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The Summer holidays are drawing to an end which means the days will slowly become shorter and the temperatures will begin to fall, and heating our homes will again become a topic of conversation. We have had a record-breaking summer, it has been the driest summer since 1961 with June being the hottest for over 40 years! In these conditions, it is easy to forget the snowstorms and freezing temperatures we saw earlier in the year and forget about the importance of ensuring that homes are warm and comfortable to live in.
2018 has definitely been a year of highs and lows. In my January blog, I asked whether 2018 could signify a Kodak moment for fossil fuel heating. I welcomed the Government’s commitment to phasing out high carbon fossil fuels but highlighted that “policy and clear commitments are to provide the certainty to grow the market and further decarbonise our homes and buildings”. I was feeling positive moving into 2018 and with a number of key consultations published throughout the first half of the year, my confidence grew.
However, in July as the temperatures increased, the Government published its consultation response to the ECO3 consultation. This could have been an opportunity to follow through with the ambition of the Clean Growth Strategy, but it was sadly disappointing. The response surprisingly stated that support would be made available for oil boilers. Whilst, we understand that it is unlikely that we will see significant deployment of oil systems under the scheme. This backtracking causes significant uncertainty, damages confidence in the Government’s previous commitments and risks discouraging investment in low carbon heat.
NIBE Energy Systems is committed to working with the Government to shape the policy landscape and to encourage the uptake of low carbon heating solutions. But decisions like this, taken against initial proposals and the views of the majority of respondents, has negative impacts on industry. We must work together to ensure that the Government keeps on the trajectory towards fully decarbonised heat by 2050 and stays committed to phasing out heating oil in the 2020s.
The low carbon heating sector needs to demonstrate that fossil fuel heating systems can and should be replaced with renewable solutions today. Installing oil boilers as part of ECO is delaying progress, increasing emissions and risks putting greater cost on the consumer in the future. The current ECO scheme will only run until 2022 after which point it is unclear as to what funding will be available to support households make the switch away from their dirty and costly oil heating systems. We believe that there needs to be a strong united voice from industry to ensure that there is the consistent and dependable policy required to achieve the phase out of oil. If the Government is committed, then action needs to be taken now to stop the installation of oil boilers in UK homes and support will be needed to help low income families make the switch to more sustainable, cleaner and lower carbon alternatives. We can’t wait until 2022 to start this transition.
Read Phil Hurley's Blog
NIBE reports continued good sales and earnings performance for the first half of 2018.
“We’ve had a positive first half-year with continued good growth in both sales and earnings. General demand is relatively good in Europe as well as in North America and Asia, mainly due to low interest rates,” says Gerteric Lindquist, CEO of NIBE.
“We see that the transition to a more sustainable way of life is on the rise in ever increasing societal sectors. This development fits our business areas perfectly: NIBE Climate Solutions’ intelligent sustainable climate solutions for all property types, NIBE Elements’ intelligent system solutions with sustainability profiles and NIBE Stoves’ products with high combustion efficiency and low emissions.”
“Our strong product programme and our business philosophy are timely with their focus on sustainability and energy efficiency. Even though it’s difficult to make predictions in the current business climate, we remain cautiously optimistic about 2018 thanks to stable profitability and good financial preparedness for acquisitions,” says Gerteric Lindquist.
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NIBE Industrier AB has signed an agreement to acquire 51% of the EMIN Group with operations in Turkey and Serbia and has a call option to acquire an additional 29% in 2025.
EMIN, founded in 1970 is a manufacturing company with 340 employees in Turkey and Serbia. The company has sales of approximately EUR 14 million (SEK 140 million) with an operating margin exceeding 10%.
EMIN’s main products are coupling systems for fluids sold to manufacturers of energy equipment. NIBE is EMIN’s largest customer and accounts for more than 50% of sales. The production process is very modern and highly automated.
“The acquisition of EMIN further complements our range of components and solutions for the all-important HVAC sector. It also gives us access to additional interesting countries for low-cost production in Turkey and Serbia. In the long term, these countries are also interesting local markets,” says Gerteric Lindquist, CEO of NIBE Industrier.
“It is very positive and valuable to us that the current management, including CEO Bülent Tacsi, will continue to lead the company as partners.”
EMIN will be part of the Element business area. The acquisition requires that certain conditions are met, including approval from the Turkish competition authority. Completion of the acquisition and consolidation is expected to take place in eight weeks.
The purchase price is not specified because the acquired business will only constitute a small part of the NIBE Group.
NIBE Industrier AB has acquired 51% of the shares in CK Fires Ltd (known under the Evonic Fires brand) in Stratford-upon-Avon, England, and has a call option for the remaining 49% of the shares by 2026.
CK Fires Ltd was founded in 2005 by Andy Cox. The company has around 35 employees and annual sales of GBP 6 million (approximately SEK 70 million) with an operating margin exceeding 10%.
Evonic Fires has a wide range of electric fires and a well-developed network of about 250 dealers in the UK. The company also sells through distributors in Ireland, Spain, Holland and the US.
