Solar heating will be competitive with other forms of energy by 1985 if oil and gas prices rise roughly 30 percent by then, a Senate subcommittee was told yesterday.

"The primary barrier to widespread use of on-site solar energy is not technology but economics," Russell Peterson, director of the Office of Technology Assessment, told the subcommittee.

His conclusions were based on a two-year study of solar energy by OTA, released yesterday.

Peterson said people would be encouraged to use solar energy if Congress allowed prices of oil and gas to rise, and if it provided subsides for solar hardware.

"Policies maintaining low oil and gas prices have the effect of discriminating against on-site solar facilities," Peterson said. "Making no move to support on-site (solar) energy systems, therefore, can translate into a policy of disincentives."

He said Congress should approve tax credits, loan subsidies and other incentives for consumers and manufacturers of solar devices.

The 525-page report, complete with diagrams and charts, details types of solar equipment available, costs and long-term impact.

The report says that solar heat and hot water are now competitive with electric heating in some areas of the country, but not with other energy forms.

"Our analysis indicates that if an aggressive program to support solar energy development is undertaken, solar equipment providing heat for residences and commercial buildings may be competitive with conventional oil systems by the mid-1980s if oil prices double by the end of the century, and could become competitive with gas at that time if gas prices increase by factors of three or four," Peterson told a Senate Energy and Natural Resources subcommittee.

He urged Congress to plan accordingly.

"If we wait for the right time to arrive - when gas and oil prices are exorbitant - we will not have the resources necessary to widely distribute solar heating equipment," he said. "We have to build on a small base to arrive at a large base."

The OTA report also says that solar heating is not likely to be competitive with other forms of heating for industrial use, given existing technology. It adds that heating from coal is likely to remain more economical than solar heat through the end of the century.

Solar heating could provide competition for existing utilities, the report says. Construction companies and firms that manufacture transistors and air conditioning now produce solar hardware.

Peterson said Congress could start building a "small base" of support for solar energy now by providing solar energy users with a 20 per cent investment tax credit - something included in President Carter's stalled energy package by discontinuing subsidies of oil and gas, and by funding more solar research and demonstration projects.

Federal funding for solar energy programs has risen from $148.7 million in 1976 to $368.3 million in 1978.

Sen. Frank Chruch, (D-Idaho), who questioned Peterson on his report, said the study would help Congress reassess funding for existing solar programs. "Unless and until solar energy becomes competitive with other fuel sources, solar energy isn't going to grow very fast," Church said.