District Heating and Cooling and Heat Interface Units are still closely tied markets

Socrates Christidis
BSRIA Research Manager – Heating and Renewables

District Heating and Cooling networks have witnessed significant growth in many European countries in the last five years and this is set to continue in the coming decade. Significant European policy initiatives, such as the Green Deal, country government promotions, alongside increased public and private investment are supporting new business models such as utilities selling heat as a service and not as a commodity, which will drive the market forward.

BSRIA research indicates that the share of heat pumps and Energy-from-Waste in district heating and cooling systems is increasing. This trend is in line with the development of the concept of 5th generation heat networks. These are demand driven and low-temperature networks, using locally available low-grade waste heat (A/C, datacentres, underground stations, etc.), low temperature renewable energy in bodies of water and solar energy instead of a central energy centre. In principle, such systems favour the use of substations at building level, but no heat interface units at the dwelling level, as these are likely to be replaced by heat pumps.

Currently industrial boilers and CHPs remain the main source of heating in District Heating networks. For instance, 85% of planned heat networks in the UK, will have a CHP as the primary source of heating and 50% will have a gas boiler as a backup. The remaining 15% will use geothermal, ground source or water source heat pumps.

Thus, in the short-term Heat Interface Units (HIUs) will remain the link between the apartment and the network.

Going forward, reducing demand for heating and increasing need for hot water and cooling imply that the market will see the uptake of:

  • All-in-one units (heating or cooling and hot water)
  • Cooling units
  • Hybrid units, with integrated electric water heating
Graph showing European HIUs market growth

The main threats for HIUs market progress are the currently lack of consistent quality of installation and COVID-19.

Heat interface units have a major impact on the overall performance of a heat network and successful operation and performance both depend on correct system design and specification, followed by competent installation and maintenance. This has been problematic, with systems inadequately designed and quite often oversized. We see some signs of improvements as the industry becomes more sensitised towards good quality district heating. Documentation is improving as well as codes of practice, testing of HIUs, and further testing on site; however, under tight budgets the emphasis is often for the lowest cost, specification compliant technology. Testing the unit in a lab and then onsite is optional but critical to ensure performance.

Closing of construction sites was the main impact of the Coronavirus pandemic, including lack of cash flow, as the invoicing is done when products are delivered onsite. The industry has also witnessed a lack of new orders from April to June, with some signs of recovery observed just after. Overall, the European sales in the first 6 months of 2020 were between 15% and 30% down, depending on country, when compared to the 6 first months of 2019.

Going forwards, new construction presents a slightly positive picture. During COVID-19 there has been delays but not cancellations in planning permissions; delays as sites operate under social distancing guidelines and some delays for new investment to come through. However, governments and authorities are still eager to go ahead with programs and incentives, with renewed emphasis on the environmental agenda.

Looking at estimations for completions of flats before and after the outbreak, the recovery is likely to accelerate in 2022, and the market is unlikely to recover before. The end of financial support schemes by governments (VAT deferral, loan schemes or furlough) is likely to have a negative impact on many businesses, including contractors. Indications are, that new build and residential sales will be hit harder than commercial ones. Southern Europe is also likely to struggle more, although recession is expected across most of European countries.

Taking all this into account, BSRIA sees the numbers of heat interface units growing steadily but at a single digit compound annual growth rate of just over 4% on a Pan-European basis. The market will become more diverse and will look for more flexible options to cater for high-end, electricity-only heating, mixed-used and communal areas.

To find out more about BSRIA’s District Energy and Heat Interface unit market studies contact us at:

Smart Homes – The View from Berlin (And some answers to Life’s Enigmas)

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

For decades, mankind has agonised over such worrying conundrums as whether the fridge light goes out when the door is closed, or whether I need to drive 20 miles home to check that I really did turn the iron off. (I plead guilty to the latter).

If the 2016 IFA Messe in Berlin, which finished on 7th September, is anything to go by, then these dilemmas will soon be a thing of the past. Not only will I be able to log into my iron from the other side of the world, but a web cam will allow me to check the contents of my fridge, and potentially even the status of the food.

For a long time the idea of smart appliances has seemed almost whimsical, the domain of the geek or the obsessive with surplus money on their hands. The more serious message from IFA is firstly that most of the major quality appliance manufacturers, in both Europe and Asia Pacific are starting to make serious investments in smart appliances. Of course this investment does not prove that the demand will grow to match it. This will depend just as much on a second clear trend, namely that smart appliances are starting to interact with wider home management systems in a way that can potentially change the whole way that households operate, and revolutionise day to day domestic life.

To take a simple example; in the UK there is a lot of talk about shifting tasks that are not time-critical to off-peak times when energy is cheaper. But this mostly hangs upon smart meters. In Germany there has been a lot of resistance to smart meters (especially on data protection grounds), but the country is a world leader in domestically generated solar power. Several of the leading ‘white goods’ manufacturers, including Siemens, Miele and Bosch have partnered with SMA, the country’s leading supplier of residential solar power and storage systems. Your wash can now be kicked off automatically when there is enough solar power to drive it thus saving both  money and CO2 emissions.