“With this acquisition, NIBE Stoves has a company that is fully focused on electric fires in a clearly expanding market in the UK, Europe and North America,” says Gerteric Lindquist, MD and Group CEO for NIBE Industrier. “We are also very pleased that Andy Cox will continue to lead the company as a partner.”
Evonic Fires will be included in the Business Area NIBE Stoves and will be consolidated with NIBE from 1st July 2018. The purchase price is not specified because the acquired business will only constitute a small part of the NIBE Group.
Perceptions on the efficiency of a heating system are important for consumers to make purchasing decisions and for policy makers to inform regulation. I have noted many miscomprehensions in how heating system developers back their efficiency claims, and this blog aims to set these right.
Heating system efficiencies are dependent on various factors. The way in which the system is installed has a substantial impact on how efficiently the system runs. For example;
Because of these, it is not easy compare heating systems in different environments. For example, boiler tested in a lab will perform better than a boiler in-situ. Despite being designed to condense, many condensing boilers do not operate in condensing mode when installed in homes. As I noted above, this could be linked to any number of factors. By the same token, a heat pump in a home cannot be compared directly to a gas boiler tested in a laboratory environment.
To ensure that we really are comparing like for like, the efficiencies should be based on independently tested data. This means product efficiency should be compared based on their Coefficient of Performance (COP). The ‘seasonal coefficient of performance’ (SCOP) is calculated as:
Using the Ecodesign energy label, this can be calculated by multiplying the seasonal space heating energy efficiency by the conversion coefficient.
SCOP values of between 2 and 5 are attainable for air source heat pumps producing hot water. For the Renewable Heat Incentive, heat pumps much achieve a minimum Seasonal Performance Factor (SPF) of 2.5 using the COP calculator. However, most heat pumps operate at much higher efficiencies. Lowering the flow temperature increases the COP therefore it is important to know the temperature at which the system will be operating. For example, an 8kW NIBE F2040 achieves a COP of 4.3 operating at 35oC in an average climate. If operated at 55oC, the COP decreases to 3.2.
Whilst in-situ studies are important, and all efforts must be made to increase the performance of heat pumps when they are being operated in real life environments, discussions around efficiencies in the context of policy decisions should be focused on the independent data. To ensure a fair comparison, when assessing efficiencies as part of the decarbonisation debate, we should be considering Seasonal Coefficients of Performance across all heating systems.
NIBE REACTION TO ECO 2018-22 CONSULTATION RESPONSE
NIBE Energy Systems welcomes the Government’s response to the ECO3 Consultation yesterday. However, we are surprised to see that heating oil will continue being supported under the scheme. This goes against the ambition of the Clean Growth Strategy to phase out heating oil in the 2020s and risks undermining the investment required to deploy low carbon heating in the UK.
BEIS’s consultation to extend the ECO scheme launched at the beginning of the year proposed to phase out subsidy support for heating oil boilers under the new phase of the scheme between 2018-22. This was in line with the vision of the Clean Growth Strategy and subsequent Call for Evidence on the Future Framework for Heat in Buildings to phase out heating oil in the 2020s. Phasing out the deployment of heating oil is a low hanging fruit to reduce carbon emissions from buildings that have been increasing over the past years. However, the Government’s response released on 19th July decided, against initial proposals and the views of the majority of consultation respondents, to continue supporting oil boilers under the ECO scheme until at least 2022.
“The decision by BEIS to sustain ECO subsidy for heating oil boilers is a blow for UK carbon reduction objectives and not in line with the Clean Growth Strategy ambitions. Further backtracking from the vision to phase out heating oil in the 2020s risks discouraging domestic low carbon heat investment” said Phil Hurley, Managing Director of NIBE Energy Systems.
Phil Hurley went on to say that “markets such as Sweden, Norway, Finland and the Netherlands have successfully reduced or banned heating oil off the gas grid and promoted the use of low carbon and clean technologies such as heat pumps by encouraging their use in new build as well as retrofit through a mix of regulation and incentive to reflect the impact of carbon intensive fuels.“ Phil added that “the UK needs to follow through with the ambition of the Clean Growth Strategy to promote use of low carbon heat in new build where it is a no brainer; this should be accompanied by work to consider as of this year an impactful replacement for the Renewable Heat Incentive which ends in 2022 as per the recent recommendations of the Committee on Climate Change in their report to Parliament. We should not be left behind in making homes more efficient and clean for UK consumers.“
The Clean Growth Strategy committed the government to phasing out the installation of high carbon fossil fuels in new and existing buildings off the gas grid during the 2020s. We strongly support this commitment and will be working with BEIS to ensure that this is achieved. One way we are supporting BEIS is through our response to the Future Frameworks Call for Evidence. Our vision for the off-grid heating sector is for homes to be heated by efficient, renewable, and clean systems. And this means moving away from fossil fuels.
It is clear that the Government must play a leading role in the phase out of high carbon fuels as it is unlikely to happen without a clear signal in policy. As such, we would like to see the phase out introduced as soon as possible. Waiting to 2029 is definitely not an option! The low carbon industry is ready to step up to the challenge of decarbonising heat in buildings however, a firm end date is needed to provide the certainty for investment in new products, services and training. Whilst we acknowledge that industry needs time to adapt, the technologies to replace dirty oil and coal systems exist today and therefore a significant lead time is not needed. We have called on the Government to introduce the phase out with a 3 year’s notice period and stressed the importance of announcing it as soon as possible.
