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ISH 2013 - Germany emerges as a hot bed of activity for small cogen, including a sneak peak at new residential fuel cells

For me, two main trends seemed to stand out at ISH this year:

1. Residential fuel cell micro-CHP part of major players future vision – two new products from two market leaders – Bosch and Viessmann - means fuel cell should now appear in the future product portfolios of all the major OEMs.

Both manufacturers have partnered with major Japanese corporations in order to “jump the queue” and attain the technology that can offer homeowners the highest electrical efficiencies of any of the cogeneration technologies. Bosch has partnered with Aisin (a manufacturer with strong links to Toyota) to bring an integrated system - similar in size to an American fridge-freezer - to Europe. Offering 700W of electrical power and an electrical efficiency of 45% (90% overall), this uses solid oxide technology and is not so different from some of the ENE-FARM systems that are proving massively popular in Japan at the moment.

Viessmann on the other hand, has paired up with Panasonic to bring a different fuel cell technology – proton exchange membrane – to Europe, with a higher electrical output of 750W but slightly lower electrical efficiency of 37% (also 90% overall). This co-branded product is again quite large – similar in size to the Bosch unit – but slightly smaller due to the lower volume hot water and buffer tanks. It can be split into two separate units.

Time will be needed to optimise the products for European conditions and each pairing will begin field trials over the coming years, targeting a commercial launch from around the middle of the decade.

2. Increasing competition in the German mini-CHP arena – not just from the established OEMs but also from a huge range of new players in the 5kW – 20kW range, using engines from Toyota, Kawasaki, Yamaha, and a host of others.

We were already seeing the small commercial cogen segment getting more competitive in Germany before “Der Energiewender” – or “The Energy U-turn”. Since then, there has been an explosion in the number of companies targeting this sector, where customer decisions are typically more based on economics and energy prices. We’ve seen major OEMs getting involved too, with Vaillant and Remeha launching new product. Major players from other industries have also started launching mini-CHP products, such as Volkswagen. Finally, established CHP companies have been expanding their range of systems - like EC Power, Kirsch and SenerTec - who all launched new product in smaller size ranges suitable for multi- and even single-family homes, as well as small commercial applications.

All this means that the product choice for customers is expanding, as are the number of buildings types that are suitable for all the various cogeneration products and technologies out there.  

These are important steps being made on the road to market success for these small cogen systems, although most will have availability limited to within Germany’s borders. I think it’s becoming clear that Germany will emerge as the key battleground market for the companies selling and installing these products. 

What’s not so clear, is how long customers in other markets will have to wait for the same product choice, or how quickly prices will come down.
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Recent Comments
Guest — Guest
Just a small correction regading similarity to the ENE-FARM systems. As the vast majority of the ENE-FARM systems is based on PEFC... Read More
Friday, 26 April 2013 10:44
Jan Hughes
That's a good point and we would agree - PEFC is driving the success of the ENE-FARM in Japan. Although it's interesting to note ... Read More
Thursday, 11 July 2013 08:57
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Why we expect the CHP share of the gas engine market to decline

Recent Delta-ee research indicates that annual global sales of small-scale gas engines (up to 5 MWe) will grow by around 44% to 2016 and by at least 86% to 2020, from 2011. And we expect the annual global market in all gas engine applications to be worth at least $7-9bn pa by 2020.

The most energy efficient application for this technology is CHP, and one might therefore expect it to take a growing share of the overall gas engine market over time. In fact we expect the reverse - its share will decline slowly, although there will be very high regional disparities with Europe having a relatively high share and Africa a relatively low share.

With all CHP’s well documented efficiency and environmental benefits, why is this?

Our research team has been analysing these markets for over 20 years and experience tells us that CHP markets have grown fastest either when incentivised (more common) or when spark spreads are sufficiently attractive (less common). Overall, however, we expect energy policymakers wishing to achieve low carbon goals to be more willing to incentivise renewables and nuclear power, whose advocates are well-organised and effective, than high-efficiency CHP, which has no voice at all in many countries.

There are certainly some exceptions. Germany’s newly revised CHP Law is likely to deliver further strong CHP growth by 2020. The Brazilian market has been growing well now for a few years based in large part on incentives. The Netherlands had a healthy regulatory framework in place which went a long way to helping CHP account for a third of electricity production by 2009. Overall, however, the CHP share of the electricity market in Europe has been more-or-less flat-lining at 11% for years.

