of solar energy. Water-based storage tanks are the most common method for storing heat, although more advanced solutions such as phase change materials (PCMs) and thermochemical storage systems are gaining attention. These advanced systems offer greater energy density and better long-term storage capabilities.
Thermal storage technologies are used depending on the required storage duration and temperature range. The most common solution is sensible heat storage, typically using water tanks, where thermal energy is stored by increasing the medium’s temperature. Water-based storage systems are widely used because of their low cost, non-toxicity, and high heat capacity, which makes them suitable for domestic hot water and space heating.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
More advanced solutions include latent heat storage using phase change materials (PCMs). In these systems, heat is stored or released during the phase transition of the material, usually between solid and liquid states. Because this occurs at nearly constant temperature, PCM systems achieve higher energy storage density than conventional water-based solutions.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
Another emerging technology is chemical storage, where heat is captured through reversible chemical reactions. These systems offer very high energy density and long-term storage with minimal heat losses, making them particularly promising for seasonal thermal energy storage in future solar heating systems.5J. A. Duffie and W. A. Beckman, Solar Engineering of Thermal Processes, 4th ed. Hoboken, NJ, USA: John Wiley & Sons, 2013. Available: https://www.eng.uc.edu/~beaucag/Classes/SolarPowerForAfrica/Solar%20Engineering%20of%20Thermal%20Processes,%20Photovoltaics%20and%20Wind.pdf
1.6 Future technological innovations
Future developments may significantly improve the performance and adoption of solar thermal systems. One promising area of research concerns the use of advanced nanomaterials to enhance the efficiency of solar collectors and heat-transfer fluids. Nanofluids, which consist of base fluids containing suspended nanoparticles, offer superior thermal conductivity and heat transfer properties compared with conventional working fluids. Studies have shown that nanofluids can enhance the thermal performance of solar collectors by improving heat transfer and solar absorption characteristics, representing then a key technology for future systems.15J. A. Bocanegra and A. Marchitto, “Nanofluids in solar collectors: A comprehensive review focused on its sedimentation,” Clean Technologies and Environmental Policy, 2025. Available: https://link.springer.com/article/10.1007/s10098-024-02964-2
Organizations can apply artificial intelligence and machine learning to optimize the operation of solar thermal systems. AI-based models can analyze weather forecasts, energy demand patterns and system performance data to determine ideal operating conditions. These techniques can improve system efficiency, enable predictive maintenance and optimize energy management.13M. Shaban and A. E. Kabeel, “Optimizing photovoltaic thermal solar systems efficiency through advanced artificial intelligence driven thermal management techniques,” Applied Thermal Engineering, vol. 247, p. 123029, 2024. Available: https://www.sciencedirect.com/science/article/abs/pii/S1359431124006975,16F. Odoi-Yorke, “Artificial intelligence for solar water heating systems: A review of global research trends, advances, and future perspectives,” Energy Conversion and Management: X, vol. 28, p. 101378, 2025. Available: https://www.sciencedirect.com/science/article/pii/S2590174525005100
Together, these innovations could improve the competitiveness of solar thermal technologies. By increasing system efficiency and enabling smarter energy management, these innovations may facilitate the wider adoption of solar thermal heating in future sustainable energy systems.
2 Economic performance
Market overview. In the 2024 global solar thermal market, the development and trends of solar thermal vary across different areas. Overall, there has been a 14% market decline globally, mainly caused by significant decreases in China (-17%) and India (-24%) as the major markets.17W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Available: https://www.iea-shc.org/solar-heat-worldwide In contrast, there has been a reported growth in other regions particularly Latin America, with 14% for Mexico and 11% for Brazil. In Europe, Turkey and Cyprus experienced positive growth of 10% and 2%, respectively. Countries with markets decline include Spain (-30%), Italy (−36%), Greece (−26%), Germany (−42%) and Poland (−43%). A decrease of 16% for Australia and 31% for United States was also reported. Figure 3 below illustrates these trends, highlighting four countries with the highest growth rates and four with the largest market declines.