Everyone in the heat sector will agree that a wide range of solutions are needed to decarbonise our varied building stock. The technology must be suited to the property, the demand profile and the occupant. Heat pumps are likely to play a significant role in the decarbonisation of heat and as such, BEIS were keen to understand the opportunities and barriers for their deployment.
Cost is seen as a barrier for many low carbon heat technologies as they are often more expensive than the counterfactual when compared on an upfront cost basis. This barrier was echoed by over 40% of the installers surveyed by NIBE who highlighted cost as the single biggest obstacle for heat pump deployment in the UK. This was often linked to low oil prices and lower cost alternatives. BEIS were therefore interested in the potential for heat pump costs to come down.
Heat pump technology is mature, but the market in the UK is not. This means that potential cost down is likely to come from non-equipment costs, specifically labour. We estimate that the overall the scope for non-equipment cost reduction is up to 50% (see below). This would be achieved from increased demand and reduced administrative costs thus lowering the cost of sales.
In terms of equipment costs, there is an opportunity here, but we believe that this is limited to around 10% of the heat pump cost. However, more significant cost reductions could be realised if our homes were future proofed and all heating systems were low temperature ready. Our Installer Survey concluded that in most cases, the heat emitters need upgrading when a heat pump is installed. However, if it was a requirement to reduce the flow temperatures when new heating system is installed, regardless of fuel type or location, this barrier be greatly reduced. Lowering the flow temperature to 50oC provides benefits the consumer today by ensuring that the boiler runs more efficiently, reduces energy bills and increases thermal comfort. Moreover, it will substantially reduce the cost of installing a heat pump tomorrow. Minimising these barriers for consumers and making the switch to a low temperature system easier is essential if we are to decarbonise our off-grid homes.
We look forward to seeing the Government’s response to the call for evidence and working with BEIS to make the transition to cleaner, greener heating systems as smooth and cost effective as possible. We are committed to ensuring that our installer views are represented in our communications with the Government, so I would like to thank the installers who responded to the survey and contributed to our response, your input is really valuable.
London, 26 June 2018 - NIBE, one of Europe’s leading manufacturers of sustainable energy products, is using Maxoptra to manage its nationwide field service operation. The dynamic routing and scheduling software has been integrated with NIBE’s CRM to streamline and automate workflows, improve efficiency and customer service. The solution also provides better management visibility of field operations for faster, more effective decision making.
NIBE operates a team of home-based field service engineers who undertake routine service, repairs and warranty call outs for its range of ground source, air source and exhaust air heat pumps. NIBE products are installed in new build developments, traditional property refurbishments as well as innovative eco homes and off grid properties across the UK and are covered by manufacturer’s warranty and a range of extended service plans.
“Despite being at the cutting edge of sustainable heating products our planning of service appointments simply relied on an online mapping website and experience,” commented Phil Hurley, Managing Director of NIBE Energy Systems. “Since implementing Maxoptra we have significantly improved the planning and communication of appointments, evidenced by customer feedback, and improved operating efficiencies. We also now have the information we need to make informed decisions about resourcing and expanding our operation.”
A cloud-based SaaS scheduling platform, Maxoptra, integrates with NIBE’s SuperOffice CRM, fully automating the routing and scheduling of service and warranty call outs. Customer information, including service plan levels and customer contact details, is stored within SuperOffice and, when a service is due, the customer is automatically sent an appointment date. Twenty four hours before a confirmed appointment a reminder is issued before Maxoptra takes over on the day.
Maxoptra builds complex service schedules in minutes, taking into account factors such as the engineer’s start and end location, type, and therefore duration, of call out and an engineer’s suitability for the job. Using powerful route optimisation algorithms Maxoptra has already boosted operational efficiencies for NIBE by minimising travelling time between jobs. This makes better use of valuable engineer hours and reduces mileage which has a direct effect on costs and environmental impact.
Maxoptra is also boosting customer service levels with positive feedback on the accuracy and timeliness of information. As arrival times are calculated and updated based on the flow of real time information the customer is kept informed in the run up to the engineer’s arrival and all paperwork is electronic, further improving the customer experience.
A year ago, I commented on the fact that air quality debates have largely focused on vehicles and that the impact of how we heat our homes on air quality had not received the attention it deserves. This month, the Department for Environment Food and Rural Affairs (DEFRA) published its Draft Clean Air Strategy. I was pleased to read that the Government has now recognised the impact of domestic heating on both indoor and outdoor air quality.
At a time when air quality is a cause for concern for the Government, heat pumps offer a cost effective, clean solution to heating our homes. My previous blog on air quality focused on the NOx emissions from oil boilers. The 1.1 million oil boilers in the UK collectively emit 4,540 tonnes of NOx each year and, as shown below, they also emit 16g of particulate matter per MWh of heat produced. The Government has since committed to the phase out of oil heating systems in off grid areas which is warmly welcomed.
