Tuesday, November 04, 2014

Energy efficiency drives growth in the UK Central Heating market

The UK domestic central heating market is substantial, with an estimated total value of around £1.1 billion at manufacturers’ prices in 2014. Over recent years this market has benefited from more stringent energy efficiency legislation and a drive towards sustainability.

Currently around 92% of UK homes have central heating installed, but while the market can now be considered mature, it still offers plenty of growth potential through upgrade and replacement purchases as well as product innovation to improve thermal performance, energy efficiency and control.

Between 2009 and 2012, the UK domestic central heating market was comparatively volatile, in line with the uncertain economic situation at this time. However, since January 2013 the market for domestic central heating products has seen a notable increase, with demand picking up as the economy improves. This growth can be partly attributed to the introduction of Government initiatives such as the ECO scheme and the Green Deal in 2013 as well as the further tightening of energy efficiency legislation in all product sectors of this market.

Estimated at £637 million at MSP in 2013, the boiler sector dominates the industry's sales. This is followed by radiators, heating controls and circulator pumps. The majority of these products are distributed via the trade channels such as builders/plumbers merchants and electrical wholesalers. However, replacement and retrofit products are often distributed via the DIY multiples and Online retailers. Other distributors include specialist heating retailers, hardware stores and catalogues. A number of products are also sold into OEMs.

In 2013 the market for domestic central heating products could be broken down into three key areas; refurbishment, which accounts for over 80% of sales, new build and first time installations. A major area of support for the market is expected to come from the domestic refurbishment sector. With new legislative measures, householders are now more aware of energy efficiency and the environmental impact of domestic central heating products.

The future performance of the UK domestic heating market is likely to be influenced by overall trends in house building, home improvement, fuel prices, energy efficiency legislation, renewable technologies, and technological developments also niche market drivers such as the self-build and conservatory markets. 

Increasing legislation represents a major influence in the long term development of this market. In addition to the demands of the European ErP directive, all radiators sold in the UK since July 2013 have to conform and have outputs verified to British Standard BS-EN442, something which is supporting the UK radiator industry as a whole, as it will eliminate low cost, imported products that do not meet this new mandatory standard. Higher levels of efficiency are also likely to be driven by the 2014 revisions to Part L of the Building Regulations.

Increasing awareness of energy usage and cost among consumers, partly as a result of the smart meters installation programme under which 53 million gas and electricity meters will be replaced with smart meters by 2020, is also a factor. This will also drive growth and product development within the heating controls sector, as demand for more sophisticated control products filters through into the consumer segment. The Governments’ renewable energy strategy with initiatives such as the domestic Renewable Heat Incentive (RHI) and Feed-in Tariffs (FIT) is likely to lead to further development of heating systems that are compatible with these technologies.

“The outlook for the UK domestic central heating market in Q4-2014 remains positive, with the continuing recovery in the UK economy and the related upturn in housebuilding and consumer confidence. However, with the election in mid-2015, uncertainties do exist regarding Government policy after this time” said Keith Taylor, Director of AMA Research. “By 2018 it is estimated that the UK domestic central heating market will be worth some £1.3 billion, representing an increase of around 18% when compared to the estimated market size in 2014.“ 

The ‘Domestic Central Heating Market Report - 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

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