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Home , Smart thermostat

Overview - UK Smart Market

1 The market for smart in the United Kingdom is driven by five key factors

The growth of the market can be attributed to a new housing construction trend with an increased adoption rate PREDICTED STRONG of smart thermostats. Another supporting driver is the UK legislature for energy efficiency. Combined with MARKET GROWTH technological improvements and increasing energy prices, the market for smart thermostats is predicted to grow.

GROWING Consumers are increasingly interested in efficient energy consumption, with the main reasons being increased CONSUMER control and an opportunity to save money. They are also increasingly interested in the possibilities of the Smart ACCEPTANCE Home, and the convenience and comfort it offers.

PUBLIC AND PRIVATE The UK government are encouraging consumers through initiatives for a smarter energy utilisation. Additionally, SECTORS the “Big 6” energy companies in the UK are actively working with energy efficiency and smart thermostats to COMMITTING keep up with the market trend.

IMMATURE MARKET The market penetration of smart thermostats in the UK is currently low, but the competition is increasing through WITH INCREASING new emerging technologies. Service and maintenance in the sector are at low levels. COMPETITION

SUBSTITUTE Substitute solutions such as insulation of properties and metering is a trend driven by UK regulations. Other SOLUTIONS substitute solutions include traditional heating control.

#%$#%$# BUSINESS SWEDEN 2 A glance at established players on the UK smart thermostat market, and where to find their products

tado° makes smart thermostats and smart Hive makes smart connected thermostats In their heating and cooling product AC controls for heating and cooling. They for heating. They offer their products as a segment, Honeywell makes smart and Wi- offer their products via their website, service by gas and energy service providers, Fi thermostats which they provide via through retailers and online stores, through and as add-on services by installers. retailers and wholesalers within HVAC and add-on services via boiler installers, and as Hive’s UK partner is British Gas. technology, and through add-on services a service by gas and energy service from boiler installers. providers.

Besides their home security products, Nest Netatmo specialises in connected objects, of The Genius Hub team offers a zoned smart makes smart thermostats which they which smart thermostats is a category. for properties. Their provide via retailers and wholesalers within Their products are offered as a service via product kits can be purchased directly via HVAC and technology, as a service by gas gas and energy service providers, or as an their website. and energy service providers, and as add-on add-on service from boiler installers. services from boiler installers. UK partners to Nest include Npower and various boiler installers.

#%$#%$# BUSINESS SWEDEN 3 Owner occupied, semi-detached houses is the most common form of housing in the UK

DETACHED HOUSES SEMI-DETACHED HOUSES FLATS AND APARTMENTS (~5.5 million) (~11.3 million) (~4.2 million)

26% 20% % of housing stock 54%

7,2% 14,7% 7,3% 36,8% Residential 25% 19,6% occupancies 85% 65,7% 38,2%

Owner occupancy Half of the UK residential housing market consists of semi-detached houses which are primarily owner occupied. In detached houses, owner occupancy is a clear majority. Only Privately rented 20% of the total housing stock consists of flats and apartments where owner occupancy is Socially rented less common, instead the majority is privately or socially rented (social housing).

#%$#%$# BUSINESS SWEDEN 4 Across all residential occupancies, are the dominant heat technology

OWNER OCCUPIED PRIVATELY RENTED SOCIALLY RENTED (~14.8 million) (~4.8 million) (~4 million)

20% 17% % of housing stock 63%

% tenures with boiler 94% 82% 83%

11% 6% 11%

% with smart meter

Largest share of the market is the Private renters have lower incentives Socially rented houses have a higher owner occupancy, who likely have to invest in home technology. More share of socioeconomically weak higher incentives to reduce energy rigid energy contracts limits ability to tenants. Energy contracts are usually costs and a higher willingness to choose energy service provider in pre-payment form. invest in home technology.

#%$#%$# BUSINESS SWEDEN 5 Individual gas boilers supplies 80% of the total residential heating market

Market share 2016 Market share e2020 (Installed capacity) (Installed capacity)

Low gas prices combined with a well established gas network suggests that gas is likely to keep high market share in the mid-term future. Gas boiler 79% Oil boilers market share expected to 81% decline due to fast replacement to gas or electricity boilers mainly driven by the ECO* scheme.

PV installations driven by Government tariffs available through RHI ( Incentive). Oil boiler 6% 5% (ground- and air sourced) installations driven by Government tariffs Solar thermal 2% 2% available through RHI (Renewable Heat Incentive).

Heat pumps 2% 2% DH is driven by Government investment into DH schemes. Market is expected to grow with 2-3% a year. 2% 4%

Other heating technologies are expected to grow, including wind- or pure electrical Other 8% 11% heating.

#%$#%$# BUSINESS SWEDEN 6 However, the strongest trend in new housing is solar thermal, heat pumps and district heating

Market share 2010 Market share e2020 (In terms of units sold) (In terms of units sold)

While being the consistent choice for 15% already existing buildings, boilers are expected to be used much less in new buildings Boilers 81% The solar thermal market experienced a recessive period in 2012 and 2013, but is 18% expected to grow significantly and surpass boilers as heat technology of choice in newly built housing Currently with approximately 20 000 installations yearly, heat pumps will come Solar thermal 7% to dominate the new housing construction market as heating 51% technology

The district heating market is driven by Heat pumps 10% new construction and rising energy costs, and will reach the same level of sales as boilers by 2020 15% District heating 2% Micro CPH will not see any substantial growth, and remains quite insignificant in market size Micro CPH & FC 0% 1%

#%$#%$# BUSINESS SWEDEN 7 Although demand for boilers is predicted to remain strong overall, it is expected to lose market share to heat pumps in new housing

The majority of sales originates from the The total market share of boiler in 2020* is existing housing stock* expected to be approx. 88%

Boilers 2500000 Heat pumps 8% Solar thermal 2000000 District heating Micro CHP & FC 1500000

1000000

500000 Boilers 92% Heat pumps 0 Solar thermal 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sales to existing housing Sales to new housing

*Forecasted sales to new and existing housing in terms of units sold

#%$#%$# BUSINESS SWEDEN 8