CH Boilers Ecodesign and Energy Label Preparatory Review Study - - PowerPoint PPT Presentation

Preparatory Review Study Task 2 (DRAFT) Market Analysis

DRAFT INTERIM REPORT

Review study Commission Regulation (EU) No. 813/2013 [Ecodesign] and Commission Delegated Regulation No. (EU) No. 811/2013 (Energy Label) Prepared by

VHK in collaboration with BRG Building Solutions, London (UK)

The information and views set out in this study are those of the author(s) and do not necessarily reflect the official opinion of the European Commission

CH Boilers

Ecodesign and Energy Label

Content

• 1. Intro
• 2. Generic economic data (Eurostat)
• 3. Market & stock data (BRG)
• 4. Prices & rates
• 5. Market actors & costs
• 6. Evaluation and outlook

Intro: study goals

• Update (MEErP) in  see chapters hereafter & methodology slide
• Review (Art. 7 of regulations)

ED appropriate – for GHG refrigerants, CO, HC, PM? – for energy efficiency, NOx, sound power? – for biofuel (gas/oil)? – In view of PEF and 3rd party certification? EL assessment – shift in market share – if package label appropriate – If having other heating efficiency than the standard season is OK – If PFHRD should be included

• Evaluate (REFIT). Did the regulations work as they were supposed to and

was there no significant negative impact?

1 0 3 4 1 0 1 1 9 4 4 8 7 7 9 0 7 7 1 9 6 0 5 5 8 0 5 7 1 5 6 8 5 5 3 5 7 4 4 7 6 6 1 8 6 2 1 7 3 5 6 8 6 5 9 4 5 9 4 6 3 8 6 1 2 5 8 4 5 8 6 4 0 7 5 4 8 6 1 6 8 3 4 1 0 4 7 1 2 4 9 9 5 4 1 2 7 2 1 1 9 4 1 0 9 2 1 1 5 8 1 1 2 5 1 0 9 1 1 0 5 6 1 0 2 1 9 8 6 3 1 0 9 2 9 8 5 3 5 5 3 3 4 3 6 2 4 7 0 1 7 0 1 1 9 7 7 2 0 1 1 1 9 7 3 1 7 2 8 1 6 4 0 2 1 3 5 1 8 8 6 1 0 2 7 1 2 1 0 1 2 7 4 1 2 4 2 1 2 0 3 1 1 1 9 1 1 5 7 1 1 5 0 1 0 8 0 1 2 5 9 1 3 4 0 1 3 4 6 1 5 6 3 315 355 439 399 459 423 467 485 470 496 479 502 447 156 156 156 156 268 164 180 362 490 515 516 538 392 7 5 9 9 8 0 4 2 9 1 1 7 8 4 7 4 7 8 5 9 6 5 5 4 6 7 6 1 6 9 5 9 6 8 4 8 6 8 0 8 6 5 6 5 7 2 0 3 6 8 4 5 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6

EU2 8 CH- Boiler Production 2 0 0 4 - 2 0 1 6

(in '000 units), source: Eurostat

Cyprus Croatia Slovenia Bulgaria Rom ania Hungary Czech Republic Lituania Latvia Estonia Malta Austria Finland Sweden Luxemburg Belgium Spain Portugal Greece Denmark I reland Slovakia Poland United Kingdom I taly Germ any Netherlands France

Boiler production EU 2016: 6.44 m gas/oil @ €5.1bn + 0.44 m heat pump @ €1.6bn + € 0.2bn other= 6.9m @ €6.9bn (in manufacturer selling prices msp)

2004: 7.4m @ €6.9bn *

• Incl. solid fuel

*=inflation corrected

Seasonal boiler efficiency of sales

• 4.9 million are condensing gas/oil (gas 4.75 & oil 0.15) with

average seasonal space heating efficiency ηs 93%,

• 0.6 million non-condensing gas/oil with ηs 75%,
• 0.26 million are air-to-water heat pumps with ηs 145%,
• 0.06 million are ground-source heat pumps with ηs 158%
• 0.07 million electric boilers with ηs 35%.

81 % 90 % 94 % 2004 2014 2016 ED implement

(2015)

ED plan ED prep. study

2006/’07

ED&EL reg.

