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Understanding customer attitudes towards connected homes will be key to unlocking the market’s full potential

I’m glad to announce that Delta-ee is carrying out some primary customer research as part of our Connected Home Service. The research will cover connected home offerings with an energy focus, identifying the attractiveness of these products to customers, and the willingness of customers to pay for connected home offerings.

Our subscribers often ask us:

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Toshiba and BDR Thermea fuel cell partnership: does this mark a final nail in the coffin of Europe’s home-grown fuel cell industry?

Toshiba and ‘BDR’ announce a strategic partnership to bring Japanese residential fuel cell technology (‘micro-CHP’) to Europe. 

Other Japanese and EU fuel cell partnerships 

BDR is the third European manufacturer to move away from its own fuel
cell development and gravitate towards Japanese technology. First it was Viessmann with Panasonic, then it was Bosch with Aisin, now it is BDR with Toshiba. 

Panasonic and Viessmann will launch their product in Germany this year. Aisin and Bosch are further behind, but will be taking part in the EU’s ene.field fuel cell demonstration programme and we should see a commercial launch from around 2016. BDR and Toshiba will target commercialisation from 2015 in Germany.  Vaillant continues to work with Germany’s Sunfire (formerly known as Staxera) with a launch expected within the next 2 years.

History repeating itself

The technology battle between Europe and Asia seems to be tipping in Asia’s favour again. Over the last decade, we have seen Asian companies winning the battle for heat pump technology supremacy in many European markets.

Europe had hoped to win the fuel cell micro-CHP battle. With a host of domestic companies developing diverse product in Europe, its prospects looked promising. 

But Japan is way out ahead in the race to volumes.
 Selected European fuel cell developers                     
  • Baxi Innotech 
  • Ceres Power
  • CFCL
  • Dantherm Power   
  • Elcore
  • Hexis
  • Inhouse Engineering 
  • IRD Fuel Cell
  • SOFCPower,
  • Staxera
  • St. Gobain
  • Topsoe Fuel Cell

Japan’s success was not down to luck

Japan’s emergence as fuel cell micro-CHP global leader was not a fluke. It has been achieved through its Government’s backing of its home-grown fuel cell industry to the tune of almost half a billion euros in public capital spending and support through comprehensive R&D and market introduction programmes. This is not to mention the benefit Japanese companies have received from stable long term policy plan and attractive subsidies. 

However, Japan still faces the challenge of achieving its long term cost reduction targets for PEMFC technology. The technical challenge of SOFC technology has also meant that product availability remains limited in Japan but is still attracting significant investment. 

So does this mean a final nail in the coffin for Europe’s home-grown fuel cell industry?

Not necessarily. While many of the European fuel cell developers lack the resources and brand power of the large boiler manufacturer / Japanese partnerships - the smaller, more agile companies could have a crucial edge when it comes to hunger and desire to see fuel cells succeed in the heating market. And with a diverse range of products, technologies, business models, they could find the key to unlocking Europe’s fuel cell micro-CHP market potential.

 Press Release
  • BDR Thermea press release here.
  • Toshiba press release here.
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Energy Label & Ecodesign – 3 Reasons Why They Will Boost The Domestic Hot Water Heat Pump Market

This is the last in a series of five articles that shine light on some highlights from our study on domestic hot water heat pumps (DHW HPs), recently published as part of our Heat Pump Research Service. For more information on the study or the Service please contact me or my colleague Lindsay Sugden.

Ecodesign & Energy Label – Promoting Energy Efficiency in the European Union

Ecodesign and Energy Labelling are two of the key policies of the European Union to promote energy efficiency in the appliance markets, with two quite different approaches to the market. Whereas Ecodesign pushes appliance manufacturers to comply with certain minimum standards, Energy Labelling is betting on customer pull for more efficient products by giving them the necessary information to compare products on a scale of A (+ - +++) to G.

After long negotiations, the final versions of the Regulations for hot water heaters were published last Friday, the 6th of September, taking effect in 2015 and 2017. But how will these regulations interact to increase domestic hot water heat pump sales? Will they, ultimately, influence customer choice?

Ecodesign & Energy Label – Raising Cost Competitiveness and Transparency for Domestic Hot Water Heat Pumps, Thus Increasing Consumer Appeal

As discussed in my first article of this series, the biggest untapped potential for domestic hot water heat pumps lies in the replacement market for direct electric storage water heaters. I expect the Ecodesign and Energy Label regulations to make domestic hot water heat pumps more attractive to consumers. And even a small shift in consumer decision will have a significant market impact: If 5% of current annual sales of direct electric storage water heaters in France alone became DHW HP sales, the European market for DHW HPs would more than double from today’s size.

Here are three reasons why the Regulations will influence consumer decision-making in favour of domestic hot water heat pumps and boost the market:
  • The Ecodesign Regulation will exert an upward pressure on prices for direct electric storage water heaters. It is my understanding from discussions with various industry players, as well as the modelling in our report, that the insulation performance of direct electric water heaters will have to double in order to keep these systems on the market after 2017. Insulation levels using current solutions (e.g. PU-foam) will have to double, or new solutions like vacuum insulation will have to be brought to the market. This will move prices for direct electric water heaters more towards the higher end of the product range, reducing one of the currently most important barriers for domestic hot water heat pumps to enter this market.
  • Domestic hot water heat pumps will continue to decrease in price and increase in efficiency. Our calculations suggest that already the upper third of today’s domestic hot water heat pumps are efficient enough to comply with the highest label available to these systems (A+). With the investment in developing and marketing domestic hot water heat pumps on the increase, I expect that the current trend of decreasing prices and increasing efficiency will continue. This means that domestic hot water heat pumps will increase their cost competitiveness compared to direct electric systems.
  • The Energy Label will bring more transparency to the market, allowing customers to compare performance of different solutions. In a few years customers will for the first time have comparable efficiency data for electric hot water systems, clearly showcasing the energy efficiency advantages of domestic hot water heat pumps over electric water heaters. Energy Labels for other appliance categories have already proven to have a significant impact on the market (in Germany for example you will have a hard time finding any fridges below A nowadays). With the price differential between electric water heaters and domestic hot water heat pumps continuing to decrease, I believe that the labelling of domestic hot water heat pumps as more efficient will significantly drive the market.
Of course the extent of the impact of each of these three factors will only be measurable in 2-4 years as the Regulations take effect, but all the signs are pointing in the right direction. We forecast that the market for DHW HPs could at least double by 2020 to well over 100,000 units/year, and the Ecodesign and Energy Label Regulations will play an important role in that.
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