This perspective could certainly change, and we will be looking out for it. If it does, it is most likely to be inspired by one or more of the following groups (alongside the small number of established CHP industry organisations) getting heavily involved to make the case for CHP to energy policymakers:
  • The natural gas industry – more gas-fired CHP means more gas sales;
  • Environmental NGOs – more gas used in CHP (as opposed to its use in other gas applications) means higher energy efficiency and lower carbon emissions;
  • Major industries and building owners – more on-site CHP will normally mean lower energy bills.
Either way, based on today’s market drivers, our research suggests that the next decade will see strong growth in many global markets for gas engines, especially in power-only applications with little or no heat recovery.

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Takeways from E-world trade fair in Essen, Germany

The German federal government’s decision for a nuclear withdrawal until 2022 and the resulting topic of “energy revolution” dominates the energy industry agenda in Germany, as was clear from my visit at the E-world energy & water trade fair held last week at Messe Essen on February 5-7.  The fair had more than 600 exhibitors from the fields of the electricity, gas and water industries, energy technology and energy efficiency.

As I would have expected, energy trading, renewable energies and energy efficiency were all very visible themes at the fair, with many companies promoting their products and services in these areas.  But some of my main takeaways from E-world include:

Virtual Power Plants (VPPs) attracting lots of interest and activity:
  • I heard there were 9 companies at the fair promoting their VPP technology, and talked with several of them.  Some companies are clearly at an earlier stage of development than others, but many (including Delta-ee) believe VPPs will play an increasingly important role in the new energy economy.  Vattenfall’s VPP project is one of the most advanced.  It is now moving into a second phase with the intention of including new technologies into the VPP such as cooling, hydrogen production, storage heaters and batteries.  An announcement is planned this week regarding the addition of a 2MW battery to the VPP in Berlin.  The company clearly has some ambitious aims for its VPP technology and project, not least giving it a route to grow nationwide in Germany away from its core Berlin and Hamburg markets.  It has also launched its own “Virtual Heat & Power” VHP label as a new technical standard for heat pumps and CHP - follow this link VHP for more details.  Whether the VHP label will be able to gain traction with manufacturers and be attractive for customers remains to be seen - especially given other labelling initiatives, such as the "Smart Grid Ready" label recently agreed by heat pump manufacturers (see this link Smart Grid Ready).

CHP is on the upswing:
  • The market trend in Germany is definitely positive and improving.  The revisions to the CHP law last year have had a positive impact on the market – although it seems that some customers are still reluctant to invest even though the economics look increasingly attractive.  Perhaps this reflects the weak economic outlook, or customer fears of new technology.  Tax regulations are a concern for suppliers developing contracting and financing models.  If the end-user owns the plant then EEG tax is not applied to his consumption.  However, if the plant is owned by a third party (eg an ESCO), the end-user becomes liable to pay the EEG contribution.  As the EEG contribution is now €5.3c/kWh this can have a significant negative impact on heat contracting business models.  Lawyers specialising in this field, and with contract models that can avoid this issue, are very much in demand.

Data services and smart home is already a crowded space:
  • There are lots of what look like “me too” vendors – variations on the same theme of home hub, sub-metering and website/smart phone interfaces.  Many vendors are positioning themselves as software companies that are essentially service providers to a customer facing organisation – ie the energy supplier.  I am mystified (along with many others I suspect) why some large energy suppliers are trying to develop their own proprietary smart home propositions.  The utility propositions I saw appear over-engineered and expensive in comparison to smaller, nimble players that are innovating quickly.  After all even a two year smart home contract for €25/month (and say €5/month thereafter) will be a tough sell for many customers – so making money is not going to be easy for anyone in this space, especially if you have a high cost base.

Delta-ee will be attending ISH in March and Hannover Messe in April and we’ll be sharing our thoughts in due course – and if you would like to meet up at either event please do get in touch.

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Recent Comments
Jan Hughes
I like the idea of the VHP (Virtual Power Plant Ready) badge. Almost like a GTI badge on a car - or a 4G enabled badge on a mobile... Read More
Wednesday, 13 February 2013 12:02
Guest — Andy
The problem with with any new label is that manufacturers will hate having to meet different labels and different standards - they... Read More
Wednesday, 13 February 2013 12:25
Guest — Tako
Hi Andy, I've read your articles about data services and smart homes. Very interesting views. I think there is a potential role f... Read More
Wednesday, 27 February 2013 21:12
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