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How the transition to new heat is disrupting the heating market and creating opportunities

We are at a pivotal time for the heating market in Europe, as the transition from ‘old’ to ‘new’ heat gains traction.

The decarbonisation agenda is finally placing heat at its centre in many markets. The heating market is seeing more disruption than ever before, as new market players compete with the incumbents, new business models and propositions emerge, traditional routes to market are turned on their heads, and technology ecosystems evolve. 

At Delta-EE, we are following these trends closely and analysing the impact on market opportunities – and threats – for heating players. A few trends stand out for us as particularly critical:

Customer propositions are evolving towards more service-based offerings. Heat as a service models have gained momentum, with a growing number of offerings being trialled or rolled out commercially. Examples include Bristol Energy in the UK, Eneco in the Netherlands and OK in Denmark.

Connectivity is becoming a must-have functionality for new heating systems, initially to enable more efficient maintenance and repairs, and ultimately to enable the shift from heating systems as stand-alone devices, to systems increasingly integrated with the wider energy system. Examples include British Gas offering Boiler IQ in the UK, or NIBE offering NIBE uplink with all their heat pumps.

Value will no longer be pinned only to the quantity of energy consumed but will increasingly be influenced by the ability to control the timing of consumption. Market experience is growing and business models are evolving, driven by the learnings from projects such as Glen Dimplex’s partnership with OVO to capture flexibility from storage heaters.

Hydrogen will play a key role in the future of heat. Hydrogen is firmly on the political agenda in many countries, and in the first six months of 2019 there were 20 hydrogen for heat projects active across five EU countries, exploring domestic heat using both blended and pure hydrogen supply.

New market entrants are creating stiff competition for incumbent energy suppliers – non-energy household names such as Amazon and Google, and agile start-ups alike, are all after their share of the ‘new heat’ prize. Experience in energy is no longer seen as a barrier to entry.

We will be discussing these issues and more at our European Heat Summit later this month. Visit www.delta-ee.com/heatsummit for more information.

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