Lebanon's market for domestic solar water heaters: Achievements and barriers

Domestic solar water heating systems are a cost effective and mature technology that enjoys increasing popularity around the world yet in many countries the penetration rates are still low. The recent growth in Lebanon's solar water heater market reflects tremendous efforts on the legislative, financial, and awareness level. This paper analyzes the developments in this market and highlights persisting barriers. Our scenario analysis presents a baseline scenario (BS) and two different renewable energy scenarios. RES-1 makes solar water heating systems mandatory for newly constructed dwellings while RES-2 requires also the use of solar water heating systems in already existing buildings. Results show that in the BS electricity consumption growth (for water heating purposes) reaches a record high of 2430GWh in 2027 while this number is limited to 1550GWh in the same year in RES-1. In RES-2 electricity consumption reaches only 1393GWh in 2027. The penetration rate of domestic SWH systems in the BS, RES-1 and RES-2 reaches respectively 10%, 58% and 67% by 2027. Yearly savings in government subsidies reach 209million USD in 2027 in case of RES-1 and 246million USD in 2027 in RES-2. We also present avoided CO2 emissions in each scenario. Increasing electricity prices to cost recovery levels, a SWH capital cost subsidy of 18% in combination with a zero interest green loan can leave a consumer's electricity bill unchanged during the repayment period. Under subsidized electricity prices, a 70% capital cost subsidy would be necessary to achieve the same result. We recommend the implementation of legislation making the use of domestic solar water heating systems mandatory for both existing and newly constructed dwellings, the further development of subsidization programs and increasing electricity prices to cost recovery levels. Concomitantly these measures will foster economic development in a sustainable manner. ► We analyze the market for solar water heaters in Lebanon. ► We present the implications of new regulatory measures. ► Scenarios producing different penetration rates are presented. ► Financial and environmental implications are presented. ► Policy recommendations are made.