In the past, Micro-CHP (5kWe and below) has been guilty of over-promising and under-delivering. However, product choice in Europe has been steadily increasing over the last three years and some major global brands are now committing themselves to bringing micro-CHP product to market. Gas industry involvement and support will be key if the technology is to achieve its full potential in a region containing 740 million people and 190 million buildings. New business models are also being proposed for capturing additional value from micro-CHP – leading to increasing interest in what ultimately remains an industry defined by much uncertainty.
For those wanting to consider where the value could be for them, here are seven things you should know about Micro-CHP in Europe:
1. Germany is Europe’s leading market
Out of fifteen micro-CHP systems to choose from in Europe, eleven are only available to customers in Germany. The reasons being: higher electricity prices in Germany making self-generation of power more attractive, supportive policy and a greater willingness of customers to innovate with their heating systems. This will eventually change but Germany will continue to lead for the time being.
2. Europe’s market leaders are two of its largest boiler manufacturers – but they still lag behind the global leader, Japan’s Honda
BDR Thermea and Vaillant are Europe’s market leaders in micro-CHP with a combined 15% of the global installed base. On the other hand, Honda still dominates with a worldwide market share of 54%.
3. The size of the opportunity is an annual heating market of 8 million gas boilers – worth around €25 billion each year
Across Europe, around 8 million boilers are sold each year which represents a market value close to €25 billion. While micro-CHP won’t be a perfect replacement for each of those boilers, taking just 4% of the market would make it a billion euro industry.
4. Japan is the global leader in micro-CHP and its companies have their sights set on Europe
Japanese sales of micro-CHP now outnumber those in Europe by around 10 to 1. The main reason behind this success story is the support from Government, and the fact that the manufacturers and the gas industry have joined forces, to help find synergies in the supply chains that would allow a single, recognisable “brand” for micro-CHP (specifically fuel cells) to be created.
5. Some in the gas industry are pioneering new ways of helping the product to market
Companies in the gas industry are trying to help micro-CHP succeed, from providing small financial incentives and assisting in product development, to supporting laboratory and field tests as well as selling and installing product. New micro-CHP business models are also being tried and tested by current market players in an effort to capture extra value and help products into the market.
6. There is an increasing range of technologies to choose from but ICE still dominates in Europe
There are generally five types of micro-CHP technology. All are at various stages of commercialisation in Europe but internal combustion engine (ICE) – the most mature of them all – will remain the bestselling one for the time being.
7. Its a market offering great potential yet characterised by huge uncertainty
Despite the uncertainty regarding the potential growth of micro-CHP, a number of major corporations remain committed, among them are utility companies such as E.ON, RWE, British Gas, GDF Suez, SSE, some of their biggest heating equipment manufacturers such as BDR Thermea, Bosch, Vaillant, Viessmann, Ariston, as well as some high-profile global brands from Japan which include Aisin-Seiki - part of the Toyota group, JX, Panasonic, and Toshiba.
To unlock micro-CHP’s potential, they will need a stable policy environment, ensure their products reach the market on time and at a reasonable cost, and foster greater involvement from the wider energy industry.
This blog was based on an article that originally appeared in Gas for Energy Magazine. Click here to read the full article.