The heating industry has had an interesting 12 months with the arrival of the much anticipated domestic Renewable Heat Incentive. Here, Martyn Bridges, director of marketing and technical support at Worcester, Bosch Group, reflects on recent developments and predicts what lies ahead.
For many industries, 2014 brought the first signs that the recession was over. The UK economy was up 3.2% on the previous year and this trend was felt in the heating sector.
The first quarter of the year was incredibly strong and the aforementioned market conditions meant that, for the first three months of the year, sales of gas-fired boilers increased by 18% – more than a 13% increase on 2013.
While the gas-fired boiler market appeared to flourish, the oil-fired economy seemed to stagnate and sales were reported as being 7% down in the first half of the year. However, this was not particularly surprising given that in the past we have seen a slowing of the oil-fired boiler market, for a variety of reasons.
Firstly, there is the idea that oil-fired boilers could be perceived as victims of their own success having proved durable and long-lasting, which ultimately results in a limited demand for replacement installations. Secondly, a new installation typically only takes place if an oil-fired boiler becomes unreliable or develops an irreparable fault. While sales may be lower than for their gas-fired counterparts, oil-fired boilers can still play an important role in off-mains-gas properties.
A year of two halves
The second quarter of the year for the heating industry saw the introduction of the domestic Renewable Heat Incentive (RHI). This eagerly awaited scheme was regarded by many as representing a turning point for the industry and a clear indication the market was going to embrace renewable technology once and for all.
However, despite the initial hype, take-up was much lower than originally anticipated. In fact, we understand there have been fewer than 4,000 applications to date and, in 90% of situations, these were legacy jobs whereby the product was already fitted long before the RHI was made open for applications.
While Worcester, Bosch Group did not expect to see huge levels of take up, the process does seem to be slower than even the most pessimistic of industry commentators predicted. Additionally, dwindling Microgeneration Certification Scheme (MCS) registrations seem to suggest that the renewables market isn’t something the average heating installer is interested in being part of. While this is of course a great shame, the situation is understandable given the delays endured by installers prior to the launch date.
In addition, this year saw the introduction of the Green Deal Home Improvement Fund, which enabled cashback vouchers to be claimed for, generally, either £1,000 or £1,500 if two measures out of a list of 12 were installed. The scheme opened to great expectations on 9 June and, contrary to the main Green Deal, was such a success that it closed less than seven weeks later with all of the allotted £120m funding having been claimed.
I am optimistic that the possibly negative viewpoint on renewables will change in 2015. The company anticipates that efficiency will become more important to the homeowner, not least given the ongoing increases in energy bills, and the renewable technology market will experience growth. However, it is likely this trend will be prompted by organic growth rather than any government-funded schemes, as they have yet to result in consumer confidence.
The added extra
Away from the boiler sector, the market for accessories and enhancements to heating systems has seen an unprecedented rise. Innovative manufacturers continue to identify gaps in the market for devices designed to improve the system for both the installer and end user.
Perhaps the best example of a boom area created as a result of the surge in demand for additional accessories is the system filter. The market for this product now stands at some 600,000 units and is growing every day. Yet, only a few years ago, the market didn’t even exist. It is only from conversations with installers that a gap in the market was found, and the concept of the product was developed.
System filters are just one example of products developed to support boiler performance, as 2014 has also seen a rise in the number of intelligent room thermostats available. With devices now on the market that allow room temperature to be controlled from a phone or the internet, the old-fashioned view of controls as a dial on the wall is becoming a thing of the past, and they are becoming a must-have gadget. This is helping to raise awareness of how important it is for homeowners to manage heating comfort and energy performance, which can only be a good thing for the industry.
Looking forward to 2015
As thoughts turn towards next year, Worcester, Bosch Group anticipates that the trends of 2014 will remain key, and the heating sector will continue to flourish. With the housing market reporting a return to normal and an increase in the number of people investing in home improvements, the signs are strong that the heating sector will experience a positive 12 months.
As a manufacturer, Worcester, Bosch Group plans to continue to engage proactively with installers and ensure it can create products they are receptive to and that will enhance their day-to-day business activities.
This article first appeared in the October 2014 issue of Builders' Merchants News.