At around 1.6 million units annually, the UK’s boiler replacement market is huge. It was ‘world beating’ until 2017 (um, yay us?), when it was finally overtaken by China and North Korea. It was easily bigger than the next-largest markets (er, Russia and Turkey) and was, at that time, at least twice the market of any of its European neighbours.
Since then, the boiler market has been shrinking by 1-2% each year and it is likely to continue to do so, as heat networks and heat pumps finally start to make inroads into the market.
So is it surprising that three fossil fuel boiler manufacturers set their faces against BEIS plans for an Obligation for boiler manufacturers to supply a minimum – and growing – number of heat pumps to customers? In the same way electricity suppliers were obliged to supply a proportion of energy from renewables, or pay a per-unit ‘buyout’, in the Renewables Obligation, fossil boiler manufacturers would have a heat pump target and could supply them directly or trade their way out of the obligation.
Responding to the governments consultation on the measure, some manufacturers were fairly sanguine about the prospect. Three said it was a bad idea.
The domestic gas boiler market is very mature. A ‘top ten market leaders’ list has some very familiar names, some very similar appliances and names that don’t come up very frequently in other contexts.
The list of heat pump makers is very different. A couple are similar to the gas boiler suppliers. A few are new specialist names that are unfamiliar to those not researching the heat pump option. The third group are very familiar – names such as LG, Mitsubishi or Panasonic that are very well known to consumers as appliance makers.
For the latter, opening up the boiler replacement market has to be very attractive – and not just to swap one appliance for another. There is plenty of appetite for shiny new tech among even the most staid appliance options – witness the growth of ‘US style’ fridges among those with more elastic budgets. Electrical manufacturers are agile and keen to respond to consumer interest in new products. Heat opens a new route into the home and an immense opportunity, not just to push new appliances but to move to the ongoing customer service market that has been suggested so often. In contrast, it’s hard to see what gas boilers can offer that is new and exciting.
In fairness, few customers what something new and exciting if they are making a replacement decision as a distress purchase. But what if you are replacing your kitchen and including built in appliances from manufacturers who also make heat pumps?
It’s entirely up to manufacturers how they want to address a changing market. In heat, some will look more broadly at what they are offering their customers. Some will focus on trying to protect their market share without doing anything too different.
Of course, what we really need to help sort out this mess is a government steer on the future.
In some areas homeowners will start to lose choice on heating options. Using hydrogen for domestic supply is likely to start near hydrogen industrial clusters. Government is to be applauded for investigating and promoting heat networks, but they will not work everywhere.
For some areas heart pumps are likely to be almost the only option.
Where are those areas? Knowing that could allow other decisions to be made. In the case of electric heating there are so many things that could be done: a new variable to add to the decision-making process on reinforcing the electricity grid in those areas; pilot projects on optimising electric mobility and heating; training for local installers; subsidies for people who need to change their boilers; holistic thinking about areas where most properties are rented; street by street insulation upgrades for the fuel poor; incentives for ‘final users’ to change over where it would allow a gas network spur to be decommissioned.
The key point is: which are these areas? Not all are known at this stage but some clearly are. Making that public would allow everyone – manufacturers, installers, network operators, local authorities, landlords and consumers – to start making better, more future-proof decisions.