From intelligent fridges to robots to keep an eye on grandma; the smart future is emerging

From intelligent fridges to robots to keep an eye on grandma; the smart future is emerging

Specialised smart systems are also increasingly being integrated into wider smart home systems, with a combination of open standards and a “best of breed” approach. This allows you not just to invest in one of the market-leading smart lighting systems, but also, for example to use it to changing the light settings to suggest that the building is occupied.  Home security is a huge theme in Germany, where burglary rates have actually been rising over the past couple of years. Another smart home system can use top of the range entertainment sound systems to mimic sounds like hoovering – with the added bonus that you can now also annoy the neighbours even when you are on holiday.

One flip-side of this is a degree of potential complexity, and many vendors are aware that systems that are complex to install, program and to manage are incompatible with a true mass market. Accordingly many now offer voice-command systems most commonly using Apple Siri or Amazon Alexa. Some suppliers also offer a degree of “machine learning” based on the behaviour both of typical users and of the actual householder.

Another key trend that BSRIA has also picked up over recent years is that much of the higher-end smart home market overlaps with the light-commercial market. A luxury home and a small office may have many similar requirements in terms of lighting security and energy requirements, and the owners may be willing to make the investment. KNX has a huge presence in this market.

On the other hand, the mass market will only be conquered by systems that are relatively low cost, and simple to install, either by the owners themselves or by an ordinary non specialist electrician. One supplier, Datastrom, makes use of mains electricity wiring to connect and control devices, so can be installed by an electrician. Others deploy low- power devices which can be battery powered and can communicate wirelessly using a low energy protocol such as Z-wave. This also makes the smart home relatively portable, which is an attraction in a country like Germany  where far more people rent their homes than do in the UK or the USA.

Smart technology - light in the tunnel, not just at the end of it.

Smart technology – light in the tunnel, not just at the end of it.

I came away from IFA with a confirmation that a dynamic smart home market is taking shape as part of the massive expansion in smart technology and the Internet of Things. There remain huge question-marks. While there is almost universal awareness that cybersecurity is an issue, and much is being invested in it, it is not yet clear that there is an effective way of keeping all devices secure at all times. In fact this concern could drive the move towards complete smart homes, as it is probably easier to monitor a network of IoT devices for ‘suspicious behaviour’ than to try to protect and update each one individually on a continual basis.

BSRIA will be shortly be publishing a series of studies on each of the Smart Homes and Light Commercial markets in Germany, France, UK, the Netherlands  and on North America, which will explore all this, and much more.

For more information please feel free to contact me, Henry.Lawson@bsria.co.uk – +44 (0)1344 465 590

Building Controls: Throwing a BRIC in the Works

Henry BlogThe BRIC countries; Brazil, Russia, India and China feature prominently in the news on an almost daily basis, for all sorts of reasons. While there have been concerns over a slowdown in growth, China, India and Brazil have all continued to grow through the recession at substantially faster rates than most of the developed world, and whilst the somewhat reduced growth rates may cause alarm in China and India, they would be cause for wild celebration in, say, much of Europe.

China, Brazil, Russia  and India all now rank in the World’s top 10 economies, and China is already second only to the USA, and is poised  to overtake it sometime in the next few years.

This economic development has naturally been associated with a lot of building development, including demand for such systems as HVAC and Building Automation. Nonetheless, in the BRICS countries the Building Controls markets have tended to lag behind their economic development.

Hence, according to BSRIA research, China’s Building Automating market was the world’s 5th largest in 2012, while Russia ranked 11th, India 16th and Brazil 18th.

What is more, the same research shows that the Chinese, Indian and Brazilian markets were dominated by the “Big 4” global suppliers: Siemens, Johnson Controls, Honeywell and Schneider Electric, even though the individual company shares varied reflecting local market conditions.

One thing that the history of the past 150 years has taught us is that as technologies mature and economies develop, industries tend to migrate to areas which offer the combination of lower costs and growing markets which China, India and Brazil are all in a position to do. This has been seen with the massive movement of manufacturing industry to China and of IT related industries and services to India. This in turn has created some new locally owned corporations with major industrial and financial clout, in a position to compete and invest on a global basis.

The latest update to BSRIA’s global study Challenges and Opportunities in the BACS Market , looks at a number of key trends, including the potential for new challengers to emerge in China, India and Brazil.

Unsurprisingly, the process appears to be most advanced in China. Spurred on by the wave of new construction, suppliers such as Techcon, SUPCON, Beston and RUNPAQ have started to make a real impact covering most of the main vertical markets, and including some high profile projects.

In India, where the overall market is significantly smaller, only Larsen and Toubrou, a major Indian-owned global corporation, stands out. There are however a host of Indian companies providing implementation and integration services.

This blog was written by BSRIA's Henry Lawson

This blog was written by BSRIA’s Henry Lawson

In Brazil a major domestic supplier has yet to emerge, though as in India there are a range of local companies offering related services.

In Russia, local Champions such as Regin and Polar Bear have gained a significant national market share, but have yet to have much impact elsewhere.

Past experience in other industries suggest that these countries may well provide favourable conditions for local champions to emerge and that, as their national BACS markets grow and mature, so this could even provide a springboard to offer products and services on a regional or even a global basis. This is definitely an area that everyone with an interest in Building automation, be it as a supplier, customer or service provider, should continue to watch going forward.

Other subjects that we focus on in the latest update include Technical Infrastructure Support Providers, developments in cybersecurity for buildings, and new alliances and mergers.

To find out more about Challenges and Opportunities in the BACS Market please contact Steve Turner – Steve.Turner@bsria.co.uk

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