2013

€ 698 € 724 € 643 € 611 € 585 100 200 300 400 500 600 700 800

Eurostat Boiler average boiler msp (euros/unit) 2004-2016

Actual (3-point average) Inflation corrected

Average gas/oil boiler msp 2004-2016 (euros/unit)

7 3 7 1 0 5 5 1 0 4 3 5 9 0 7 9 0 6 8 6 3 8 2 6 0 6 4 7 2 5 0 2 4 6 0 200 300 400 500 600 700 800 900 1000 1100 1200

CH-boiler uncorrected prices 2 0 0 4 -2 0 1 6

(in euros/ unit) for selected countries, from Eurostat data

France Germany United Kingdom Netherlands Poland Italy Slovakia

51 58 73 97 128 133 148 223 273 313 309 272 148 132 61 60 65 66 72 73 64 147 151 168 186 163 160 163 68 74 74 80 73 64 58 120 159 159 137 98 105 97

7 9 7 8 9 7 9 8 6 1 0 0 7 9 2 4 7 7 5 7 4 1

20 10 20 11 20 12 20 13 20 14 20 15 20 16

EU2 8 CH-Boiler Exports (in million Euros)

Turkey Switzerland Norway Bosnia & H. Belarus Canada Ukraine OTHER United States Russia China

EU 2016 gas/oil boiler export € 741 m

Russia decreasing, China increasing

45 49 50 52 53 49 52 153 199 202 213 212 261 269

2 3 1 2 8 5 2 8 9 2 9 7 2 9 6 3 4 2 3 6 0

20 10 20 11 20 12 20 13 20 14 20 15 20 16

EU2 8 CH-Boiler I m ports (in million Euros)

Turkey Switzerland Norway Bosnia & H. Belarus Canada Ukraine OTHER United States Russia China

EU 2016 gas/oil boiler import € 360 m

Turkey increasing

6.6 35.4 21.9 48.6 46.8 13.0 15.1 7.6 19.2 22.2 18.3 0.9 1.2 1.0 0.9 3.0 25.7 30.5 29.7 25.7 25.0 27.4 8.9 6.4 6.9 11.3 13.7 17.1 67.3 49.4 50.1 0.0 50.0 100.0 150.0 200.0 250.0 300.0

1990 2004 2014

EU28 Domestic Heating STOCK, in million dwellings

No CH (local heating + no heating) Individual dry gas/electric SOLID fuel boilers District Collective ELECTRIC HEAT PUMP CH boilers ELECTRIC CH boilers OIL/GAS Jet burner (85-90% oil) GAS Floor Standing non-condensing GAS Wall Hung non-condensing GAS Floor Standing condensing GAS Wall Hung condensing

in scope: 143 (58%) 244 223 195 81

(41%)

125

(56%)

215 primary dwellings 29 secondary dwellings

2004 vs 2014 in scope: gas 7077%, oil 22 15%, heat pump 0.41.2%, collective 1412%, dry 67%, no or local 2221%

EU Boiler stock 2014 (<400 kW)

120 5 14 residential individual (120 m dwellings) residential collective (30 m dwellings) non-residential 3360 500 840

Million units installed (total 139 m) Million kW installed (total 3.94 TW)

7002 6977 7170 6765 6624 6177 6251 6044 5820 5995 5900 6221 5924

10 00 20 00 30 00 40 00 50 00 60 00 70 00 80 00 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 '0 0 0 units sold

Boiler unit sales EU28 2004 -2016 ( source BRG 2017)

Heat Pumps to water Electric Boilers Wall Hung Gas Cond Floor Standing Cond Wall Hung Gas Non Cond Floor Standing Gas non Cond Jet Burner Boilers Total

ED & EL implemented 1 Sept. 2015

EU 2016 5.93m boiler sales: gas 5.2m, 0.37m heat pump, 0.3m oil, <0.1m elec boilers.

11% gas condensing w h 354% gas non-condensing 2% gas condensing fs 198% jet burner (90% oil) 33% solid fuel electric boiler 156% heat pum p 314% 86% 0% 50% 100% 150% 200% 250% 300% 350% 400%

Boiler unit sales trend 2 0 0 4 -2 0 1 6 ( 2 0 0 4 = 1 0 0 % )

Wall Hung Gas Non Cond Wall Hung Gas Cond Floor Standing Gas non Cond Floor Standing Cond Jet Burner Boilers Solid Fuel Boilers Electric Boilers Heat Pumps TOTAL

1 1 4 2 7 5 6 4 5 5 8 10 12 8 26 17 43 35 21 41 82 114 192 74 130 1 1 4 3 2 1 1 6 6 1 4 7 6 5 14 11 35 45 8 34 8 21 15 46 1 1 1 3 2 2 2 2 6 5 3 6 4 5 7 6 7 14 10 13 56 51 20 35 3 6 3 9 7 16 15 27 18 17 40 47 30 64 44 89 154 151 230 355 234 504 434 772 1 641

50 10 0 15 0 20 0 25 0 30 0 35 0 Estonia Latvia Bulgaria Slovenia Portugal Lithuania Finland Denmark Greece Croatia Sweden Ireland Slovakia Hungary Austria Czech Republic Belgium Romania Spain Netherlands Poland Germany France Italy United Kingdom

EU Boiler Sales 2 0 1 4 by End-Use (in '000 units)

New Housing 1st Time Installed Non- Housing Replacement

Market segmentation by end-use

End-use 2004 2014 difference New Housing 1.58 0.85

• 0.73

1st time users 1.05 0.28

• 0.77

Non-housing 0.28 0.26

• 0.02

Replacement 4.36 4.90 0.54 7.26 6.30

• 0.96
• New Housing: Gas condensing 64% and heat pump boilers 18% of
• Non-condensing: Still ¼ of First Time Installation and Replacement in 2014
• Non Housing: Includes floorstanding 16%, oil jet burner 10%, solid fuel 9%

and heat pump boilers 10%.

