Two recent articles on solar water heating represents the potential – and difference – this sector has as compared to solar energy. The first, via the New York Times, notes how interest in solar water heating is growing globally:
To produce milk and cheese for the world, dairies need cows and grass. But they also go through enormous amounts of hot water each day to flush out milk lines and clean other equipment. And so farmers on King Island, part of the Australian state of Tasmania, were delighted when workers began installing solar arrays on their dairies’ rooftops to capture the energy of the harsh Australian sun and use it to heat water.
“They actually look quite attractive, believe it or not,” said Troy Smith, who heads a farmers’ group on the island. He estimates that the solar hot water gear, set up earlier this year, will lower power costs 10 to 15 percent. The Tasmanian government financed the equipment with a $188,000 grant, and the dairy farmers paid for related expenses like roofing and electrical upgrades.
Interest in solar water heating has spread quietly around the world. Though the technique has been around for more than a century, the concept of using the sun to heat water gets far less attention than its better-known cousin, solar electricity produced from photovoltaic panels.
The technologies are different. The hot-water application uses plates or tubes — often called solar collectors — to capture the energy from the sun’s rays and use it to heat water that is circulating nearby. The King Island’s farms are using glass-encased tubes made by the Australian company Apricus to heat liquid to transfer the energy of the sun’s heat to water. Photovoltaic panels, by contrast, use semiconducting materials, typically silicon, to stimulate electrons and generate electricity. Both are seen as a solution by governments and individuals eager to move away from fossil fuels, which can be expensive in isolated places like King Island.
The decision to install solar water heating is “very cost-dependent,” said Carl Zichella, a San Francisco-based director at the Natural Resources Defense Council who works on renewable energy development. In the United States, where low natural gas prices undercut solar hot water, installations are relatively sparse, he said. Americans tend to use solar collectors to heat swimming pools, though elsewhere in the world they are mostly used to heat water for homes.
The market for solar collectors grew nearly 10 percent from 2011 to 2012, according to a report this year from the International Energy Agency. (Those figures, which are the agency’s latest, include a small percentage of collectors that heat air instead of water.)
Many developing countries, which struggle with high energy prices relative to income, have embraced the technology.
China is by far the world’s leader in solar water heating. Systems there are comparatively inexpensive — about $300 for a rooftop installation, according to Gang Chen, a professor of power engineering at the Massachusetts Institute of Technology. However, unlike systems in use in the United States, the Chinese systems are unpressurized, meaning that the heavy tank for heated water must go on the rooftop alongside the collectors. A higher-quality, pressurized system can cost an American homeowner $4,000 or $5,000, Dr. Chen said.
In terms of per capita installation of solar water-heating units, Cyprus leads, followed by Austria, Israel and Barbados, according to the International Energy Agency report. In Cyprus, about nine out of 10 homes have the systems, and incentives are available to reimburse 30 percent of homeowners’ investment, according to a recent report from the International Renewable Energy Agency.
In Austria’s case, a tradition of self-sufficiency that began with people chopping wood to heat their homes has led to a special interest in solar hot water, according to Brian Norton, the president of the Dublin Institute of Technology. Germany and Sweden, he said, have large-scale solar hot water systems that serve entire neighborhoods.
Many countries, such as Britain and Ireland, require new buildings to include renewable energy, Professor Norton said. Installation can be expensive — in the case of solar hot water, for example, the systems must hook up to the plumbing — so such requirements are less onerous when incorporated into initial construction. “European manufacturers have been doing a lot of work on making things much easier to install,” he said.
As with most industries, manufacturing of solar hot water systems and their components is often done in parts of the world where costs are lower. For example, Apricus, which made the King Island systems, was founded in Australia in 2003 and has opened offices around the world, but its factory is in Nanjing, China. Smaller countries like Israel, Cyprus or Austria often have strong local solar hot water companies, according to Professor Norton.
The precise technology for heating water with solar energy varies widely, but experts say it is improving. The goals include increasing efficiency, reducing costs (by making them easier to install, for example) and appealing to new markets, Dr. Chen said.
