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Slow but steady growth predicted for the UK heat pump and electric heating industries

 

A key question we are often asked is, ‘what are the opportunities and impacts for my business in the new energy landscape’? Our Electrification of Heat Research Service has recently looked closely into this question for the UK from a variety of perspectives; and we’ve identified a number of key insights into the growing convergence between the heat and electricity sectors.

Do we think the UK is ready to shift to an electric dominated heating market?

Not quite yet, our research shows. However new opportunities including smart electric heating, network balancing, and market innovations are emerging which could significantly impact the market.

Our Electrification of Heat Service provides regular reviews of key European heating markets at the country level. We recently conducted research into the UK market landscape, to provide in-depth analysis of the current state of the UK market for heat pumps and other electrically-driven heating market -  and explored the developments we think will emerge in the coming years.

The UK is an interesting but currently small market for electrically-driven heating, dominated as it is (for now) by gas heating (figure 1). As new technologies and offerings begin to reach the market, however, there is significant potential for growth in electrically-driven heating during the next 5-10 years.

The UK heat pump and electrically-driven heating market has remained steady in recent years.   But we see potential for the heat pump market – mainly air source heat pumps – to grow by around 50% over the next five years. Low oil and gas prices – and a lack of clarity over UK Government support for after the current RHI support scheme ends in 2021 - could potentially put a dampener on this forecast in the short-term. But we’ve also identified that a number of additional opportunities for market growth could emerge in the next 5-10 years, especially in the area of ‘smart’ electric heating.

Capture

Figure 1: the UK heating installed base and annual market by heating type.
Source: EHPA, Delta-ee, 2017

We have identified three key opportunities which have the potential to boost the market for electric heating in the UK, and create opportunities for current stakeholders and for companies developing new and innovative products and services (figure 2). With the right developments in policy and regulation, and concurrent changes in consumer attitudes, we see smart electric heating, network balancing, and new market innovations (including new business models) as key opportunities for the electric heating industry to grow.

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Figure 2. Emerging opportunities in the UK electric-heating market

In the short-term, we will be keeping our eyes closely focused on UK policy developments in key areas including building regulations and what is planned by the UK Government post-RHI. We will also be looking out for exciting new products and services – especially new routes to market – introduced by the innovators in the industry, which make use of these emerging new opportunities.

In a market which is seeing uncertainty in the short-term, and potentially disruptive changes in the future, Contact me on Jaryn.Bradford@delta-ee.com to find out more.

 

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