Delta-EE tracks the progress in the transition from old to new energy in its annual State of the Market Report. This study gathers evidence of the shift from selling energy as a commodity to selling new energy products and services. It covers a broad range of product areas, such as eMobility, New Heating, Storage or Smart Buildings – both in the C&I and residential segments.
What progress has been done in 2020 in the transition from old to new energy?
Fig. 1: Customer spend on new energy products and services per country and product area in 2020. For more details on our model, please get in touch.
Despite the COVID-19 outbreak, the new energy market in Europe is progressing faster: customer spend in 2020 has increased by 53%, compared to 46% in 2019. Germany and the UK were the fastest growing markets and, as in most European countries, their growth was largely driven by the uptake of eMobility and new heating technologies.
Customer spend on eMobility overtook the other product areas for the first time in 2020. Customer appetite for electric vehicle is booming, in particular for company car propositions. Thus, innovative propositions around C&I eMobility are becoming key for energy companies to address the European EV market. Oil majors, utilities and auto OEMs are actively developing their offers to cover a wider range of customer’s needs and follow different strategies such as acquisitions, partnerships or the development of inhouse expertise.
Advanced digital tools and connected features are becoming a must have for the heating and smart building industry. These propositions are important to numerous stakeholders: they improve the workflow of installers, provide customers with comfort, support the grid and more. HVAC manufacturers and utilities are actively developing solutions and trying to push these to installers or targeting their existing customers.
What can we expect in the next 5-10 years?
Fig. 2: Past and forecasted customer spend on new energy products and services. For more details on our model, please get in touch.
Customer spend on new energy products and services in Europe will grow at a CAGR > 32% over the next five years. While customer spend in Germany will remain the largest in Europe, we expect France and the UK to overtake the Netherlands. eMobility will continue to drive most opportunities in the new energy markets – we expect customer spend to grow at a CAGR of 44%. Following major policy announcements, the uptake of new heating, behind-the-meter solar and storage propositions will also increase significantly in several countries.
84m EVs are expected to be on European roads by 2030, compared to less than 5m currently. Key opportunities will continue to lie in the C&I segment but to capture them, providers will have to differentiate themselves by offering turnkey propositions around company cars management. We can expect a growing number of new partnerships and acquisitions from providers, such as utilities and oil majors, willing to cover the whole eMobility value chain.
Although the behind-the-meter solar and storage market slowed down in 2020, it is set to grow in all countries and both segments in the next five years. The bulk of the market will remain C&I solar propositions. However, customer spend on batteries will grow faster, especially in the C&I segment: as feed-in-tariffs come to an end, electricity costs rise and demand for flexibility in Europe increases, the uptake of storage and energy management propositions will improve.
Innovative propositions will be a key differentiator in the new heating market. Offers such as energy management and remote diagnostics can carry significant benefits to the service providers, such as reduced provision costs. By 2030 we expect up to 10% of heating appliance sales to be on “as a service” contracts. The Netherlands and Germany will see the largest growth in uptake of such propositions.
Conclusion: The new energy market is progressing at a faster pace, creating new threats and opportunities for all types of players
The competitor landscape is evolving, with new entrants capturing part of the value chains, which used to belong to the incumbents. To retain the customer’s interest and their market shares, legacy players are therefore developing innovative offers, such as digital tools, turnkey solutions and more complex financing mechanism. These will be key differentiators in the coming years. Players are also following a broad range of strategies, including M&A and partnerships, to extend their geographical coverage and solutions portfolio.
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