Solar Thermal vs. Solar PV: Where Thermal Collectors Still Make Economic Sense - Coherent Market Insights

The prevailing talk in the field of solar power today revolves around the concepts and uses of photovoltaic panels. The low cost of PV panels, the development of large power plants for energy generation, and the trend to adopt solar panels on roofs for electricity generation have turned PV panels into the most prominent form of solar energy in the modern era. However, it was economically more viable in certain areas where only thermal energy was needed.

To explore in greater depth, check out the Solar Thermal Collectors Market for detailed insights into technology advancements and evolving project requirements.

Different Outputs, Different Economics

The most important distinction between solar thermal and solar PV lies in what they produce. Solar PV systems can produce electricity directly, which can either be stored or converted to heat. Solar thermal systems produce heat directly, usually in the form of heated water, steam, or space heating.

This has significant economic implications. The conversion from electricity to heat through the medium of electric boilers or resistance cabins and even heat pumps entail efficiency losses and additional equipment cost, as well as reliance on the reticulated infrastructure. Solar thermal panels completely obviate all such conversion processes. Where the principal use is for space heating and similar purposes, it may be simpler and more economical to generate heat directly.

To support this notion, a study conducted by Solarthermalworld in January 2025 identified that solar thermal energy could be a less expensive alternative to PV heat for processes that operate under moderate temperatures of 55-85° C. Using a standard price of approximately €300 per square meter for the initial installation costs of the solar thermal system, it was found that solar thermal heat could be a less expensive alternative to heat generated by a PV system.

(Source: Solarthermalworld)

Industrial Process Heat: A Clear Advantage for Thermal

“One of the most robust economic applications of solar thermal technology remains in industrial process heating, particularly where temperatures below 400°C are involved.” The processes that use high heat in this sector include food and beverages, textiles, chemicals, paper, and mining processes that involve “washing, drying, pasteurizing, and processing.”

The application of solar PV systems to cover such demands typically involves oversizing solar PV systems, investing in electrical infrastructure, and erecting electric boilers or heat pumps. Solar thermal systems, on the other hand, can be connected to existing heating systems as pre-heating systems before existing boilers. This will immediately reduce fuel consumption without disrupting operations. Where there is a continuous day-long heating demand, solar thermal systems are generally preferable economically.

District Heating: Scale Favors Solar Thermal

Another area where solar thermal remains an economic choice is district heating. In district heating systems where the residential blocks, campuses, or whole neighborhoods are served by a central heating plant, the economies of scale and simplicity of solar thermal power work well. Solar thermal plants with seasonal thermal energy storage can provide a predictable contribution to the annual heat demand.

Although solar PV can support the use of electric heat pumps for district heating on an indirect basis, the system becomes more complex and requires more electricity generation. Solar thermal provides direct heat distribution into the grid, which relieves the power grid and improves the efficiency of the system. Solar thermal is still the lowest-cost technology for the production of renewable heat when using the existing district heating infrastructure, mainly within Europe and Asian countries.

A July 2025 ResearchGate study analyzed a solar district heating system in northern China that combines a large flat-plate collector field (~12,400 m²) with seasonal thermal energy storage (~52,125 m³). The system was able to supply roughly 48,378 GJ of heat annually, with a positive net present value and a defined payback period — demonstrating economic viability when integrated with district heat networks.

(Source: ResearchGate)

Final Takeaway

Solar PV and solar thermal collectors are complementary rather than substitutes; they presently solve different energy problems. Clearly, solar PV has an edge in applications where electric power demand dominates, or in cases where there isn’t sufficient space to install solar thermal collectors in order to satisfy various electrical loads. In most modern energy applications, solar PVs have become essential.

At the same time, solar thermal collectors also make economic sense in locations with a high and predictable heat demand and where heat is a key part of operations. Industrial plants, district heating, hospitals, colleges, and larger commercial buildings can immediately use solar heat without having to convert electricity into heat, and with a lower fuel usage rate. For such installations, solar thermal systems have a shorter payback period and a lower cost of ownership than a solar PV-based heating system.

Rather than competing head-on, solar thermal and solar PV increasingly play complementary roles. Hybrid systems that combine PV for electricity and solar thermal for heat often deliver the best overall economics and decarbonization outcomes. As fuel price volatility persists and pressure to cut emissions intensifies, understanding where solar thermal collectors outperform—and where PV is the better fit—will be critical for decision-makers seeking cost-effective, scalable clean energy solutions.