What makes solar energy cost effective

The sun it the most reliable renewable energy source we have, but how can we use it in a cost effective way ?? And what is solar energy ?? and is solar energy cost effective ?? 

When you google or read about solar energy it seems that the majority agree, that solar energy is coming from solar panels or solar PV cells, producing electricity.

If you analyse the costs of this solar electricity you will soon find out, that it  is far more expensive than electricity from other renewable sources connected to the grid, e.g. large wind turbines. However for off-grid installations providing the consumers with 12 V electricity for LED lighting and low energy electronics they are unique. So the answer today is both a no and a yes.  In the future we may hope for a double yes.

But what about solar hot water panels?

Hot water panels are standing in the shadow of the solar PV, almost forgotten, and mainly known as solar hot water panels for single family houses. These small panels on the roofs are not cost effective in urban areas in which we can produce the hot water much cheaper with surplys heat and renewables via district heating. However, they are very successfull on the roofs of single family houses in e.g. Southern Europe and China. So also here the answer depends on the conditions.

The newest development is however large-scale solar water heating plants based on large efficient panels. The solar energy provided as hot water up to 90 dgr.C from such plants, typically larger than 10,000 m2 of panels is very cost effective and competitive against oil at world market prices. The plants are booming in Denmark to supply district heating networks, but almost unknown in most other countries. In Chile the first very large plant for the mininig industry is under construction.

What makes them cost effective ?

The secret seems to be that they are optimized with the aim to be competitive. Therefore they are simple and efficient and the benefit from the large scale effects. The larger fields, the more cost effective up to around 20,000 m2. Also the heat storages, which level out the solar heat during some days are much more efficient and cost effective in large scale. The only precondition for using these cost effective panels is that you have a corresponding large demand for hot water in the summer months, which you have in district heating systems and e.g. in some mining industries.

One more advantage with the large solar heating plants is that they are monitored, proving that they are really cost effective, see e.g. the links below for further information.



 The picture shows the 18.000 m2 solar heating plant at Marstal Distric Heating, Ærø, Denmark. Left below you see the first 10.000 m3 test underground hot water pit storage.






Aarhus and Copenhagen – Energy Efficiency Landmarks for Europe

The EU directives for Energy Efficiency and Renewable Energy request all regional and local authorities to integrate district heating and cooling into the urban planning. Moreover the Energy Efficiency directives request that new power capacity should be located neat market, which can utilize the surplus heat and reduce cooling losses.

This is a challenging “hen and egg problem”. You cannot use the surplus heat and RES without district heating and it is difficult to develop the capital intensive district heating infrastructure without the cheap efficient heat production from power plants.

We have solved this problem in Denmark. There are many good cases to study in Denmark, which proves how it can be done. In particular two landmarks, Aarhus and Copenhagen, could inspire large European Cities on how to implement the directives.

The second largest city in Denmark, the City of Aarhus, cultural city of Europe 2017, was the first city in Denmark to develop a district heating plan for the whole city and moreover combined with the first approval two new CHP units at the power plant Studstrupværket.

You may find information about the Aarhus heat transmission system at:


The plan has been fully implemented since year 2000 and is now entering a second phase of increasing the share of renewable energy significantly.

Greater Copenhagen, a region of 20 local authorities, was the first region to implement a regional heat plan including zoning of gas and district heating based on CHP and energy from waste. Moreover the plan was combined with the first approval of a new CHP plant with heat accumulators located at a new site close to the heat market – Avedøreværket. Exactly as it is requested by the EE directive.

You may find more information about the integrated district heating system in the Copenhagen Region below:

Visit the heat transmission company CTR who owns the eastern part of the transmission system:


Visit the heat transmission company VEKS, who owns the western part of the transmission system


Visit the waste management company Vestforbrænding, who owens the northern part of the system


Visit our Ramboll profile at Stateofgreen.com and find a presentation of the whole system among our related media:


Denmark has taken the lead again
No doubt many European cities will catch-up with Denmark and reach the same level of urban energy efficiency within some years, however Denmark takes one more step. The policy of transforming the whole energy sector to be independent of fossil fuels will be a challenge to the energy systems and the building sector to be even more energy efficient and integrate low quality and fluctuating renewable energy.

We can already now see how the challenge boosts a development of more efficient supply of district heating, e.g. integrating all possible heat sources and storing heat for longer time in huge heat storage tanks.

Avedøre CHP plant in Copenhagen – a landmark for other cities – the first large CHP plant located at a new site close to the heat market according to national energy legislation.

2012 a remarkable year for European Energy Efficiency

All EU countries can benefit from 35 years of Danish experience to implement the new EU energy directive from 2012, and in 2012 Denmark started a new road map toward CO2 neutral heat and power in 2035.

I can see two reasons that year 2012 was a turning point in European efficiency towards a more sustainable energy sector in Europe and in particular in Denmark – and these two reasons are linked together.

The first reason is that 90% of the Danish Parliament March 2012 entered an energy policy agreement regarding the first steps up to 2020 on how to bring Denmark on the right track towards independency of fossil fuels. In fact, spokesmen from the political parties agree that the overall objective is that the heat and power sectors shall be (net) independent of fossil fuels in 2035, and that other sectors should follow not later than 2050. It will be a challenge to do it in a cost effective way, not to reduce welfare but on the other hand to increase competitiveness. http://www.ens.dk/en-US/policy/danish-climate-and-energy-policy/political-agreements/Sider/political-agreements.aspx

The second reason is that the European Community agreed during the Danish presidency in 2012 on a new Energy Efficiency Directive – the European Law on Energy Efficiency. It was finally published 25 of October 2012. http://ec.europa.eu/energy/efficiency/eed/eed_en.htm

The this directive forms together with the Energy Performance Directive for Buildings and the Renewable Energy Directive a perfect packet of European Energy legislation, which will minimize the fossil fuel consumption in buildings in a cost effective way. The objectives of the building directive are to improve the indoor climate in a cost effective way taking into account local conditions. Moreover buildings shall be nearly zero carbon emission building taking into account the opportunity transferring renewable energy and surplus heat from the power production (CHP) to buildings via district heating and cooling infrastructure. To facilitate that, national, regional and local authorities, according to article 14 in the EE directive expected to plan for urban heating and cooling infrastructure in order to identify where it is cost effective to develop it. Even more, the EE directive requests that all new power capacity shall be located near the heat markets and be designed to supply both heating and cooling, unless it is not cost effective. The logic in this request is that the fossil fuel consumption for heating can be cut down by around 70% by using heat extracted from large power plants compared to heat only boilers, thus reducing the losses in cooling towers.

And how are these two reasons linked?

They are linked not only because the Danish Ministry of Energy Managed to help the Commission with the directive, but because Denmark already is on the right track towards a low carbon community and that the Danish Experience since 1980 in least cost development of district heating based on Renewable Energy and CHP is a model for other European communities on how to implement the directive.

In fact, thanks to the heating infrastructure, which already has been developed to supply 63 % of the population with low carbon clean heat, and the energy efficiency improvements in buildings, Denmark has the key to further improvements.

We have many good cases to study in Denmark, but in particular two landmarks, Aarhus and Copenhagen, could inspire large European Cities on how to implement the directives. The Avedøre CHP plant (picture) was the first power plant to be located at a new site near the heat marked in accordance with the new legal framework.

In my next blog I will give more information on our two landmarks.