As the phase out of this polluting fossil fuel is implemented, it is important to ensure that the transition improves air quality as well as reduces carbon emissions. There is a need to align our air quality ambitions and our carbon targets to ensure that we achieve the right technology mix for future generations. The burning of wood is carbon neutral, and for many homeowners is an eco-friendly, cost-effective and attractive means to provide additional heat to their home. Stoves and open fires are often used as a secondary form of heating for many households in both urban and rural areas. Phasing out high carbon and polluting primary heating fuels such as oil and coal must be a priority.
Electric heating is by far the cleanest of all the options for domestic heating in terms of particulate emissions however direct electric heat can be expensive, inefficient and carbon intensive. Heat pumps offer efficient, low carbon heat with no negative impact on air quality, a win-win for consumers, government and the environment. In fact, heat pumps can help improve indoor comfort and air quality simultaneously.
BEIS state that the domestic burning of wood and coal contributes to 38% of the Primary Particulate Matter emitted, this is higher than industrial combustion and road transport combined. These tiny particulates can have significant impacts on health with the elderly and the young being more likely to be affected.
It is important to highlight that using the correct fuels and using appliances as instructed can significantly reduce pollution. The burning of coal, wet or contaminated wood can produce a lot of smoke and contribute to poor indoor and outdoor air quality. A move to dry wood and smokeless solid fuels should be encouraged. The Government recently closed a call for evidence on the burning of coal, solid fuel and wet wood with the ambition to move consumers away from these polluting fuels to cleaner alternatives.
To encourage a move to cleaner heating systems, the Strategy proposes the following actions:
· Legislate to prohibit the sale of the most polluting fuels
· Ensure that only the cleanest stoves are available for sale by 2022
· Give powers to local authorities to take action in areas of high pollution
· Work with industry to identify an appropriate test standard for new solid fuels
· Ensure that consumers understand what they can do to reduce their impact from burning
We welcome these proposals, in particular it is essential that we educate consumers on the impact their heating system could be having on their family, their neighbours and the environment. Raising awareness of alternatives and changing behaviours is one of the key challenges which will need to be overcome if we are to move to cleaner and greener heating solutions. There is a clear role for heat pumps in the clean transition to a low carbon heat future, however building consumer awareness and sending clear signals is key. NIBE is currently drafting a response to the BEIS Call for Evidence: A future framework for heat in buildings in which we will be emphasising the need for a clear end date to high carbon fossil fuels and highlighting the need to consider the air quality impacts of alternative heating solutions. BEIS are running an installer webinar on 5th June on the call for evidence, get in touch if you would like the details.
· Sales rose by 11.3% to SEK 4,862 million (SEK 4,370 million)· Operating profit rose by 16.7% to SEK 497 million (SEK 426 million)· Profit after net financial items increased by 11.9% to SEK 443 million (SEK 396 million)· Earnings per share amounted to SEK 0.67 (SEK 0.58) · Acquisition of 60% of US element company BriskHeat Corp and Alfa Laval’s business for district heating/cooling systems “Both sales and profit have shown good growth at the start of 2018 and the general demand looks positive in Europe, North America and Asia alike,”says Gerteric Lindquist, CEO of NIBE. “In addition to low interest rates and relatively good construction activity, it is quite apparent that the transition to a more sustainable approach to energy supply, transport and climate control of both small and large properties is creating new markets with solid demand.” “As we have regularly reported, our operations are dominated by integration of the most recently acquired entities in a careful yet definite manner, plus a constant striving to improve our internal efficiency.” “The NIBE Climate Solutions business area continues to enhance its position as a comprehensive supplier of intelligent, sustainable climate control solutions for single-family homes as well as commercial properties.” “The NIBE Element business area successfully continues to offer the market a comprehensive range of intelligent system solutions.” “The NIBE Stoves business area is growing steadily with many successful product launches and product development efforts that have an increasingly in-demand sustainability profile." “We have a strong product programme and a timely business philosophy that focuses on sustainability and energy efficiency. Even though it’s difficult to make predictions in the current business climate, we remain cautiously optimistic about 2018 thanks to stable profitability and good financial preparedness for acquisitions,” says Gerteric Lindquist.
NIBE reports another successful year and shows a significant increase in both sales and profit in the company’s 2017 year-end report
“For NIBE, 2017 was a strong year and the intermediate target of achieving sales of 20 billion by 2020 now feels very close. As soon as we pass the 20 billion sales target, the next milestone will be 40 billion,” says Gerteric Lindquist, CEO of NIBE.
“The year was characterized by good demand, resulting in high production rates, continued high acquisition intensity, especially in North America, and several good signs that our product range based on intelligent, sustainable, fossil-free climate control solutions is highly appreciated.”
“All business areas are growing and taking a bigger share of their markets, thus strengthening their international presence.”
“We have a timely product programme and business philosophy. Our profitability is stable, we are well-prepared for further acquisitions and are geographically widespread, which creates stability. As always, there are many uncertainties in the outside world, but we are still cautiously positive on 2018,” says Lindquist.