Figure 3: Solar thermal market growth and decline in selected countries in 2024 (%). Countries shown represent the four highest market growth rates and the four largest declines. Data based on ref. X.
In Europe, renewable energy targets and policy frameworks drove these increases, while in Latin America (Mexico and Brazil), market expansion was driven mainly by planned government projects to build renewable district heating.18Fortune Business Insights, Solar Thermal Market Size, Share & Industry Analysis, By Collector Type, By Type of System, By Application, and Regional Forecast, 2019–2032. Available: https://www.fortunebusinessinsights.com/industry-reports/solar-thermal-market-101920 Overall, the solar thermal market is driven by the transition toward low-carbon energy systems and the economic benefits of renewable heat technologies.
Economic analysis
Economic analysis considers indicators such as capital expenditure (CAPEX), the levelized cost of heat (LCOH), and the lifecycle cost (LCC). CAPEX is the initial investment required to install the system (e.g., collectors, storage tanks, piping, and installation costs), whereas LCC represents the total cost of the system over its entire lifetime. Such cost includes installation, operation, maintenance, and also considers component replacement. Solar thermal systems typically operate for 20–30 years.19J. Košičan, M. A. Pardo, and S. Vilčeková, “Lifecycle and economical study of selected thermal solar installations,” SSP – Journal of Civil Engineering, vol. 15, pp. 95–102, 2020. Economic benefits during those years may arise from reduced fossil fuel consumption, lower energy expenditures, and avoided carbon costs.20L. Gobio-Thomas et al., “A comprehensive assessment of the economic performance of an innovative solar thermal system: A case study,” Sustainability, vol. 17, p. 455, 2025. doi:10.3390/su17020455 Various financing mechanisms can help improve economic feasibility, such as government subsidies, tax credits, utility rebates, low-interest loans, and Energy Service Company (ESCO) models. This model allows a third party to finance systems.
2.1 Investment and installation costs (CAPEX)
The initial cost of installing a solar heating system can be significant, particularly for large-scale applications. The cost varies depending on system size, technology, and regional market conditions. Domestic solar heating systems typically cost between €210/kWth and €1,980/kWth, while large-scale systems benefit from economies of scale, with prices as low as €290/kWth in competitive markets like Denmark. Factors influencing installation costs include system complexity, required modifications to existing structures, and the availability of skilled labor. Industry reports commonly express solar thermal system costs in terms of collector area rather than thermal capacity. Typical turnkey system costs range between €700 and €1200 per m² of collector area, including collectors, piping, storage tanks, control systems, and installation services.21Bundesverband Solarwirtschaft e.V., Solar Heat for Large Buildings: Guidelines and Practical Examples for Apartment Buildings, Hotels and Business. SOLARGE Project.
Case studies of a multi-family residential solar thermal system in Berlin with a collector area of 54 m² reported total installation costs of approximately €69,944, corresponding to around €1,295 per m² of collector area.19J. Košičan, M. A. Pardo, and S. Vilčeková, “Lifecycle and economical study of selected thermal solar installations,” SSP – Journal of Civil Engineering, vol. 15, pp. 95–102, 2020. Other studies of residential solar thermal installations have demonstrated significant financial savings, where simulations of solar water heating systems for a residential building showed potential savings of approximately €1,900 per year, depending on system configuration and auxiliary heating technologies.22F. Sahnoune, M. Madani, M. Zelmat, and M. Belhamel, “Comparative study between solar and conventional heating – economic study and environmental impact,” Energy Procedia, vol. 50, pp. 841–852, 2014.
2.2 Operation and maintenance costs
One of the major advantages of solar heating systems is their low operational and maintenance (O&M) costs. Solar heating systems do not require fuel, and the main costs involve periodic servicing of components such as pumps and heat exchangers. While passive systems have minimal O&M requirements, active systems may require more attention, particularly for auxiliary equipment.
