Sudden, bizarre change in solar hot water standard could be disaster for industry

A sudden and unexplained change to building standards, which will require all new rooftop solar hot water systems to face north, could spell disaster for the solar hot water industry.

The standard, which apparently has been worked on for a few years, was only made known to most in the solar hot water industry a week ago. Yet the rules are due to come into effect this weekend.

The industry says it is dumbstruck. It cannot understand why the rule has been introduced and wants a “stay of execution”, at least by changing terminology on the new standard from the mandatory “shall”, to the more flexible “should.”

James Teague, from the Gold Coast-based Bar Plumbing, said: “This beggars belief. Not every house has that roof orientation. Not every household wants their solar hot water system facing north.”

John Grimes, the head of the Australian Solar Council, the major industry group, says one-third of homes adopting rooftop solar hot water do not have north-facing rooftops, and may be lost to the market.

“This will have a devastating impact on the industry,” Grimes told RenewEconomy. “This is a mess. We require an urgent response (to its request to at least change the wording of the standard while proper consultation is made).”

The ruling, published by Standards Australia, says that every solar hot water system must be orientated within 45° of true north (see extract on the right).

The industry says it cannot think of a single reason why the new standards would insist on all new solar hot water systems facing north. It notes that those facing east or west can still operate at 80 or 90 per cent efficiency. Unlike solar PV, it does not affect grid supply by loading excess supply back into the network at certain times.

“We don’t understand the motivation for this. It seems fishy to us,” Grimes says.

The market leader in the solar hot water industry is Solarhart, owned by Rheem. But solar hot water is only a small part of that company’s hot water offerings, which are dominated by gas and electrical systems. (Rheem later said that it had fought against the new standards, which it also finds “inequitable”.).

The solar hot water industry is already struggling to compete, particularly with falling prices of solar PV, as this graph below from Green Energy Markets illustrates.

Sales, which peaked at 200,000 units a year when the small-scale renewable energy certificate systems was introduced at the end of 2010, has now fallen to around 50,000 – below the 80,000 level before the introduction of SRES system, which provides a rebate on the up-front cost of the systems.

Chris Taylor, from Apricus, a maker of “evacuated tube” solar hot water technology, also says the new ruling could be disastrous for the industry, even though his company’s technology is not affected by the ruling because it can be mounted in a way that ensures it faces north, even on east-west roofs.

But he says the technology that dominates the market – the flat-plate solar hot water system and “thermo-cycling” systems – are not so flexible and could not be mounted on east-west roofs.

“Even though we are fortunate to be in a good position, it is going to knock the industry,” Taylor says.

“Plumbers will think solar hot water too hard. They might decide that they can’t be bothered trying to work out the angles. Once you start seeing mainstream solar hot water companies struggle and disappear, then less people will be looking for the technology.”

He said the ruling will affect those homes looking to replace existing solar hot water systems too.

Grimes says the industry has sought clarity from the environment minister’s office about the potential impact on the STC market, which is unclear. It has not yet received a response.

(Editor’s note: This story has been adjusted to note that Rheem said it fought against the change in standards. A full story on that component can be found here).