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As those of us in the heat industry are more than aware, decarbonising our buildings is one of the biggest challenges of the next decade and beyond. The Department for Business Energy and Industrial Strategy is currently asking for ideas on how we can do this. The Future Framework for Heat in Buildings Call for Evidence is open until the 11th June. Claire Perry in her forward to the consultation said that this call for evidence will be vital in realising the Government’s ambition set out in the Clean Growth Strategy to phase out high carbon fossil fuel heating in buildings off the gas grid during the 2020s. NIBE supports the ambitions of the Clean Growth Strategy but as discussed previously, what the Strategy lacked is detailed policies and proposals. This Call for Evidence will help develop this detail and therefore it’s important that industry submits some clear ideas. In other recent posts, I have discussed various approaches to phasing out decarbonising buildings including how we approach fuel poor households and the opportunity that is being missed in new build.
NIBE Energy Systems will be developing a response to the Call for Evidence drawing together these views and others. I welcome your views on how the UK can lower its emissions from its buildings. This is a key time for engagement. I see the call for evidence as a call to action for the heating industry to respond in as much detail as possible and to provide the evidence needed for BEIS to design and implement clear, long term policy that will enable and support the deployment of low carbon heating.
Below I have summarised some of the key questions for the domestic heat pump market. If you have comments on any of these, please get in touch.
Transition away from high carbon fossil fuels
Role for heat pumps
There are further questions on the financing of clean energy, how energy tariffs could be used to encourage the uptake of electrically driven heating, engaging and educating consumers, building sector skills, and future proofing new build homes.
I encourage all of you involved in the delivery of low carbon heat to respond to the call for evidence and submit your views on what the future of heat in the UK could look like.
The Non-Domestic Renewable Heat Incentive (RHI) is an environmental programme which provides financial incentives to increase the uptake of renewable heating technologies by businesses and not-for-profit organisations. Eligible systems receive quarterly payments over 20 years depending on their heat output. Payments begin to accrue from the date of accreditation. Both air source and ground source heat pumps can apply for RHI payments. For air source heat pumps the current tariff is 2.61 p/kWh and ground source heat pumps can receive 9.09 p/kWh.
The Government regularly reviews the cost effectiveness and performance of its policies including the RHI. Following public consultations, the Department of Business Energy and Industrial Strategy laid the new regulations on 7th February and the new eligibility criteria and policies are due to come into effect in the Spring. The changes, when approved, will apply to new applicants and to existing ones who amend their capacity.
The regulations will introduce a number of changes to eligible heat uses. The Government will remove wood-fuel drying as an eligible heat use other than where the renewable heat installation is replacing a fossil fuel heat source. The drying, cleaning or processing of waste will no longer be an eligible heat use. Finally, the eligibility of swimming pools will be tightened so that only pools that are used for a municipal or commercial purpose can receive support. The Government’s response to the consultation on eligible heat uses can be found here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/679244/RHI_Eligible_Heat_Use_Government_Response.pdf
A new policy to allow applicants to secure a tariff rate before their installation is commissioned and fully accredited on the RHI. The tariff guarantees policy will be applicable to large plants. For Ground and Water Source Heat Pumps, this means the system must be above 100kWth. Ofgem’s guide to tariff guarantees can be found here: https://www.ofgem.gov.uk/system/files/docs/2018/02/guide_to_tariff_guarantees_final_version_14.02.2018.pdf
The regulations will introduce payments shared ground loops. Applications for a system where a ground loop is connected to two or more heat pumps will be classified as a shared ground loop system. Payments for a shared ground loop system will be based on the deemed score of the property, as is the case in the Domestic RHI scheme. Ofgem have produced a guide to shared ground loops which can be found here: https://www.ofgem.gov.uk/system/files/docs/2018/02/easy_guide_to_shared_ground_loops_final_version_7_feb_18.pdf
More details on the changes to the non-domestic regulations can be found on the BEIS and Ofgem websites.
NIBE Industrier is acquiring Alfa Laval’s business for district heating/cooling systems and hot water systems for commercial use. The products were previously sold under the well-known Cetetherm and Uranus brands which now will be used again.
The business acquired has around 60 employees in Sweden (primarily in Ronneby), France, Russia, the Czech Republic, Finland, the United Kingdom and Slovakia. Sales were approximately SEK 300 million in 2017, with positive operating margin.
“The acquisition gives NIBE Climate Solutions additional high-quality products with good business opportunities, and it generates synergies with NIBE’s heat pumps,” says Gerteric Lindquist, CEO of NIBE Industrier. “We also find it both valuable and positive that both management and other employees will remain in post in the NIBE Group.”
“This business has indeed improved throughout last year,” says Tom Erixon, President and CEO of the Alfa Laval Group. ”However we concluded that it would have even better opportunities to develop under the ownership of the NIBE Group. NIBE Group is a solid player with a dedicated focus on the HVAC industry – and the heat exchanger systems will be a valuable complement to their current portfolio”.
The acquisition is expected to be consolidated into the NIBE Climate Solutions business area as of 31 May 2018. The purchase price is not specified because the acquired business will constitute a small part of the NIBE Group.