2.3 Lifecycle cost analysis (LCC)
LCC considers total lifetime costs, including capital investment, operation and maintenance expenses, and fuel consumption. In general, installing solar thermal systems require higher capital investment initially but operational cost then will be relatively lower, whereas conventional heating systems typically involve lower upfront costs but higher long-term fuel expenditures.18Fortune Business Insights, Solar Thermal Market Size, Share & Industry Analysis, By Collector Type, By Type of System, By Application, and Regional Forecast, 2019–2032. Available: https://www.fortunebusinessinsights.com/industry-reports/solar-thermal-market-101920 Comparative studies showed that the cost of solar heat was estimated at approximately 2.34 DA/kWh (≈ €0.023/kWh) when investment subsidies were included.18Fortune Business Insights, Solar Thermal Market Size, Share & Industry Analysis, By Collector Type, By Type of System, By Application, and Regional Forecast, 2019–2032. Available: https://www.fortunebusinessinsights.com/industry-reports/solar-thermal-market-101920
Figure 4 below presents a simplified lifecycle cost comparison between solar thermal and conventional gas heating systems over a 20-year period. As shown on the graph, solar thermal systems require higher initial investment, but their cumulative costs increase slowly due to minimal operating expenses, while conventional heating systems cost rises steadily due to fuel consumption.

Figure 4: Lifecycle cost comparison between solar thermal and gas heating systems over 20 years. Graph created by the author based on comparative economic studies of solar and conventional heating systems
Note: Assumptions used in the graph include an initial solar thermal investment of €7000 with annual O&M costs of €70, and a gas heating system investment of €2500 with annual fuel and operating costs of approximately €900.
2.4 Economic incentives and financing
Government policies and incentives play a significant role in the financial viability of solar heating systems. Subsidies, tax credits, and feed-in tariffs Instruments such as rebates, tax credits, grants, low-interest loans, and renewable heat incentives can help reduce the initial upfront investment cost, making solar heating more accessible to consumers households and businesses. These financial mechanisms help stimulate the adoption of renewable energy technologies, thus supporting the transition to a sustainable energy future.
3 Ecological performance
3.1 Reduction in greenhouse gas emissions
For instance, a test solar hot water (SHW) system in Italy was calculated to produce about 700 kg of CO₂, which is recovered within approximately two years of use. Similarly, in Australia, the life-cycle emissions of a SHW system were found to be recovered rapidly, with the system having about 20% of the impact of an electrical water heater and half the emissions impact of a gas water heater.
One of the key ecological benefits of solar heating is its ability to significantly reduce greenhouse gas emissions, particularly carbon dioxide (CO_2). By replacing fossil fuel-based heating systems, solar heating contributes to mitigating climate change and improving air quality.
Life-cycle assessment (LCA) studies indicate that solar thermal systems for domestic hot water production have significantly lower lifecycle greenhouse gas emissions than conventional water heating technologies such as electric or gas heaters. These studies also report energy payback times under two years, although the exact values depend on system design, climate conditions, and the electricity mix used during operation.23F. Ardente, M. Beccali, M. Cellura, and V. Lo Brano, “Life cycle assessment of a solar thermal collector: Sensitivity analysis, energy and environmental balances,” Renewable Energy, vol. 30, no. 2, pp. 109–130, 2005. Available: https://www.sciencedirect.com/science/article/abs/pii/S0960148104001855
3.2 Energy efficiency and resource conservation
Solar heating systems can achieve energy conversion rates of 50–70% under favorable conditions. This performance helps conserve natural resources and reduce the environmental impact of energy production. Furthermore, solar heating systems rely on an abundant and renewable resource, the sun, thereby decreasing dependence on non-renewable fuels.
Solar heating systems are efficient technologies for converting solar radiation into useful heat. Certified solar collectors can reach instantaneous efficiencies of around 60-70% under favorable conditions and moderate temperature differences between the collector and the surrounding environment.6Swiss Energy Research for the Energy Transition (SWEET), “DeCarbCH Wiki Technologies – Solar Energy,” 2025. Available: https://www.sweet-decarb.ch/wiki-2300-1 However, this value refers to collector performance rather than the efficiency of the entire heating system, whose overall performance depends on system design, climate conditions and usage patterns.