• Replacement 78% in 2014, 60% in 2004
• New housing and First-time users biggest losers : -46% and -73%

Technical market segmentation

• Room-sealed (86%), gas-fired (95%) condensing (71%) combi boiler (71%)

with a fan-assisted premix burner type (68%), electronic ignition (99.9%) and steel or aluminium heat exchanger (>70%) is the dominant type (60- 70%).

• Switch from conventional (59% in 2004) to fan-assisted premix and low

NOx burners (78% of total in 2014)  much improved emission control

• Approx. 93% of all oil/gas boilers now have a hot water functionality,

either as combi or with an external cylinder.

• Average capacity residential gas/oil boiler 27 kW; heat pump 10.3 kW.
• Average product life: 24 years. (DE, NO, DK try to force it down, e.g. ban

boilers >30 years and/or oil-fired, but legally difficult)

Heat pumps

• Outside airWater 212 k units (avg. 10.1 kW)
• Ground source 81 k units (avg. 10.9 kW)
• Exhaust air Water 19 k units (to revisit in Task 4)

Total: 312 k electric units , avg. 10.3 kW Estimate: 6 k gas-fired (GAHP) units Heat pump sales 2004-2014: Ground source stable at 77-81 k. Outside-air 900% growth from 24 to 212k FR (75k, fastest grower), DE(56k), SV(33k) = 60% HP market IT (20k), AT (15k), FI(13k) follow Ground source in SV(25k), DE(16k), FI(11k)

Market other types

• Micro-CHP: 3.3 k units (prices € 9-20k/unit)
• Hybrids: 6.6 k units (prices >€ 4k/unit),

11k in 2016. Large potential but needs policy support

• Passive Flue Heat Recovery Devices (€ 200 possible,

Save 31% on hot water energy, payback 5 years):

• ca. 20 k in 2016. Large potential but needs policy support
• Solar thermal (2014): 2.8 Mm2 sold, o/w glazed flat plate 86%, unglazed

4%, vacuum tube 10%.

• Sales now declining (6.6% drop); less subisidies; installer label does not

work for solar?

• In 2014: 100 k solar-assisted combi-boilers sold

Consumer prices boilers

• Financial crisis lower demand fierce price competition
• Production shift to low labour costs (Eastern Europe, Turkey, China),
• Higher production volume of condensing boilers and more

integrated product design,

• Result: nominal prices of oil/gas boilers almost the same as 10 years

agoinflation corrected prices decreased by 20%, despite the switch to more efficient condensing boilers.

• Over the same period, the market share of the more expensive heat

pump boilers –promoted by Ecodesign and related measures-- increased threefold, driving the average boiler price up.

• The end result is an EU average boiler price (all types, including heat

pumps and microCHP) of €1825/unit in 2014-2016. In real terms (inflation corrected) this is the same as the €1500 boiler price in 2004.

1 5 6 1 3 0 1 0 0 5 0 1 5 3 1 2 6 3 0 1 7 .5 9 .8 1 5 1 0 3 3 5 7 .5 2 .2

2 0 4 0 6 0 8 0 1 0 0 1 2 0 1 4 0 1 6 0 1 8 0 2 0 0

%

Consum er price, value chain ( % of m sp)

Overhead Labour OEM Margin Raw material

msp=100 consumer price =187% of msp

Installation and total acquisition costs

Installation costs over the last 10-12 years increased, in the range of 20-30% (inflation corrected) due to:

• extra work on chimneys/flue gas ducts due to the switch from to

condensing gas/oil boilers and

• higher installation costs of heat pump boilers.

Current installation costs are estimated at over €2000/unit. The total acquisition cost of the average boiler is €3850/unit, which is probably 15% more than a decade ago in real terms. The total EU acquisition cost for all boilers is around €23bn/year, of which €11bn in strict boiler costs and €12bn in labour and auxiliary materials for installation.

Running costs & rates

• Repair and maintenance costs stable. EU total €23.2 bn (incl. VAT).

Maintenance cost is €120 per year for a residential boiler and €16bn/year for EU. Repair costs per year €60/unit and €7.2bn for EU.

