Commercializing Solar Heating:

A National Strategy Needed

EMD-79-19: Published: Jul 20, 1979. Publicly Released: Jul 20, 1979.

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Solar heating systems warrant particular attention because of their advanced position of being economically and technically accepted relative to other solar technologies. Solar heating devices also have a large potential for use since more than 40 percent of the Nation's energy is used for heating purposes. Although the technical feasibility of using solar heating for a wide range of residential, commercial, and industrial applications is well established, many constraints tend to discourage consumers and businesses from investing in solar heating equipment. These constraints include economic, institutional, regulatory, and legal constraints, as well as a lack of consumer protection. The National Energy Act (NEA) contains provisions aimed at encouraging the use of solar heating systems. These include a non-refundable income tax credit for individuals who install solar equipment in their principal residence, business tax credits for investments in solar equipment, a $100-million program to provide support for loans to owners of family dwellings who install solar heating and cooling equipment in their residential units, and a $100-million program for demonstrating solar devices in Federal buildings.

Both Federal and many State governments are working to remove one or more constraints. State efforts have emphasized financial incentives and many have enacted legislation aimed at removing the legal constraints. The Federal Government's activities have generally focused on: (1) developing standards governing the design, installation, and performance of solar heating systems; (2) cooperating with industry in developing a certification process to verify how well solar equipment meets existing standards; (3) developing model legislation and codes; and(4) creating a network of regional solar energy centers. However GAO found that State and Federal efforts have not yet evolved into a comprehensive and uniform approach to effectively encourage the use of solar heating systems. The tax credit provisions of the NEA are likely to have their biggest impact on encouraging the use of solar water heaters for residential use. But because of their high cost and economic drawbacks, the use of other solar heating applications are not expected to have as much of an impact. The other provisions of the NEA will not be nearly as significant as what is expected to result from the tax credits. Overall, if successful, the initiatives enacted under the NEA should greatly expand the solar industry. However, in terms of energy saved or replaced by 1985, the impact will not be large. Furthermore, there is a need for a clearly defined national commercialization strategy for solar heating systems.

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