This high efficiency means that solar heating systems help conserve natural resources and reduce the environmental impact of energy production. Furthermore, solar heating systems rely on an abundant and renewable resource, the sun, thereby decreasing dependence on non-renewable fuels.
Because solar thermal technologies convert solar radiation directly into heat without intermediate electricity generation, they can reduce primary energy consumption in heating applications compared with conventional energy systems.
3.3 Lifecycle environmental impact
While the manufacturing of solar heating systems involves the use of raw materials, such as metals and glass, the long-term environmental benefits far outweigh these initial impacts. Advances in recycling and sustainable manufacturing practices continue to improve the ecological footprint of solar heating systems.
A comprehensive evaluation of the environmental performance of solar heating technologies is commonly conducted using Life Cycle Assessment (LCA). This approach evaluates environmental impacts across all stages of the system’s lifecycle.24F. Ardente and G. Beccali, “Life cycle assessment of a solar thermal collector,” Renewable Energy, vol. 30, no. 7, pp. 1031–1054, 2005. Available: https://www.sciencedirect.com/science/article/abs/pii/S0960148104003714
The first stage, extraction of raw materials, involves aluminium, copper, glass and insulating materials for collectors and tanks. Mining and processing these materials consume significant energy and can lead to greenhouse gas emissions, resource depletion and land disturbance.
The second stage is the manufacturing of components, including solar collectors, storage tanks, and piping systems. During this phase, energy consumption and industrial processes contribute to environmental impacts such as carbon emissions and material waste.
Transport and installation stage also contribute to the system’s footprint through fuel consumption during equipment transport and the energy required for installation activities.
However, the operational phase provides the greatest environmental benefits. Indeed, solar thermal systems produce renewable heat, replacing conventional fossil-fuel-based heating systems and significantly reducing greenhouse gas emissions over their lifetime.
Finally, the end-of-life stage includes the recycling and recovery of materials such as metals and glass. Effective recycling can drastically lower resource consumption and environmental impacts by allowing valuable materials to be reused in new products.24F. Ardente and G. Beccali, “Life cycle assessment of a solar thermal collector,” Renewable Energy, vol. 30, no. 7, pp. 1031–1054, 2005. Available: https://www.sciencedirect.com/science/article/abs/pii/S0960148104003714
4 Social impact
4.1 Energy access and affordability
Solar heating systems have the potential to improve energy access in remote and underserved regions, particularly in developing countries. In these areas, solar heating provides an affordable and sustainable alternative to traditional electricity-based heating methods. By reducing household energy costs, solar heating can improve living standards and increase energy security.
4.2 Job creation
As noted in Section 1, solar thermal technologies have been widely deployed worldwide. The growth and widespread deployment of the solar heating industry has contributed to job creation across multiple sectors. Job creation in the renewable energy sector can stimulate local economies and create long-term employment opportunities, particularly in regions with high solar potential. These include manufacturing, installation, maintenance, and research and development, involving different levels of skills and employment duration. Job creation in the renewable energy sector can stimulate local economies and create long-term employment opportunities, particularly in regions with high solar potential.
The global solar thermal sector employed approximately 318,000 people worldwide in 2023.3W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Online. Available: https://www.iea-shc.org/solar-heat-worldwide This employment estimation in the solar thermal sector is based on a comprehensive methodology which combines literature review, country market reports, and data from national renewable energy institutions. The job calculation approach considers full-time jobs across the production, installation, and maintenance of solar thermal systems.17W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Available: https://www.iea-shc.org/solar-heat-worldwide
The methodology assumes different labor productivity levels depending on the production structure and labor costs in different countries. In countries with high labor costs and highly automated production processes, approximately 133 m² of installed solar collector area corresponds to one full-time job. In contrast, countries with lower labor costs and less automated production may require 87–133 m² of installed collector area per job, depending on the technology and manufacturing processes. For systems such as swimming pool heating using unglazed collectors or air collectors, approximately 200 m² of installed collector area corresponds to one full-time job.17W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Available: https://www.iea-shc.org/solar-heat-worldwide
While the previously mentioned figure presents specifically on the solar thermal sector, statistics often reported broader employment under the category of solar heating and cooling in global renewable energy assessments. Recent estimates indicate that approximately 591,000 people were employed globally in solar heating and cooling sector in 2025. The employment types include manufacturing, installation, and related services associated with solar thermal technologies.

