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State of the micro-CHP sector part 1: 2015 sales and market summary

The first of our two-part blog on the state global micro-CHP market provides a run-through of the key events that shaped the outcome in 2015 – taken from the Delta-ee ‘Micro-CHP Annual Roundup and Market Outlook’ report.

2015 was the year of the first ‘double-dip’ in the micro-CHP market

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Wave of new, renewed, and extended incentives to improve heat pump prospects in Europe

With renewable heat moving ever higher up the political agenda in Europe, heat pumps look to be benefiting already

Across Europe’s five largest heating markets (where almost 5 million heating systems, equivalent to more than 60% of the European total, are sold annually), there is a wave of renewed and extended support measures that look likely to improve the prospects for heat pumps.

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Why we think smart thermostats will lead the connected home energy market in the UK and the Netherlands

When we speak of connected home energy solutions, different types of products come to mind, among these are smart thermostats, multi-zonal (room thermostat) systems, remote diagnostic of heating systems and tariff optimisation solutions.

Latest Delta-ee research shows that smart thermostats are expected to be the dominant type of connected home energy product in 2017. Our central scenario sees sales in the UK and the Netherlands expected to reach 700,000 and 400,000 units per year respectively, from around 100,000 units per year base today.

Today’s supply chain is dominated by energy suppliers

Although some of these products, especially in the UK, are available through retailers and installers, majority of sales are coming from energy suppliers, as they attempt to reduce customer churn in a highly competitive market. In the UK, Hive, which has the vast majority of sales today, is being pushed through British Gas. Other energy suppliers are offering product but with far less sales so far. Climote through Scottish Power, Nest through Npower and Tado through SSE. As for the Netherlands, Quby has majority of the sales with the Toon smart thermostat, which is available exclusively through Eneco. Essent is offering ICY smart thermostat, as well as Nest thermostat. Plugwise, with Anna, a “Nest like” aspiration type product, introduced towards the end of 2014, will be looking to increase the level of competition in the Dutch market, and will push its smart thermostat primarily through Dutch utility, NLE.

Why are the UK and Netherlands set for growth?

The level of heating controls in the UK are typically quite basic, which makes it an ideal market for smart thermostat upgrades. As for the Netherlands, although the heating controls are typically more advanced, the high level penetration of easily upgradable “dumb thermostats”, on top of the high number of gas boilers coming with OpenTherm (an open communication protocol), makes the Dutch market also very attractive.

The overall opportunity for smart thermostats in the Dutch market is limited by an installed base of ~6 million boilers. However, the UK market, with ~21.5 million gas boilers installed, and annual installations of heating systems reaching 1.6 million, presents a much bigger opportunity. This opportunity has been exploited mainly by energy suppliers, looking to increase customer retention by offering a smart thermostat for free or at a reduced price in exchange for a long term energy supply contract. This could be further exploited in the UK if ECO, an energy efficiency obligation on energy suppliers, was to include smart thermostats within its framework - smart thermostats could then bring significant additional value to energy suppliers, and see sales exceeding our reference scenario of 700,000 per year by 2017.

How can value be extracted from the connected home space?

Delta-ee’s recent report on different business models for connected home players identified 20 value creation opportunities for energy suppliers, heating appliance manufacturers, connected home providers, installation companies and telcos.

Some of these value creation opportunities are attainable by 2017, for instance the direct profit from selling these smart thermostats, or cost-to-serve savings through customers understanding their energy usage better. Other opportunities, such as value creation from demand response programmes, have high potential, but are not likely to be widely in reach by 2017 in most markets. Sweden is one exception where ToU (Time of Use) tariffs are already available (Denmark will follow) although they are not yet widely promoted by energy suppliers and the value is dampened by low volatility in the wholesale electricity market there.

Sweden and Denmark will be the next countries to be added, as part of Delta-ee‘s Connected Home Market Outlook Report, following the first part which covered UK, the Netherlands, Germany and France.

So although smart thermostats will remain dominant in the UK and the Netherlands, the story is different in other markets. For example, multi-zonal heating systems will be more successful in other countries, such as Germany. We will be writing about this in a future blog.

To find out more about this research or the Connected Home Service, contact me at

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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. 


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?


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 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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