Between 2001 and 2010, there were on average 144,000 new homes completed annually, this is 100,000 fewer than in the 1970s, yet the population has risen[i]. The Government is committed to building 225,000 to 275,000 more homes per year to keep up with population growth. As we build more homes we must also build energy efficient homes. Whilst new homes are generally more efficient than existing homes, it is widely accepted that they are not what is needed to meet our carbon budgets.
Our new homes too often do not meet the performance standards, and this means that consumers are not getting what they expect from a newly built home. Buyers believe they are getting an affordable, highly efficient home but all too often homes are leaky, fossil fuel dependent, poor quality and not fit for the future. Despite us having the technology and solutions to build to EPC Band A and zero carbon standards. This is something that Lord Deben, Chair of the Committee on Climate Change is keen to address. Only one in five new homes are rated Energy Performance Band C. Given that the average existing home is EPC band D and the Government has an aspiration to bring all homes up to Band C as a minimum standard, this is a shocking statistic. House builders must step up to ensure that new homes meet higher standards to deliver high levels of fabric efficiency and future proof properties for low carbon heat.
Building inefficient homes does not enable low temperature heating systems but instead creates properties that remain reliant on fossil fuels and will need costly retrofits in the future. To meet our carbon budgets, emissions from buildings will need to be close to zero carbon by 2050. The government has recognised this and has stated that we “need to avoid new homes needing to be retrofitted later and ensure that they can all accommodate low carbon heating. This could involve all new homes off the gas grid from the mid-2020s being heated by a low carbon system such as a heat pump.”[ii]
My question to the government and to house builders would be if this low carbon heat future can be achieved today, why aren’t we delivering it?
The Government is concerned about the cost of improving the requirements for new homes, but the cost of not taking action is greater. The cost would include higher energy bills for consumers, the need to retrofit renewable heating systems and insulation in these new homes in the future, and the damage to the environment of emitting avoidable carbon emissions. It is important to recognise that the cost of living in a future-proofed home will also be reduced, making them more affordable and comfortable for homeowners today and in the future. Moreover, there is a plethora of demonstration projects across the country that show that it is possible to build low carbon, affordable housing; both in terms of market value and living costs.
Renewable ready homes need low temperature ready heat emitters, high thermal insulation to reduce demand, and smart technologies given the role they will play in a more connected future world. Once a home has been built to this standard, the additional cost of installing a low carbon heating system is reduced significantly as many of the ancillary costs have been met. In addition, the cost of installing a heat pump at new build stage is lower than the cost of installing it as a retrofit at a later date due to economies of scale and availability of skilled labour on site.
I believe that if we are to lower the cost of transitioning to renewable heat, meet our carbon budgets and build affordable, future-proofed homes; a renewable ready standard should mean installing renewable technologies today, making low carbon homes the norm rather than a novelty.
[i] National Audit Office (2017) Key facts Housing in England: overview https://www.nao.org.uk/wp-content/uploads/2017/01/Housing-in-England-overview.pdf
[ii] BEIS (2017) Clean Growth Strategy https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/651916/BEIS_The_Clean_Growth_online_12.10.17.pdf
On Monday 5th March, NIBE Energy Systems exhibited at ‘Energy Innovation Exhibition – Looking to the Future’ which was organised by the Sustainable Energy Association and the All-Party Parliamentary Group for Renewable and Sustainable Energy (PRASEG). The event aimed to raise awareness of and showcase innovative, energy saving and low carbon technologies within Parliament.
We presented our new, renewable exhaust air heat pumps to Parliamentarians and Peers across the political spectrum, including the Minister of State for Energy and Clean Growth. This new generation of heat pumps provides heating, hot water, ventilation and heat recovery for homes. It is particularly well suited to new homes with consumers being able to easily schedule their heating and hot water requirements for each day of the week, ensuring a comfortable indoor climate. The heat pump is also smart grid ready and is able to respond to pricing signals, reducing the strain on the grid and saving consumers money.
Prior to her keynote address the Minister spoke to us about the F730 integrated heat pump and proudly told the delegates that she would be taking home a Molly the Moose from the NIBE stand.
The Minister highlighted the Government’s ambition to get homes off the gas grid, in particular, off fossil fuels and the importance of innovation in tackling climate change and the role that new technologies will play in cutting emissions. She stated that we do not yet know what the most affordable technologies will be and that the Department for Business Energy and Industrial Strategy is investing heavily in innovation to drive decarbonisation.
The cross-party commitment to meeting our climate change targets was clear, with the Minister emphasising that we were the first country in the world to pass a Climate Change Act and that do to that cross party support was key. The Shadow Minister Alan Whitehead MP shared her enthusiasm, highlighting the enormous amount of progress that has been made to date and the significant role innovation will play as we move forward. He did however, stress that there is a lot still to do, particularly in terms of heat.
Phil Hurley, Managing Director of NIBE Energy Systems said “The event was a great way for us to showcase our new innovative technologies to MPs and members of the House of Lords, many of whom were keen to find out more about the role heat pumps could play in our energy future. There is no silver bullet to solve the decarbonisation challenge but the technologies that were on display at the exhibition offer opportunities to lower emissions, reduce bills and improve households comfort. Collectively, we can work towards a cleaner, greener future.”
