Building Code Requirements Will Buttress Global Solar Market

Implications: The German requirement of solar and other forms of renewable energy in new residential construction is another leadership effort by the world's largest wind and photovoltaic nation.  It is part of a growing trend by primarily European countries to require solar in new and substantially rehabilitated structures, and will provide a stabilization of growth of solar and renewable energy industries.

Analysis: The German announcement of requiring solar or other renewable energy technologies to be part of new construction starting in 2009 adds another layer to the growth of green power industries.  This can be a steadier stream of business less subject to incentives or other politically insensitive issues.  It will also help to build acceptance of green technologies as businesses and the public get more used to the idea.  This latest action  has been motivated by skyrocketing fossil fuel costs, especially coal in Europe, energy accessibility from Russia, and global climate issues.  Biofuel appliances like pellet stoves are also part of the choice of renewable energy systems to be considered for installation.

Other countries like Spain and Portugal require solar heating and photovoltaic systems in new construction or substantial rehabilitation.  Japan also has a de facto requirement of solar in low-rise residential construction.  France, Italy and other European countries are also studying a code requirement. 

This measure will continue German growth in solar thermal technology, maintaining total leadership while Mediterranean countries like Greece have higher per capita rates.   Companies that operate in Germany and elsewhere like Schuco, Solarhart and Chromagen will benefit.  Interestingly, medium temperature solar thermal has flown under the radar of the investment community because little of this technology is built or sold by publicly traded companies.

Requiring solar in some building codes in the U.S. is under consideration in some communities, primarily in California or Oregon.  But inherent conservatism in the building community will slow down this innovation.