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Annual Value of UK Low Carbon Heat Market to More Than Double to £0.5 Billion by 2016


News provided by

Delta Energy & Environment

10 Sep, 2013, 14:46 GMT

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EDINBURGH, September 10, 2013 /PRNewswire/ --

The market for residential low carbon heating products (including solar thermal, air source heat pumps, ground source heat pumps, micro-CHP, biomass and hybrid technologies) is set to take off, according to the latest forecasts from decentralised energy consultants Delta Energy & Environment (Delta-ee).

Annual installations of low carbon heating products are to rise from ~30,000 this year to 80,000 in 2016, making the market worth more than £0.5billion - more than doubling its current value.

A key catalyst for this growth is the recently announced (domestic) Renewable Heat Incentive (RHI), scheduled for launch in 2014. The tariff announcement marked the end of years of uncertainty which had left the low carbon heat markets flat. It will give industry participants the confidence to invest in supply chains and to develop new customer propositions, like those that developed around PV, such as "heat pumps for free".

We will also see growth expanding into new segments.  Currently, sales are concentrated in social housing and new build properties - which together account for 77% of installs. However, owner occupiers are expected to grow their market share to over 40% of installs by 2016. Uptake will be driven by attractive paybacks in this sector (5 years or less in some cases) as households take advantage of the RHI. Companies that develop propositions for these households will be the big winners in the growing low carbon heat market.

In technology terms, heat pumps will increasingly dominate the low carbon heating market; growing from ~15,000/year today to upwards of 45,000/year in 2016.   For customers using heating oil today, air source heat pumps - with the RHI - are a competitive alternative. The inclusion of hybrid heat pumps in the RHI will provide an innovative low carbon solution for on-gas customers too.

What does this mean for market players?

  • Energy suppliers: have a significant opportunity to tap the market growth.  Some - such as EDF and British Gas - are already developing a portfolio of low carbon solutions for their customers.  
  • Boiler manufacturers: hybrids have significant potential and could be a game changer for involvement of leading boiler companies - Vaillant already has a hybrid heat pump product on the market.
  • Low carbon product manufacturers: an opportunity to be early movers on innovative propositions for off-gas grid owner occupier customers. For Daikin and others, hybrids will be a driver for engagement with on-gas customers too.
  • Installers: great opportunities to grow and diversify business - expect new training opportunities from manufacturers and distributors.

The full market forecasts report, including the key market segments and customer groups to target, is available via the Delta-ee Microgen Insight Service. Further information is available from http://www.delta-ee.com

About Delta-ee

Delta-ee provides commercial insight and market expertise in decentralised energy and low carbon strategies. With in-depth expertise of the European heating and energy industries, the company has been tracking decentralised energy markets and technologies since 2004. Delta-ee supports clients through providing strategic insight and rigorous analysis on market size, competitive landscape, regulatory environment, and potential for future growth. Clients include many of the major heating equipment manufacturers, energy companies, and technology developers from around the globe.

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