NIBE has reached an agreement to acquire 70% of the outstanding shares in Hemi Heating AB. NIBE has an option to acquire the remaining 30% of Hemi Heating´s outstanding shares at a later time.
Hemi Heating produces heating jackets, heating tents, heating cables, heater fans and several different temperature control options. Hemi Heating have a strong foothold in the science and research segment and have delivered to CERN, MAX4 and a number of universities. As most producers of heating jackets Hemi Heating also produces products for the semiconductor industry.
The company was founded in 1991, has 36 employees, a turnover of about MSEK 20 and a profit level around 15%. Hemi Heating has an 80% ownership in a Chinese company and 16 of the 36 employees are employed in the Chinese company. The local management owns the remaining 20% of the Chinese subsidiary.
Production takes place in Södertälje, Sweden and in Guiyang, China.
Hemi Heating will become part of NIBE Element and will legally be a subsidiary to Backer BHV. The current management/owners Henry and Kerstin Kvael will continue to run the company.
The demand for renewable heating solutions for our homes continues to gather pace with an ever increasing number of homeowners exploring the options available to them.
In order to support this growth in demand, and to ensure all areas of the market are catered for, leading manufacturer NIBE has added a new smaller model to it extensive range which will support new build and smaller properties.
“It is important that we opened up the availability of our products to a wider range of homeowners and developers so that properties with a smaller heating loads are able to reap the benefits of renewable heating solutions too,” said Robin Adderley sales director NIBE Energy Systems. “Enabling more people to enjoy the benefits of such systems, both financially and environmentally, is a very positive step towards delivering more choice for homeowners as to how they provide heating and hot water for their homes.”
The F2040- 6kW joins the F2040 family of heat pumps which has been previously offered in 8, 12 and 16kW. The new, smaller heat pump offers the same product features as the established larger units such as compatibility with the VVM320 Indoor Module and SMO range of controllers. The F2040 is also a ideal size for complementing other energy sources for hybrid solutions and can be docked with an existing system such as an oil or gas boiler.
“Hybrid systems are becoming increasingly common applications for heat pumps, with the heat pump being incorporated into existing energy sources with great effect,” said Robin. “ It is an investment that brings considerable economic, energy and environmental benefits and one which we look forward to seeing more installations in the coming months and years.”
Like the larger models in the series, the NIBE F2040-6 heat pumps offer a high heating capacity from the inverter driven compressor and can operate down to -20°C ambient.
Despite delays to policies and changes within Government, for me 2017 demonstrated a growing consensus on climate change, sustainable energy and a commitment to a cleaner future. On the Global stage, the UN Climate Change Conference sent a common message that co-ordinated action is needed to get on track towards the Paris Climate Change Agreement despite Donald Trump’s withdrawal. In the UK, the political parties united on the need to address climate change, improve the efficiency of existing buildings and build more homes.
Renewables beat fossil fuels on a number of fronts throughout 2017. Over the year, a host of different renewable energy records were broken. This included the first full day since the Industrial Revolution without coal power, the most electricity produced from solar power, and the most wind power produced in a day. We have the fourth cleanest power system in Europe and our emissions from the power sector keep falling. To meet our carbon targets, the Committee on Climate Change has said we must also decarbonise our homes. It’s a tough nut to crack with many options still on the table but the uncertainty around how we decarbonise our homes should not be a reason for inaction.
The fifth carbon budget was agreed in June 2016, however the plan to achieve these targets got caught up in politics and as such was delayed, amended and redrafted as Ministers changed and departments merged. Throughout 2017, I saw multiple predictions, speculations and guestimates for its publication date and its content. Towards the end of the year, the Department for Business Energy and Industrial Strategy provided some stability and certainty for the industry by publishing its Clean Growth Strategy. The Strategy, which was discussed in my blog from October, signifies a clear shift in Government’s thinking and a commitment to sustainable growth and addressing climate change across the economy. The highlight for me was a commitment to phase out high carbon fossil fuels for off grid heating in the 2020s. This could signify the Kodak moment for fossil fuel heating.
The Committee on Climate Change recently assessed the Clean Growth Strategy. In the report, Lord Deben says that the Strategy “has changed the tone surrounding consideration of emissions reduction in the UK” and “recognised the essential contribution of the low carbon transition to the economy as a whole”. The Committee welcome its publication but stress that whilst some new policies were announced, detailed policies and measures to meet the targets are not set out and the gaps in meeting the carbon budgets remain. The committee calls for “urgent policy development”.
2018 therefore looks to be a year full of opportunities to develop new policies and shape the future landscape for renewables. For organisations involved in delivering clean, green energy to households and businesses, the Government’s commitments to phase out carbon intensive fossil fuel heating and ensure that homes are future-proofed are ones which stand out in particular. Whilst the commitment to phase out fossil fuels is clear, how the government plans to achieve it is not.
The Committee on Climate Change estimate that by 2030, 2.5 million heat pumps need to be installed in homes but to achieve this a clear focused strategy must be developed. They recommend that the Renewable Heat Incentive is urgently retargeted towards heat pumps to support this increase in installations. There are many options to support the transition to low carbon energy and over 2018, NIBE will continue to work with Government officials and industry professionals to bridge the gap between current policy and what is needed for us to meet out climate change targets.
