When the Worcester team asks to ‘take you up The Shard on April Fools’ Day’, you have to double-check they are being serious. However, serious they were and the company wanted to show off its newest condensing boiler, the ‘Greenstar I’.
Ten years ago to the day, condensing boilers became mandatory and the legislation has been a great success. At the time, installers fitted around one million new boilers a year. Now, they fit around 1.6 million condensing boilers a year. The boiler business has been good for manufacturers and installers since the new legislation came into force.
A slowing market
In the face of the decline in installations this year, Worcester Bosch still sees a positive housing market with plenty of strong signals for a buoyant market for boilers. The recent decline of the oil price has boosted the UK economy. However, Worcester’s sister companies in Eastern Europe, are being ‘decimated’ because of the problems in the Ukraine and Russia.
Compare that to heat pumps, where around 20,000 heat pumps installed in the UK each year. Delta-EE predicts that this will rise to around 50,000 installations a year by 2017. That is quite an increase each year, but still nowhere near the number of new condensing boilers installed each year.
Worcester’s announcement put the heat pump market into clear perspective too.
Further into the future, Worcester Bosch will move into developing ‘hybrid solutions’ which would include its mix of condensing gas boiler and air source heat pump solutions. However, Carl added that this new technology might not be for the UK market.
Interestingly, the company has relied heavily on its installers being their advocates for their products. This route to market is what the government is encouraging to promote its flagship energy efficiency program, the Renewable Heat Incentive. It seems like a sensible approach and one which is natural for most manufacturers that do not have contact with end customers.
In contrast, however, Worcester Bosch stated that it is focussing more on end customers (or homeowners). Customers are becoming increasingly important in the decision making for their heating systems. They are relying less on their installers to decide which their best option, according to Worcester Bosch is. As a result, the manufacturer is working to rely less on the installer to get their message out.
The Green Deal Flop
Given that only 3% of gas installers are qualified to install GD solutions, it is not surprising that so few homeowners have taken advantage of the scheme. Why? It is too complicated for homeowners and installers, so they do not bother. Furthermore, another complaint about the GD was the cost of the funding (i.e. the rate of interest) was too high. Why pay such a high rate when you can borrow money more cheaply elsewhere?
When you put the market for gas condensing boilers against the market for renewable heating systems, you can see a marked difference. The market for heat pump, for example, has declined by 14.5%, according to Neil Schofield.
The number of air source heat pump installations flattened last year, while demand for solar thermal and ground source heat pumps has declined heavily. However, demand for biomass boilers soared, mainly because of the generous tariff provided by the renewable heat incentive.
How many heat pump installers?
The UK government has a target to reduce carbon emissions by 80% from a 1990 baseline by 2050. It appears that it does not care how it achieves it. If the UK installs more biomass boilers and gas condensing boilers to hit the target, is the government bothered? Probably not.
The market for heat pumps, does not look to get any better, despite predictions otherwise. Homeowners are aware of heat pumps. But, the only people installing them ‘en masse’ in their homes either have little choice in the matter (i.e. social housing tenants), or they can afford them without the incentive anyway (i.e. wealthy homeowners).
Too much upfront
The market for heat pumps in the UK needs a catalyst for it to take off. The RHI does not appear to be a strong enough catalyst. What will it be? Hybrid heat pumps? A sudden and rapid rise in the cost of oil? Who knows?
What is certain is that homeowners and commercial property owners only become interested in heat pumps if they save money and the solution pays for itself quickly.