New uses for solar hot water are also emerging. Industrial customers, like breweries and food producers, need large amounts of hot water and are looking to solar, Professor Norton said. Another emerging application for the solar collectors is hot air, which is needed in some commercial processes, like sun-drying tomatoes, Dr. Chen said.
And dairies, of course, will continue to require hot water. Rachel Brown, who did contract work on King Island for the industry body DairyTas, said that farmers on Tasmania’s main island would look to the King Island project to see how well the collectors work.
One of the island’s farmers, Ron Muller, said he had seen a saving of 30 percent in the first month of operation with his solar hot water system. However, Mr. Smith noted that comprehensive data from the island’s experience with the technology will have to wait until April — after the Australian summer.
“Hopefully, they’ll be a common thing on dairy roofs before too long,” Mr. Smith said.
The second, via Greentech Media, examines why America’s biggest solar hot water firm is rebranding and becoming an energy broker:
Skyline Innovations, the first U.S. company to offer third-party financing for solar hot water systems, is moving into a different line of business: energy brokerage.
Earlier this month, the company changed its name to Nextility and announced that it would be offering energy management services to small businesses. It also closed a Series-B round worth $7 million from existing investors to execute the shift.
At first, the transition might seem like a sign that the struggling solar hot water market isn’t the right place to build a strong business. But Zachary Axelrod, Nextility’s CEO, insisted that brokerage services were part of the plan all along.
“When I started this five years ago, the goal was to be a small commercial ESCO,” said Axelrod. “We had a business model looking for a home. So we started developing our software for solar hot water.”
That software is an automated tracking service for utility bills, which the company uses to calculate savings for solar hot water customers. Before becoming Nextility, Skyline Innovations developed dozens of commercial-scale solar hot water systems and closed a $30 million fund from WGL Holdings to support projects around the country. With 45 employees, Skyline became the largest solar hot water provider in the U.S. — a notable achievement, but also proof of how small the solar thermal market is compared to solar PV.
Third-party solar hot water services will still be a focus for the newly rebranded company. But in order to grow faster, Nextility has added more functionality to support gas and electricity brokerage services for customers in competitive markets.
“If you’re already downloading bills and manipulating them by locking in prices, you can add competitive-rate scenarios,” said Axelrod. “The software is the underpinning of our whole business.”
Nextility’s software automatically downloads utility bills, pulls the monthly numbers, compares them to other market rates and rebuilds a utility bill by factoring in new services.
Although brokerage services will offer Nextility a new opportunity to expand, the company isn’t exactly targeting an area brimming with easy business. Axelrod calls the small commercial sector “insanely hard” to break into due to poor customer education, wildly different usage patterns and small returns for each transaction. He said the company’s software enables quick turnaround for “lots of small deals.”
There are thousands of brokers around the country helping businesses procure energy services in open markets. However, most of them target large commercial buildings, where scale is easier to achieve and the cost of doing business is lower. Nextility’s sweet spot will be buildings between 5,000 and 50,000 square feet — the restaurants, laundromats and convenience stores that very few brokers want to touch.
Before founding Skyline Innovations, Axelrod worked at GridPoint, which is now selling energy automation services to small commercial customers. Nextility is taking the opposite approach: rather than selling hardware and energy analytics to facility managers, it’s selling energy savings by taking over energy purchasing decisions.
“Our belief is that the vast majority of customers don’t care at all about this stuff — so having a menu or even comparisons leads to lower participation,” said Axelrod. “We do the comparison for them; they aren’t given a menu.”
In the coming months, Nextility will release a free online monitoring service that allows customers to track their savings and options in a more transparent way. For now, however, the customer simply gets an email outlining a new billing structure.
Over time, Nextility may blend the contractor side of the business with the brokerage side and offer lighting or HVAC upgrades, as well as additional solar services. “I don’t know what comes next, but we can imagine having multiple lines of business,” said Axelrod.
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