• Average EU electricity price in 2016 was around €0.20/kWh for households

and €0.114/kWh for non-households. Real (=inflation corrected) increase of 14% for former and 5% for the latter over the last 10 years.

• The average EU gas price in 2016 was around €0.064/kWh for households

and €0.030/kWh for non-households. Real decrease of 2% for households and 15% for non-households over the last 10 years.

• For gas heating oil, the October 2017 price was €729/1000 litre

(€0.069/kWh GCV). This is 8.6% higher than the price in 2009.

• Energy prices increased considerably less than was expected  More

comprehensive Life Cycle Cost (LCC) calculation needed in future Tasks.

• The discount rate in LCC calculations will be 4% as indicated in the Better

Regulation Toolbox.

Market actors: Boiler Industry

• EU boiler industry: dozen multi-nationals making up 90% of turnover and

employment in the sector. Names include Bosch, Vaillant, Viessmann, BDR Thermea, Atlantic, Ariston, etc..

• Most deliver the full package of HVAC solutions: boilers but also water

heaters, ventilation units, air conditioning, etc. .

• Heat pump boiler manufacturers like NIBE, Daikin Europe and Stiebel are

now new significant players in (heat pump) boiler manufacturing.

• 10% of the boiler industry is made up by another dozen of medium-large

companies (non-SME, i.e. >250 jobs) , as well as a mix of 40-50 importers.

• Accumulated sector turnover of these end-product suppliers is in the
• rder of €16bn and their employment amounts to 73 000 jobs. Around

80% will relate to boilers in scope.

• Independent SMEs with their own boiler-brand are rare and could not be

identified.

Flue gas vent & air intake M&G Group (NL Ubbink (NL) Gas valve system Honeywell (NL) SIT (IT) Combustion fan Ebmpapst (DE) Burner-control Siemens (DE) Circulator Grundfos (DK) WILO (DE) Heat exchanger Sermeta (FR) Heating controls Honeywell Danfoss (DK) Johnson Controls Expansion tank ZILMET(IT) Gas burners Polidoro (IT), etc. Oil/ gas jet burners Weishaupt (DE), Riello (IT) Pipes WAVIN (NL) Bekaert (BE) Valves Caleffi (IT)

Market actors: OEMs

Market actors: Wholesale/distribution

• Wholesale is under pressure from not only the financial crisis but also e-
• commerce. International wholesalers are Ferguson plc (UK), Saint Gobain

(FR) and the GC Group (DE). Every country has national wholesalers for plumbing products.

• Installers, have suffered relatively little from the financial crisis. Nominal

turnover has grown by 37% over the 2004-2015 period. Corrected for inflation this is still +1% per year on average. Possible causes: Extra work related to condensing boilers and heat pumps; more frequent inspection/ maintenance, following EPB rules.

• The boiler-related work is estimated to create a €40bn turnover for

installers, retaining 450 000 installer jobs. Some 60% of this is boiler installation work and 40% is in boiler repair and maintenance.

Other market actors

• Test laboratories/notified bodies
• Building/boiler inspectors that are not installers (e.g. DE chimney

sweeps)

• 15 EU associations from industry sectors & NGOs, national

members associations

• Trade fair organisers (ISH, Mostra Convegno), publishers of

specialised magazines

• Consumers: owners & users, prospective buyers, including private

builders, (social) housing corporations, real estate developers and investors.

• Policy makers

ECOS

REHVA

Associations

Evaluation

• The space heating energy efficiency of boilers in the scope of the

regulation increased by 14%-points at the expense of 15% higher acquisition costs (mainly installation costs).

• A decade ago, when the Ecodesign and Energy Label regulations were

prepared, it was expected that energy saving in 2016 could be higher but also at the expense of acquisition costs that were much higher.

• What happened? The 2007 financial crisis !  construction slump

drastically reducing new housing and 1st time installations where the most efficient boiler solutions could be applied AND the EU austerity policy, resulting in severe reduction of financial incentives for e.g. solar assistance and micro-CHP.

• Only in the last two to three years the heat pump boiler sales recovered to

the same level they reached in 2006.

Evaluation

• Still: The switch to condensing boilers has been achieved, although some

smaller ‘hick-ups’ still need attending.

• Heat pumps are back on their way up with healthy growth perspectives.

Several innovations in air-source HP boilers better COP at lower price

• Innovative new products like hybrids (part HP, part gas boiler) have come
• n the boiler market and further push the A+ market. PFHRDs seem to

have come of age.

• Overall, Ecodesign and Energy Label measures worked as an accelerator,

and have been operating without 'significant negative impacts' . In many respects the changes induced by Ecodesign and Energy Label regulations helped businesses and consumers to better cope with the potentially very negative impacts of the financial crisis for this sector.

• Having said that, ‘good housekeeping’ on several parts of the regulations

is needed to improve their effectiveness