Energy communities is emerging as one of the hot topics of the 2020s in the energy world.  This has been accelerated by the current Covid-19 crisis, which has made the need to find local solutions to global problems even more pronounced.  Many of the discussions around community energy are centred around electricity - but are we missing an opportunity by not talking about the benefits of a multi-vector approach which integrates electricity together with heat (and ultimately other vectors like mobility and hydrogen)? In this blog, we will focus on the opportunities for heat to be at the heart of energy communities.

The transition from “old heat” to “new heat” is making a community energy approach to heat more and more appropriate – and potentially more valuable.  We believe that working directly with communities on local heat decarbonisation strategies will be critical to the success of heating product and service providers in the future.  Energy communities with heat at their heart are not just the future – they are already here, and they are a growing opportunity not to be missed by the energy and heating industries.

The Netherlands is at the forefront of the move to decarbonise the European heating sector through electrification of heat, driven by a policy goal to phase out natural gas. In the Netherlands, this drive has been strengthened by a series of earthquakes in the north of the country that have been caused by natural gas extraction. This is quite a shift as, similarly to the UK, the Netherlands has previously been a country dominated by gas heating. 85-90% of homes currently use natural gas as their main heat source.  

Cate Lyon, manager of Delta-EE's Electrification of Heat research, says that building regulations have been the key to kick-starting the electrification of heat in new build housing.

In my last blog, I explained why I think now is the time for air/air heat pumps (A/A HP).  There are strong opportunities in the residential heating market in Europe. But in our conversations across the heating and energy industry, we still meet challenges from those not yet engaged in A/A HPs. Here are some of the major myths and challenges we hear - and why we still think A/A HPs should not be ignored.

Challenge #1: “A/AHPs are good for cooling but suboptimal as a primary heating solution”.

The market for air/air heat pumps (A/A HP) has long been established – it is a global, high volume market selling well-tested products, primarily for cooling applications (and therefore usually referred to as ‘air conditioning’). But based on our recent research under the Electrification of Heat Service we believe there is significant untapped potential for A/A HP to be used for residential heating in Europe. In some market segments, A/A HP could even threaten the incumbent hydronic systems.  

So why do we think the stars are aligning for A/A HP right now in the heating market, when the technology has been around for decades? Three reasons:​

The transition from ‘old’ to ‘new’ heat is disrupting the market in several ways, creating new business models, customer propositions and new technology ecosystems, as well as opening up opportunities for new market players and sales channels. In part one of this two-part blog series, we discussed  how new technology ecosystems and connectivity are shaping the market. 

For this second and final part of the heat blog series we consider customer propositions and new market entrants and how they will impact the heating market. 

The transition from ‘old’ to ‘new’ heat is disrupting the market in several ways, creating new business models, customer propositions and technology ecosystems, as well as opening up opportunities for new market players and sales channels. This two-part blog series will consider how the heat market could evolve and what could be seen in the next few years.

This first part considers heating system functionality and connectivity, value stream diversification and hydrogen for heat. The second will look at customer propositions.