Figure 5: Estimated employment in the solar heating and cooling sector by country/region in 2024 (in thousand). Source: Author’s illustration based on2U.S. Department of Energy, “Solar Water Heaters,” Energy Saver – U.S. Department of Energy. Available: https://www.energy.gov/energysaver/solar-water-heaters
Figure 5 shows that employment in the solar heating and cooling sector is highly concentrated in China which accounted for about 421,000 jobs. This is mainly associated with installation, operation and maintenance, with smaller share on manufacturing. Other countries contribute significantly fewer jobs. For example, Brazil employed around 55,900 workers in this industry in 2024, followed by United States (32,000), EU (19,000), and India (17,000).
4.3 Health and well-being
Solar heating systems reduce the reliance on biomass and fossil fuels, which are major sources of indoor air pollution. This reduction in pollution has a direct impact on public health by improving respiratory conditions and reducing the incidence of illnesses related to poor air quality. Furthermore, solar heating helps improve energy security by decreasing dependence on volatile fossil fuel markets.
5 Political and legal aspects
5.1 Regulatory framework
Governments play a crucial role in promoting solar heating through regulations and policies. Policy instruments such as renewable heat obligations, financial subsidies, tax incentives, and carbon pricing mechanisms encourage the use of renewable heating systems. For example, building codes in some countries require new constructions to integrate renewable energy systems, including solar heating. These regulations help ensure that buildings are energy-efficient and contribute to reducing overall energy consumption. Two countries with such implementation efforts were Israel and Spain among others.
The regulation of solar thermal usage in Israel began in 1980.25J. Nowarski, “Solar Israel: A practical and legislative model,” Renewable Energy World, Mar.–Apr., pp. 92–99, 2000. doi:10.6084/m9.figshare.21443073 At that time, Israel relied fully on imported fuel for its power. To show commitment to solar energy, reduce energy dependency, and boost energy transformation, the government introduced new regulations, including mandatory solar installation for hot water for new buildings.
The government published various national standards and laws regarding the use of solar energy in each different framework.25J. Nowarski, “Solar Israel: A practical and legislative model,” Renewable Energy World, Mar.–Apr., pp. 92–99, 2000. doi:10.6084/m9.figshare.21443073 These included solar standards law (addressing the fundamentals of the solar legislation), planning and building law (obligation of new buildings erected from 1981 to install a solar heater including residential, hotels, and institutions), solar installation (defining capacity of collector area per day, storage tank volume in open system and closed system, backup system, daily energy output required for each type of residents, and other technical foundations), land law (for existing multi-apartment buildings to install solar heater), labeling, and guarantee, among others. As a result, within 18 years’ time (by 1997), with a total number of populations of 5.9 million and households about 1,589,700, there were 1,270,000 number of solar water heaters installed. This means, over 89% of Israeli families had solar water heaters.25J. Nowarski, “Solar Israel: A practical and legislative model,” Renewable Energy World, Mar.–Apr., pp. 92–99, 2000. doi:10.6084/m9.figshare.21443073
Spanish government also implemented new regulation of The Technical Building Code (CTE). It was introduced in 2006 (Royal Decree 314/2006), requiring builders to comply with minimum energy efficiency standards.26H. S. Moreno and R. M. Garcia Teruel, “Obligations for owners to climate-proof buildings in Spain,” EPLJ, vol. 13, pp. 127–149, 2024. doi:10.1515/eplj-2024-0007 This regulatory framework aimed to replace older regulations and aimed to modernize construction standards, representing a major reform of the building sector, addressing structural safety, fire protection, health standards, sustainability, and energy efficiency.27European Solar Thermal Industry Federation (ESTIF), The Spanish Technical Building Code (Royal Decree 314/2006 of 17 March 2006): English Translation of the Solar Thermal Sections of the Code. Brussels, Belgium: ESTIF, 2006. The regulation requires buildings to cover 30–70% of their Domestic Hot Water (DHW) demand using solar thermal energy, exceeding the minimum requirements of the EU Energy Performance of Buildings Directive.28European Solar Thermal Industry Federation (ESTIF), Best Practice Regulations for Solar Thermal. Brussels, Belgium: ESTIF, 2007. The solar thermal provisions of the CTE apply to new buildings and major renovations, with exceptions for buildings that meet their DHW demand through other renewable energy sources, existing cogeneration systems, solar access limitation, or historical preservation constraints.
