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Petroleum supermajors look to “New Energies” – but will they be bold enough?

The direction of travel is clear – our energy and heating markets are undergoing a profound transition. The dynamics of power generation that have previously held true for over a century are being flipped precisely on their head, coupled with rapidly evolving and increasingly sophisticated energy demand characteristics.

And now even the largest, most established - and traditionally fossil fuel focused energy companies - are beginning to murmur a response.

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Ecobuild 2015 - 7 key take-aways from the event

Once again, March’s Ecobuild exhibition in London provided a valuable window into what’s happening, and what isn’t, in the UK low-carbon heating market. The event is the largest of its kind in the UK - showcasing the latest in sustainabiliby, low-carbon design and construction and energy technologies, among other topics.  Delta-ee's Microgen Insight Service research team were in attendance for all three days of the conference and exhibition.

This time around we were impressed with the variety of new renewable heat products coming to market (if not with the lack of finance to help customers afford them), underwhelmed by the lack of push from the big heating brands and any commitment-demonstrating announcements by civil servants, and enthused by the range of innovation shown around technologies like PV and energy storage. This blog provides a summary of our seven key take-away thoughts from the event.
1. A lack of big brands exhibiting - doors opening for smaller players
This is indicative of the big boiler brands backing away from low carbon heat in the UK at present – good news for specialist manufacturers, who have an opportunity to monopolise the early market. Companies like Bosch and Baxi, and other important names like Dimplex, Mitsubishi and Daikin (to name a few) chose not to take a stand this year and instead displayed a selection of products in the merchant areas.
2. Finance needed to unlock the full potential of the domestic RHI
There is no hiding from the fact that the RHI, in its current format, has failed to have the impact many in the industry expected (or hoped). It was clear from the event that the innovative financing packages our research shows customers are looking for are yet to reach the market.

Based on our own customer research Delta-ee still believes third party financing could significantly change the shape and trajectory of the market. If any of the big players can find a way to make this work this will be a game changer for the RHI.
3. Emphasis on wholesalers as the low-carbon route-to-market
Most large manufacturers showcased their products via the wholesaler stands: Travis Perkins Group, Plumb Centre etc., indicating a shift of focus from manufacturers – no longer trying to be a customer brand. Or maybe, just a bit of marketing maths to save costs?
4. BRE launched the new Quality Home Mark
The new Quality Home Mark – a consumer-centric replacement for the departing Code for Sustainable Homes - was unveiled for the first time. The launch marks the start of a renewed focus on energising the consumer; potentially a fantastic opportunity for microgen technologies.
5. PV still dominates the microgen sector in the UK...
Huge stands imported by Chinese manufacturers made an impressive sight once again in the Excel: JA Solar, Yingli and Jinko, for example.  Now a household name – the most recognisable technology among customers – PV demonstrates the mass appeal microgen can have if the pitch, and the price is right (at 45p/W the market has become very competitive).
6. ...Although manufacturers continue to provide more renewable heating options
While the big traditional brands may be scaling back their efforts, there is no shortage of smaller, more specialist companies bringing new products to market. For the most part it was evolution rather than revolution, but there was a wide range of next generation low-carbon central heating products on show. Notable examples included: Daikin's new reduced-size increased-performance monobloc air source heat pump (ASHP), Vaillant's wall-hung shared-borehold ground source heat pump (GSHP), Viessmann's fuel cell-powered micro-CHP and Grant UK's new condensing pellet-fired boiler.
7. Innovation was mainly focussed on 'smart' heating controls
The growing presence of companies offering the next generation of ‘smart’ heating controls: learning thermostats, zonal control and remote control apps etc., this year was undeniable. Such players were often the ones taking up space on the big stands vacated by the large OEMs. The jury’s still out on whether or not these products will be an enabler for the microgen market, but they are fast gaining momentum with customers; helping them become more engaged with their ‘boring old heating systems’.  It’s a start.

