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Hybrid Heat Pumps & High Spirits: Inside the Buzz of 2024 VSK Heating Fair

Summary

After spending two intense days at the VSK fair in Utrecht, speaking with the leading players on the Dutch heating market Klara Ottosson, Heating Business Research Manager is sure of one thing – the Dutch HVAC industry knows how to have fun! 

After spending two intense days at the VSK fair in Utrecht, speaking with the leading players on the Dutch heating market I am sure of one thing – the Dutch HVAC industry knows how to have fun! 

From Remeha blasting ‘We are the champions’ to celebrate their new hybrid model winning the Audience’s Award to visitors walking around with beers in their hands from 11AM and people dressing up in both gold sequin suits and racing outfits (complete with a helmet – the Stig style) – the VSK fair is for many exhibitors and attendees the highlight of the year. One person I spoke with described it as ‘better than Christmas’.  

After countless discussions with boiler and heat pump manufacturers about the development of the Dutch heating transition, here are my main observations: 

The future of heating is spelled ‘hybrids’  

If there were any doubts about the future of the heating transition it is now absolutely clear that the focus is on hybrid heat pumps – at least in the medium term. Every single boiler and heat pump manufacturer showed one. While many of them are similar, some manufacturers are taking steps to stand out from the crowd by making their model more compact (Remeha, Daikin) or by taking the heat pump’s outdoor unit inside for a fully indoor heat pump (ATAG). 

Heating manufacturers were taken aback by the sudden drop in sales in the last few months of 2023 

The heat pump market in 2023 started out very strong, and three quarters into the year it looked like total heat pump market could reach more than 170,000 units (up from 120,000 in 2022). But the last quarter dealt a blow to the heating sector overall, and December sales were much lower than anticipated – and with wholesaler warehouses filled to the brim sales are unlikely to pick up soon. The final tally for 2023 was 150,000 heat pumps; growth of 36% compared to 2022. The boiler market on the other hand dipped by nearly 25% compared to 2022, largely being displaced by hybrid heat pumps. 

Direct electric heating could be an underrated challenger 

Depending on who you speak with, direct electric is either a growing, or a non-existent, market. Boiler and heat pump manufacturers seem to ignore direct electric products as a competitor, although when speaking with the product suppliers themselves they paint a picture of being a challenger in both new and existing buildings. New buildings are so energy efficient that it may not make economic sense to invest in a heat pump for heating as there will not be a pay back. The same is true for smaller existing homes (with low heat loads) that are looking to move away from gas. It may be time for the big heating manufacturers to start paying attention to direct electric! 

Heating manufacturers are worried about declining sales in 2024 

It is not only direct electric products that should be worrying the big heating players. It looks like the declining trend from the end of last year is continuing and 2024 is bound to be a year of uncertainty for the heating market. Although there are different views on what will happen – the market can either dip, be completely stable compared to 2023 or experience a very slight growth – everyone agrees it will not be another year of record growth as things start to stabilise after record years during the pandemic. 

There is uncertainty about how to fully decarbonise all the homes that will install hybrids in the coming decade 

Finally, while it is clear the foreseeable future will be all about hybrids, it is considerably less obvious what will happen in 10-15 years when the hybrids installed today will need replacing. The role of gas in the Dutch heating system is undeniable, but there are no concrete plans on how to decarbonise it despite the Dutch efforts to prove the concept of hydrogen heating and targets to grow the volume of biomethane in the grid 10-fold by 2030. While one or two manufacturers did have hydrogen products on display, other manufacturers are instead preparing for an all-electric route by offering all-electric ready hybrids. These have a higher capacity and could be used to produce domestic hot water if the householder chooses to get rid of their gas boiler. But all-electric is facing another obstacle – the Dutch electricity grid is terribly under dimensioned and grid operators will need to act quickly, and invest huge sums, to get the grid ready for increased electrification of not only heating but also transport and the large and growing share of homes (around 20%) with PV panels. VSK, and the fun, is over for this time. The exhibitors will have just under two years to rest up and get ready for the next fair. And 2026 will be a big year for the Dutch heating market, with the proposed (and world’s first) hybrid heating mandate probably coming into play. Perhaps these two years will also provide some clarity on the long-term strategy for decarbonisation of heat. I will in any case be eagerly waiting. 

 

For more insights from the Heat research team check out our webinar: Heat in Europe: 2023 Market Highlights and Predictions for 2024 and Heat as a Service: Now or Never?  Or, reach out to us directly for a chat: klara.ottosson@lcp.com 

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