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Andy’s primary responsibility is the ongoing development of Delta-ee’s research services and consulting offerings.  He established Delta-ee's ‘Energy Services in Europe’ Summit and leads our activities in this knowledge area.  He has over 20 years’ experience in the energy industry, predominantly with Wood Mackenzie where he held a number of roles in research, consulting and business development.  He has extensive consulting experience, gained from managing market studies, strategy advice and transaction support projects for industrial and financial clients.  Prior to Wood Mackenzie, Andy had roles with Wefa Energy and also BP Oil International, in both the UK and Germany.

Micro-CHP and CHP – Front & Centre at Hannover Messe 2013

Delta-ee attended the Hannover Messe 2013 last week. The Messe is a leading global trade event, held annually in north Germany. It is actually 11 trade fairs held concurrently on the same exhibition grounds.  Energy is just one of these 11 trade fairs, focusing on renewable and conventional power generation, power supply, transmission, distribution and storage.  

From our Delta-ee decentralised energy perspective, Hannover Messe is a really interesting event for both micro-CHP and CHP, and it was great to talk with some of our clients and contacts while we were there, and discuss latest developments.  Here are some of our observations from our time at Messe 2013.
  • In overall terms the event seemed much quieter and less well attended than previous years.  The Messe was only a month after ISH so perhaps this had an impact on attendance, but the nervous economic climate can’t be helping much.
  • It was also very noticeable that none of the big German utilities had any major presence or large exhibition stands, a marked contrast to previous years.  We see this as a symptom of the crisis these companies are facing in Germany, with the phase out of nuclear power and growing impact of decentralised power generation on their core business.
  • Wind had a very strong presence in the Energy fair, as in previous years, but there was less evidence of solar PV and nothing significant on heat pumps.  The smart grid forum felt quite different to 2012, with the focus being on grids/network/smart metering, and there was minimal presence of HEM vendors.  This could be a reflection of the Messe 2013 overall theme of “Integrated industry” but may also indicate that many companies at the Messe see the best near term ‘smart’ opportunities on the utility side of the meter.  This made an interesting contrast to the ISH fair a month earlier where it was ‘apps galore’ - see Top 5 Takeaways from ISH 2013
  • For micro-CHP, the focus of the Messe is primarily on fuel cells.  Many of the micro-CHP developers are participating in the Callux and/or Ene.field field trials, and some claim their product is ‘ready’ for market launch.  I say ‘ready’ because this doesn’t mean we expect to see a wave of fuel cell micro-CHP products to hit the market this year.  There will be some launches but these may be quite selective as some companies need to scale up production capacity and supply chains before they are really ‘ready’.  Also some manufacturers are still working hard to make their products as ‘plug n play’ as possible.  This is to try and negate the risk that installers will charge customers very high fees for installation.  But we sense that developers who have been collaborating through the Callux programme are now gently starting to think about how they can differentiate their own fuel cell product, what makes their product special and what customers they will focus on – indicative that market competition is getting closer.  For example, CFCL, which is already active in the market with its Bluegen product, is particularly focusing on maximising sales into the small, commercial market in the German state of Nordrhein Westfalen, where incentives are now available.  See our latest micro-CHP research for more details on this topic. 
  • For CHP, the Messe provided further evidence to support our view that economic and policy drivers are helping the sector to recover from the doldrums of 2009-2010.  This is especially true of mini- and small-scale CHP (in our eyes 5 to 100 kWe and 100 to 400 kWe, respectively). This increasingly dynamic sector has witnessed a number of product launches recently which are likely to challenge the incumbent ‘main players’. For example, EC Power has recently expanded their portfolio of products to include smaller 6 and 9 kWe CHP units which will surely be in direct competition with the current market leader in this segment - the 5.5 kWe Dachs unit from Senertec. Interestingly, Senertec appear to be returning fire; they are due to launch a new 20 kWe product later this year. To help our clients understand the opportunities and changing dynamics in this space, Delta-ee have recently commenced a new multi-client study focusing on gas engines (CHP and power-only applications) in the 10 to 400 KWe size range throughout Europe; you can find out more about the research here.
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Takeways from E-world trade fair in Essen, Germany

The German federal government’s decision for a nuclear withdrawal until 2022 and the resulting topic of “energy revolution” dominates the energy industry agenda in Germany, as was clear from my visit at the E-world energy & water trade fair held last week at Messe Essen on February 5-7.  The fair had more than 600 exhibitors from the fields of the electricity, gas and water industries, energy technology and energy efficiency.

As I would have expected, energy trading, renewable energies and energy efficiency were all very visible themes at the fair, with many companies promoting their products and services in these areas.  But some of my main takeaways from E-world include:

Virtual Power Plants (VPPs) attracting lots of interest and activity:
  • I heard there were 9 companies at the fair promoting their VPP technology, and talked with several of them.  Some companies are clearly at an earlier stage of development than others, but many (including Delta-ee) believe VPPs will play an increasingly important role in the new energy economy.  Vattenfall’s VPP project is one of the most advanced.  It is now moving into a second phase with the intention of including new technologies into the VPP such as cooling, hydrogen production, storage heaters and batteries.  An announcement is planned this week regarding the addition of a 2MW battery to the VPP in Berlin.  The company clearly has some ambitious aims for its VPP technology and project, not least giving it a route to grow nationwide in Germany away from its core Berlin and Hamburg markets.  It has also launched its own “Virtual Heat & Power” VHP label as a new technical standard for heat pumps and CHP - follow this link VHP for more details.  Whether the VHP label will be able to gain traction with manufacturers and be attractive for customers remains to be seen - especially given other labelling initiatives, such as the "Smart Grid Ready" label recently agreed by heat pump manufacturers (see this link Smart Grid Ready).

CHP is on the upswing:
  • The market trend in Germany is definitely positive and improving.  The revisions to the CHP law last year have had a positive impact on the market – although it seems that some customers are still reluctant to invest even though the economics look increasingly attractive.  Perhaps this reflects the weak economic outlook, or customer fears of new technology.  Tax regulations are a concern for suppliers developing contracting and financing models.  If the end-user owns the plant then EEG tax is not applied to his consumption.  However, if the plant is owned by a third party (eg an ESCO), the end-user becomes liable to pay the EEG contribution.  As the EEG contribution is now €5.3c/kWh this can have a significant negative impact on heat contracting business models.  Lawyers specialising in this field, and with contract models that can avoid this issue, are very much in demand.

Data services and smart home is already a crowded space:
  • There are lots of what look like “me too” vendors – variations on the same theme of home hub, sub-metering and website/smart phone interfaces.  Many vendors are positioning themselves as software companies that are essentially service providers to a customer facing organisation – ie the energy supplier.  I am mystified (along with many others I suspect) why some large energy suppliers are trying to develop their own proprietary smart home propositions.  The utility propositions I saw appear over-engineered and expensive in comparison to smaller, nimble players that are innovating quickly.  After all even a two year smart home contract for €25/month (and say €5/month thereafter) will be a tough sell for many customers – so making money is not going to be easy for anyone in this space, especially if you have a high cost base.

Delta-ee will be attending ISH in March and Hannover Messe in April and we’ll be sharing our thoughts in due course – and if you would like to meet up at either event please do get in touch.

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Recent Comments
Administrator
I like the idea of the VHP (Virtual Power Plant Ready) badge. Almost like a GTI badge on a car - or a 4G enabled badge on a mobile... Read More
Wednesday, 13 February 2013 12:02
Andy Bradley
Hi Toon. Thanks for the comment. In our recent HEM heating study (see elsewhere on our website for details of this) we did a glo... Read More
Thursday, 28 February 2013 09:26
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