The first of our two-part blog on the state global micro-CHP market provides a run-through of the key events that shaped the outcome in 2015 – taken from the Delta-ee ‘Micro-CHP Annual Roundup and Market Outlook’ report.
2015 was the year of the first ‘double-dip’ in the micro-CHP market
For those just interested in the bottom line, 2015 was a tough year for micro-CHP. Actually, it was the first time Delta-ee has reported a simultaneous drop in product sales across both of the industry’s two main regional markets: Asia (Japan) and Europe (Germany). The end result was a 10% reduction in volumes compared to 2014.
While it is no secret that the micro-CHP market has under-delivered in terms of its potential, it should be noted that this recent drop was against the prevailing trend of year-on-year growth that has been seen since 2009/10 (with essentially a flattening out in 2014).
So how did industry get to this point – and are there any positive trends that could help get sales back on track?
All key markets struggled – policy uncertainty was a consistent hurdle
The global micro-CHP market fortunes rest heavily on the fortunes of PEM sales in Japan and to a lesser extent, engine micro-CHP sales in Europe.
With several important micro-CHP suppliers exiting the German market during the course of 2014 (including Kirsch and Proenvis), and with widespread uncertainty created by a drawn-out deliberation on the revisions to the main law that supports their uptake (the KWK Gesetz / CHP Law), we expected it would be tough for their competitors to fill the gaps. This proved to be the case.
Market launch plans of several potential key UK players were put on hold as they awaited confirmation on what rate of VAT they could charge, and what price of feed-in tariff their customers would get.
In Japan, against a difficult backdrop of corporate accounting practices, leading PEM micro-CHP developer Toshiba corporation saw its market creation efforts stall and certain parts of its existing market saturating. Sales were down by several 1,000 units. It’s rival Panasonic fared better but again this was not by enough to pull overall sales out of the slump.
As for the positives, we did see a few notable developments in 2015.
Companies continued to innovate and lay the groundwork for future sales
Back to Germany, details of the rumoured market introduction programme for fuel cell micro-CHP continued to filter through. It was obvious that the federal government wants to put substantial funds into the development of the industry as part of the solution to the Energiewende. The suggested ~€9,000 subsidy for a 1kW appliance has since been confirmed, and is now available for customers to reserve. Fuel cell suppliers were also able build a decent base for growing the market with several hundred sales; this in-spite of the subsidy not yet being launched.
One player, Elcore, began to see some success from taking a new approach to market – supplying a retrofitable ‘add-on’ system (instead of a fully-integrated micro-CHP ala Toshiba and Panasonic) and by selling it through a novel online platform based on customer service and cost reductions. These are two trends we certainly expect to see other companies look to replicate.
In the Netherlands, Remeha started to see rising appeal for its ‘rent a micro-CHP’ concept, growing the prospects for Stirling engine micro-CHP (although this is now less of a focus for them). In South Korea, some 10s of KD Navien Stirling engine systems were deployed as the Seoul government’s technology demonstration project got underway.
As is the trend, very few micro-CHP units were deployed commercially in the US, although the DoE signed off millions of dollars worth of R&D support for native non-fuel cell micro-CHP developers looking to crack the opportunity.
Of course, it will take time for such programmes to bear any fruit in terms of commercial sales. For now what the industry really needs is a growing range of compelling customer propositions for existing products that will allow the continued expansion in market reach and customer types.
Look out for our next blog on this topic – where fellow Micro-CHP Research Service Analyst Cate Lyon will discuss Delta-ee’s view on how the market will evolve, and what the picture will look like 10 years from now.