In this paper, the results of a research and demonstration project to develop and optimize a transparent insulation (TI) wall heating system are described. First, the overall research and development concept and details of the modelling and optimization of the TI structure with regard to polymer type and cell geometry are described. Second, this paper focusses on the presentation of a novel, polymer film based small-celled TI structure, the optimized TI wall system of the application demonstration building and measurement results gathered during the heating period 2002/03 at the TI wall system. The values for the total energy transmittance and the heat loss coefficient of the novel polymer film based TI structures were found to be superior to the commercially available TI materials. To produce prototypes of the optimized small-celled lamellar structures based on cellulose triacetate films a continuously working prototype production plant was built and the structures were manufactured by a combined winding and joining process. For the application demonstration, a technically and ecologically optimized TI facade system was developed and used to equip a south-oriented wall of a solar house meeting passive house standard in Graz (A). The demonstration building was also equipped with an appropriate data recording system for solar irradiation, temperatures and heat fluxes. The practical experience within the heating period 2002/03 has proven to have an outstanding solar energy efficiency of about 44% of the novel TI wall system.