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Manufacturers of residential green tech need to ‘adapt to thrive’ as traditional routes to market become disrupted

Summary

Manufacturers of residential green technologies are being urged to adapt their business strategies to ensure they benefit from the predicted rise in use of technology such as heat pumps and batteries.  

New analysis from LCP Delta predicts that by 2030 across Europe, 130 million residential renewable technologies will be in use. This will include more than 40 million air-2-air heat pumps and AC systems and 30 million Solar PVs. 

In How can green technology manufacturers adapt and thrive in the energy transition? LCP Delta predicts that while there is set to be a staggering rise in these technologies, it won’t be boom time for the suppliers and Original Equipment Manufacturers (OEMs) of these technologies unless they adapt their business strategies to meet changing consumer habits.  

The market is seeing the rise of Future Energy Managers, who take customers on their net zero journey, while giving them control of their bills through packaged tech and tariffs. These companies are doing this by acquiring technology manufacturers to offer the full solution, building these capabilities internally or partnering with other providers​. This is disrupting the traditional route to market which would see many OEMs sell directly to customers and this trend is only set to increase as the energy transition accelerates. Examples of this type of company include the Germanbased 1Komma5° and the Spanish Holaluz.  

This shift is already starting to happen. Alternative charging models for products are gaining traction, such as leasing, finance, or ‘as-a-service’ with easy-to-understand services such as monitoring and maintenance. Our research shows more than 40% of customers want to buy their new heating using one of these alternative payment methods.​ 

LCP Delta believe that it order to adapt and thrive in the market, manufacturers of these products need to adopt one of three strategies:  

  • Be best in class and connected: Produce high-quality, low-cost products that can integrate with 3rd party optimisers. Partner with Future Energy Managers and others to ensure interoperability of products and services. 
  • Offer a ‘whole-house’ solution: Full-suite of home renewable tech that can seamlessly integrate. Acquire, partner, or build manufacturing and software capabilities where gaps exist and partner with a supplier to offer bundled tech and tariff. 
  • Become a Future Energy Manager: Offer bundled tech and tariffs direct to customers. Acquire or build energy supply and acquire or build manufacturing and software capabilities. 

 

There are already examples of OEMs that are embracing market changes. This includes Enphase, a Californian-based OEM, who is one of the leading manufacturers of micro-inverters and batteries for both residential and commercial markets. ​They have developed a home-based app that lets customers schedule appliance use and has compatibility with other appliances from leading manufacturers. Schneider Electric, the multi-national energy management and automation OEM, recently partnered with Airzone to integrate the management of its air-to-air heat pumps into Schneider Electric’s Wiser and Wiser KNX ecosystems. The partnership will enable customers better control over heating and cooling, tackling the biggest energy consumer in home. 

Andy Bradley, Partner in LCP Delta, commented: “The confluence of climate policy and the energy crisis means the time is now for home-based green tech. For manufacturers of residential green tech there is a fantastic opportunity to maximise this, but they need to adapt to the new market dynamics in order to thrive.  

“Getting the right guidance about how to navigate this rapidly evolving market with the right business strategy will position manufacturers to reap the rewards now and in the future.” 

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