Delta-ee’s Roadmap Service forecasts how the residential heating market will develop out to 2025 across five of Europe’s major boiler markets – France, Germany, Italy, the Netherlands and the UK. For each market, we forecast the annual sales of a range of low carbon heating appliances and under our reference scenario, gas boiler sales across Europe will be eroded by a range of low carbon alternatives – with sales falling by 800,000 units per year to 2025. Annual heating appliance sales across five of Europe’s Major heating markets
Gas boiler sales will be hardest hit, with sales dropping by ~800,000 units / year by 2025 as low carbon appliances take a bigger share of the heating market
But what does this mean for key players in the industry – in particular the gas boiler manufacturers and the gas utilities?
Our research shows there will be a significant change in the structure of the heating appliance market, but despite a forecast that indicates a slowing of gas boiler sales, we believe the low carbon technology opportunity will present opportunities for all – including those that want to sell gas. Manufacturers: Gas boiler manufacturers need to take ‘boiler plus’ solutions seriously, and there are good opportunities for new low carbon entrants.
A changing market where the traditional boiler is ‘under attack’ certainly presents challenges to key stakeholders in the European heating industry. The oil boiler market will be in steady decline. And while we see strong pressure on gas boiler sales – it’s not all bad - as a new ‘low carbon gas’ opportunity will emerge. This is up for grabs by both new entrants & existing players – if the latter are willing to diversify their offering.
While appliance sales will vary from country to country, there are some common themes across the European market. One, is a strong role for gas boiler plus* options in the near term (total annual sales will be 320,000 by 2025 across Europe). By adding the right products to your portfolio (e.g. solar thermal or hot water heat pumps) at the right time, and targeting it at the right housing segments, savvy players can protect and possibly even grow their share of the boiler market. Energy Companies: Gas demand will face downward pressure – but there are opportunities for gas and electric utilities around new technologies
Overall, we expect to see a small reduction in gas demand
for residential heating by 2025. While annual sales of gas boilers do fall to 2025, most of these are being displaced by gas boiler plus* options or new gas-based technologies. A small amount will be displaced by electric heat pumps. And much of the new build housing stock we will see by 2025 will be connected to gas – adding new gas demand. To protect gas sales, gas utilities could consider raising the awareness of more efficient gas appliances (such as gas heat pumps) & ‘transitional’ technologies such as hybrid heat pumps to their customers. Investing in R&D to facilitate bringing new gas based technologies to market (or even offering the technologies to customers) could also help protect sales.
The story for electricity is quite different, where we see some potential for growth in electricity demand
for residential heating by 2025. Electric heat pumps will experience strong growth in off-
gas and new build dwellings – where regulations are encouraging uptake. And we expect to see good growth in hybrid heat pumps sales (boiler with an ASHP) which will enable electricity to eat into the gas market. The result will be significant amounts of new electric appliances being installed, adding new electricity demand in the residential heating sector.
Electric utilities need to consider developing innovative heat pump tariffs to help them attract new customers as well as maintain their current market share. They could also consider playing in the heat pump market, either directly by selling product or indirectly through information dissemination to help grow overall electricity demand (and thus their own sales).
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. *Boiler plus: Delta-ee defines ‘boiler plus’ solutions as a gas boiler plus one of: solar PV, solar thermal, hot water heat pump