So what about next year? The ethos of Ecobuild 2016 could be all-change depending on what happens with the election in a few months’ time. With DECC’s current call for evidence and timeline for introduction on third party financing in the domestic RHI, we’d be really surprised at a comparable lack of ‘green’ financiers next year. The presence of energy storage grew at this event and we certainly expect this trend to continue, as will the encroachment of smart controls into the mainstream market. It remains to be seen whether the big heating brands will decide to become more heavily involved from 2016, probably not, but this will at least again leave the door open for the smaller, more invested manufacturers to get customers more interested in renewable heat.

Download our expanded event briefing note here.

Contact: steven.ashurst@delta-ee.com; +44(0)131 625 1003.
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The future of the French and Dutch heating markets: How will they evolve?

In May 2014, more than fifty specialists from Europe’s leading utilities and heating industry companies joined a Delta-ee webinar to discuss the future of the French and Dutch heating markets. To access the webinar recording and slide set follow this link.

During the webinar, we explored two key questions using the Pathways Tool and Roadmap Service (Netherlands & France editions):

1.       How are residential properties heated in the Netherlands and France today?

2.       How will the heating markets in both countries change to 2025?

This was the second in a series of webinars exploring how the residential heating markets across different European countries will evolve to 2025.[1]  

Q1. How are residential properties heated in the Netherlands and France today?

The Netherlands and France are two major European markets for heating appliance sales – but are incredibly different in terms of the mix of annual appliance sales in each market, the mix of fuels used to heat homes and in the scale of their new build housing markets. 

BREAKDOWN OF THE HOUSING STOCK IN THE NETHERLANDS AND FRANCE BY THE FUEL TYPE USED TO HEAT HOMES, AND A COMPARISON OF THEIR NEW BUILD MARKETS



In the Netherlands, more than 95% of residential dwellings are connected to gas with low cost gas boilers dominating annual boiler sales.  Competing with cheap gas boilers is a huge challenge for lower carbon technologies, meaning lower carbon appliances only account for 3% of annual appliance sales today.  Air source heat pumps, ground source heat pumps, biomass boilers and solar thermal are competing closely for these sales today – each achieving sales of a few thousand units per year.

In France, the story is very different – homes are more likely to be heated by electricity or oil than they are by gas.  This higher share of “off-gas” homes (where heating bills are usually high) presents a good opportunity for lower carbon technologies to deliver fuel bills savings and deliver a more attractive proposition for customer.  As a result, 10% of annual appliance sales today are lower carbon, with air source heat pumps dominating these sales.

Another key difference between both markets which influences uptake of lower carbon technologies is the size of their new build markets.  In France, the new build market is near 300,000 dwellings per year.  Coupled with tough building regulations – requiring a share of the hot water demand to be met by renewables – this is encouraging the adoption of lower carbon technologies.  In the Netherlands, where building regulations are weaker and where the new build market is much smaller, new builds present only a small opportunity for lower carbon technologies.


Q2. How will the two heating markets change to 2025?

EVOLUTION OF LOWER CARBON HEATING APPLIANCE SALES IN THE NETHERLANDS & FRANCE TO 2025



By 2025, we expect lower carbon technologies to account for one quarter of annual heating appliance sales in the Netherlands, with gas boiler sales falling by around 75,000 units per year. A number of technologies will be competing for a share of these sales, with two key technologies dominating sales.  Lower carbon gas technologies will win out.

In France, we also see significant growth in lower carbon sales.  By 2025, we expect low carbon technologies to account for 30% of annual heating appliance sales – around 240,000 units per year.  A range of technologies will be competing for this – but we expect ASHPs to remain the leading technology, displacing primarily electric heating.  Lower carbon gas technologies such as hybrids, gas heat pumps and micro CHP will also be competing. 

To access the slide set for this webinar please go to our website.

 
How similar is this story in other European markets?

One thing is for certain – each European country has its own unique story as to why it’s heating market looks the way it does. And each country will have a new story to tell as to why each will develop uniquely out to 2025.

Next in this webinar series, we will be looking at the prospects for one or two key technologies across a number of European markets.  To register an interest in this webinar, please email info@delta-ee.com. Places are limited.



[1] In our previous webinar, we compared Germany and the UK – two markets that will develop very differently in the next 10 years.  To access the slides set & recording of this, click here
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