The last year has proven that renewable energy can and will play a significant role in our future energy mix, however policy and clear commitments are needed to provide the certainty to grow in the market and further decarbonise our homes and buildings. This means that 2018 will be a busy one for the renewable energy sector and for Government as we strive to reduce our impact on the environment and build a more sustainable future. Despite the unprecedented global turbulence and political change, I feel positive moving into 2018. One way or another, the future ahead will be cleaner and greener even if the pathway alters slightly along the way.
NIBE has reached an agreement to acquire 60% of the outstanding shares in BriskHeat Corporation. NIBE has also agreed to acquire the remaining 40% of BriskHeat´s outstanding shares at a later time. BriskHeat, of Columbus, Ohio, will become part of NIBE Element North America.
BriskHeat is the world´s largest cloth heating jacket manufacturer, providing flexible surface heating elements, controls and accessories for a variety of end markets, mainly for the semiconductor industry, but also for the composite, petrochemical, plastics and consumer product industries.
Founded in 1949, BriskHeat has about 650 employees, annual sales of $39 MUSD and an operating margin above 15%. BriskHeat will continue to run its operations and support its global customer base from its Columbus, Ohio and Vietnam production locations as well as from its sales and warehouse facilities in Taiwan, China and the Netherlands.
“BriskHeat represents another key step in our strategy to become the leading electric heating supplier worldwide; this time in the important and growing Semiconductor Industry, says Gerteric Lindquist, CEO of NIBE.
“Here BriskHeat has an important and growing global customer base with both the manufacturers of semiconductor equipment (OEMs) and the actual manufacturers of semiconductors themselves. BriskHeat´s presence in this and other end markets, combined with NIBE Element´s worldwide manufacturing footprint and engineering activities will provide for significant synergies and growth opportunities going forward”.
“It is also reassuring”, says Gerteric Lindquist, “that BriskHeat´s current management, headed by Mr. Domenic Federico, will continue to run the Company”.
BriskHeat will be consolidated into NIBE Element North America effective January 1, 2018.
Friday 23rd February marked Fuel Poverty Awareness day, during which organisations and individuals across the country highlighted the challenges faced by families unable to afford even the most basic of living essentials; heat. As the UK continues to experience one of the harshest winters for several years, the impact of cold, inefficient and expensive to run homes can be devastating. A recent report by E3G found that the UK ranks second from bottom in terms of excess winter deaths, when the heating season length is taken into account, with only Ireland performing worse. The majority of these deaths are linked to the avoidable circumstance of living in a cold home.
NIBE Energy Systems believes that everyone should have access to clean, affordable and reliable heat. Renewables are the only real energy-secure future proof solution to heating our homes, however encouraging consumers to switch to low carbon solutions can be challenging. To understand the barriers, in co-ordination with the Department of Business Energy and Industrial Strategy, we asked our installers what they thought the barriers to heat pump uptake were. Almost 140 people responded to the survey, of which 43% highlighted cost as a significant barrier for heat pump deployment. A key theme throughout the responses was the fall in oil price over the last couple of years and consumers relying on low oil prices to heat their homes. Respondents stated that “oil is seen as the cheaper option” and that “oil seems to be favoured while oil prices are currently so low”.
Whilst the low oil price over the three years has provided some rest bite for off-grid households, since August the oil price has rebounded, and prices have risen. Prices peaked to those seen in 2014, with the average price for a litre of heating oil increasing by 24% between November 2016 and November 2017. This price volatility makes it increasingly difficult for households to budget for their energy requirements and it can leave households opting to not use their heating when prices unexpectedly rise, particularly in the winter months. For households at risk of fuel poverty, this unpredictability can be devastating.
Switching these homes to clean, renewable heating systems is a quick win in terms of reducing carbon emissions, lowering fuel bills and improving comfort. As part of the Clean Growth Strategy, the Government has committed to phasing out high carbon fossil fuels in off grid homes during the 2020s. This will help to lower emissions from buildings, which currently represent almost 40% of the UK’s total greenhouse gas emissions. Moreover, households switching away from fossil fuels, can realise substantial energy cost savings.
Air Source Heat Pumps (ASHPs) provide heating with significantly reduced running costs compared to fossil fuels because of the high energy conversion efficiencies that can be achieved. Using the department for Business, Energy and Industrial Strategy’s central oil price scenarios, switching to an ASHP would lower the cost of heating for an average detached house by 9%. These calculations do not include the financial support consumers could receive from the Government’s Renewable Heat Incentive and do not account for the difficulty in predicting and preparing for oil price fluctuations.
The need to move away from fossil fuels is clear from an environmental perspective and for homes not connected to the gas grid, significant savings can be made through the adoption of renewable heating systems. Fuel poverty is multifaceted and like decarbonising our homes, there is no silver bullet, however the Government’s commitment to phase out high carbon fossil fuels is a step in the right direction for households struggling to afford to heat their homes.
 House of Commons Library (2018) Briefing Paper Energy Prices
 Oil price comparison site Boilerjuice.com