The solar obligation was later removed from the building code in 2013, after which solar thermal became only one of several technological options for meeting residential hot water demand alongside alternatives such as heat pumps and photovoltaic (PV) systems. In addition, since 2022, PV installations have been mandatory for electricity users in new buildings. Consequently, while solar thermal continues to contribute to renewable heat supply, market growth in the residential segment has moderated due to increasing technology diversification. Despite these changes, Spain’s installed solar heating capacity increased more than threefold, from 988 MWth in 2008 to 3,589 MWth in 2023.17W. Weiss and M. Spörk-Dür, Solar Heat Worldwide 2025: Global Market Development and Trends 2024 – Detailed Market Figures 2023. Vienna, Austria: IEA Solar Heating and Cooling Programme, 2025. Available: https://www.iea-shc.org/solar-heat-worldwide
Important mechanisms which uphold the quality, safety, and performance of solar thermal technologies are technical standards and certification schemes. They ensure that systems meet recognized performance criteria, leading to enhanced market transparency and maintained consumer confidence. The international standard ISO 9806 defines test methods for evaluating the thermal performance, durability, reliability, and mechanical strength of solar thermal collectors.29K. Kramer, S. Mehnert, C. Thoma, P. Ollas et al., Guide to Standard ISO 9806:2017: A Resource for Manufacturers, Testing Laboratories, Certification Bodies and Regulatory Authorities. Freiburg, Germany: Fraunhofer Institute for Solar Energy Systems, 2017. SRCC OG-100 verifies the safety, durability, and thermal performance of solar collectors, while SRCC OG-300 evaluates complete solar water heating systems by performance assessment of components (collectors, storage tanks, pumps, heat exchangers, and controllers.30Solar Rating & Certification Corporation, “OG-300 Certification Program.” Available: https://solar-rating.org/programs/og-300-program/ As a result, the Solar Keymark verifies solar thermal collectors and systems based on European standards such as EN/ISO 9806 and EN 12976 developed by ESTIF and CEN.31European Solar Thermal Industry Federation, “The Solar Keymark Scheme Rules.” Available: https://estif.org/solarkeymarknew/ While SRCC certifications are widely used in North America and Solar Keymark in Europe, they are based on comparable testing standards such as ISO 9806. Hence, enabling consistent and comparable performance assessment across different technologies and markets, and are frequently referenced by regulatory frameworks and incentive schemes.
5.2 Financial incentives
Financial incentives, such as tax credits, rebates, and low-interest loans, also make solar heating more financially viable. These measures encourage consumers to invest in renewable energy solutions and reduce the economic gap between solar heating and conventional heating technologies.
5.3 Carbon pricing mechanisms
Carbon pricing policies, such as carbon taxes and emissions trading schemes, indirectly support the adoption of solar heating by making fossil fuel-based heating systems more expensive. These market-based mechanisms create a more favorable economic environment for renewable energy technologies, including solar heating.
5.4 International collaboration
Organizations like the International Energy Agency (IEA) and the International Solar Energy Society (ISES) promote global collaboration in solar heating research, policy development, and technology transfer. By sharing knowledge and expertise across borders, these organizations help accelerate the development and deployment of solar heating technologies.
5.5 Challenges and future outlook
Despite its numerous advantages, solar heating faces several challenges, including high initial investment costs, limited public awareness, and competition from other renewable energy technologies. To overcome these challenges, governments must implement stable, long-term policies and continue investing in research to enhance the efficiency and affordability of solar heating systems. International collaboration and market competition will further drive innovation in the sector, facilitating cost reductions and improved system performance.
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