Policy fundamentally dictates the commercial opportunities within a market, and the business models that are viable. With energy policy shifting focus from electricity, towards heating and transport, could the regulatory moves and discussions we are seeing in the transport sector be mirrored in heating?
A plethora of incentives for EVs are now in place across Europe, discussion of the mandatory requirement for every new build to be equipped with an electric recharging point and the outright ban of certain products are underway. Although developments in the heating sector are currently slower moving, the first steps are in place, in particular new build requirements. It is clear that when countries do decide to act, change and transformation can be rapid.
Norway holds the pioneering stance on electrifying their transportation sector – the extent and rate of change highlights how Governments that really support a certain trajectory can succeed in generating large scale and rapid change. Having introduced a raft of generous subsidies to encourage the population to engage with electric cars, achievement has been unprecedented – the target of selling 50,000 EVs was achieved 3 years ahead of schedule, 1 in 4 cars now sold are electric. Not only addressing upfront cost, but also ongoing costs incurred, not only addressing private ownership, but also the rental market and wider use, such as free municipal parking and access to bus lanes, the approach has been co-ordinated and holistic.
Strong policy conversations that take the opposite approach – removing choice rather than incentivising alternatives – are underway in a growing number of countries across Europe. The Netherlands, France, Sweden, Belgium, Switzerland and Germany have all made statements that suggest political willingness to entirely ban the sale of combustion engine cars by 2025 or 2030. The very products that are available to the market are being assessed, and potentially curtailed!
In the heating sector, the first such moves have begun – under the European Eco Design and Energy Label Regulations (ErP) non-condensing oil and gas boilers have been phased out across Europe over the last few years, and since last September can no longer be sold. Attention has however focused on the new build sector – naturally enough.
In France for example, under the RT2012 thermal regulations direct electric heating is no longer permitted in new buildings. In Germany’s Climate Action Plan 2050, early versions mentioned plans to ban the installation of fossil fuels driven heating appliances from 2030. While this has seen been revised and removed, it shows clear political willingness and desire to address the often neglected heating side of the energy industry, with an approach that would currently be considered surprisingly courageous.
While it is hard to say if and when such moves may be made… in the next 5, 15 or 35 years, two things are clear.
- Policy decisions are making a marked impact in the residential heating appliance market and
- The speed with which a transition could occur is impressively rapid.
In as short a time as 5 years, market places can become unrecognisable. Which products and commercial propositions benefit from such change, and ultimately capture market share, are not firm at the outset or even during the transition – much flexing and pivoting occurs. The need to look at which are be relevant now, and as the energy system changes, is imperative.
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