This document summarizes trends in the global heating and cooling market. It finds that: 1) The HVAC market was worth €100 billion in 2013, with China accounting for €39 billion and Europe €25.9 billion. 2) China has become the top domestic boiler market, surpassing countries like the UK and South Korea. 3) New regulations taking effect in 2015 will phase out less efficient boilers and increase demand for high-efficiency condensing boilers and hybrid heating systems. 4) The heat pump market is growing rapidly, especially in China and Europe, with projections showing continued strong growth through 2020.

1. Heating and cooling revolution
By Andrew Giles
October 2014

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Heating and Cooling Markets Agenda
•Global HVAC market and the rise of China
•Western & Eastern Europe heating market trends in short term
•ErP in September 2015, the great divorce of condensing boilers, rise in hybrids and solar
•Heat pumps – China versus Europe and the top growing product types
•2020 & 2035 market for heat generators and new technologies
•Traditional water heating losing to combination boilers and other sanitary hot water solutions
•Top manufactures – making acquisitions and positioning in the HVAC markets /market share
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Global Major Regions HVAC Market Value
Europe analysis based on following countries: Austria, Belgium, Czech Rep., France, Germany, Italy, Netherlands, Poland, Spain, Sweden, Switzerland, Turkey, UK
Total 2013 market value: €100bn
NAmerica €22.7bln
China €39.0bln
Japan
€14.0bn
Europe
€25.9bln

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China domestic boilers leaps to top spot
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0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016 2017
UK
South Korea
China
Russia
Number of of boilers sold
per annum

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ErP - Impact on products
Increase in Combined and Hybrid systems
Eco Design
A +++ ≥150%
A ++ ≥125%
A + ≥98%
A ≥90%
B ≥82%
C ≥75%
D ≥36%
E ≥34%
Cogeneration
Gas HP
Condensing boilers
Non- condensing boilers
Ground /Water to water HP
Air to water HP
From 26/9/2015 products with Label D to G are no longer allowed to be sold
Hybrid Heat Pumps
Combined CB + ST system
+ enhanced Controls
Fuel cell
Labels mandatory from Sep. 2015
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Combining systems
Product label
High efficiency
gas boiler
Solar thermal
system (VT)
Temperature
controls
System label example:
89%
6%
4%
+
+
System
efficiency 99%
A + ≥98%
System label
Separate labelling for
Space Heating and SHW.
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12%
15%
88%
85%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2012
2017
condensing
non-condensing
Boiler technology shift Domestic gas and oil boiler sales 2012 - 2017
Outside the EU market
Inside the EU market
‘000 units
‘000 units
70%
92%
30%
8%
-
1,000
2,000
3,000
4,000
5,000
6,000
2012
2017
condensing
non-condensing
Source: BSRIA, based on the analysis of 9 largest European markets
Source: BSRIA, based on the analysis of Turkey, Russia, China, S. Korea
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Hybrid heat pumps Market potential by 2020
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2014
2015
2016
2017
2020
France
Germany
Italy
UK
Netherlands
units
CAGR 2014-2020
+51.7%
Hybrid Box
Gas cond. boiler & A/W monobloc HP
Modulo Hybrido
Gas cond. boiler & A/W split HP
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53,400
5,042
1,973
1,547
831
2,595
-
10,000
20,000
30,000
40,000
50,000
60,000
China
Europe
Turkey
Brazil
India
Other
countries
Solar Thermal Market
World market
* 29 countries
Total world* market: 65.4 million m2 in 2014e (+7%)
•~ +7% growth in 2014
•~ 82% of world market
‘000 m2
2012
2013
2014
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Heat Pump Market China - 2013
Total market estimated at 1 million units in 2013: (+ 15%)
units
12.0%
5.0%
20.0%
17.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
Ground / Water to Water
Splits
Monoblocks
DHW Heat pumps
2014
Growth 2014
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Heat Pump Market Europe* – ground/water/air-to-water
Ground/Water-to-Water
~110,600 in 2014
(+4.3%)
*Includes 21 countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK, Croatia, Czech Republic, Poland, Russia, Serbia, Slovakia, Slovenia
Air-to-Water
~196,500 in 2014
(+7%)
units
units
-3.1%
2.8%
-6.0%
3.1%
4.3%
5.6%
6.3%
6.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2010
2011
2012
2013
2014
2015
2016
2017
Ground/ water to water
Growth
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
-
50,000
100,000
150,000
200,000
250,000
300,000
2010
2011
2012
2013
2014
2015
2016
2017
Splits
Monoblocs
Growth splits
Growth monoblocs
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*Includes 21 countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden, Switzerland, UK, Croatia, Czech Republic, Poland, Russia, Serbia, Slovakia, Slovenia
Cylinder Integrated Water Heaters Heat Pumps
~111,000 in 2013
(+15.7%)
Heat Pump Market Europe* – Cylinder integrated
units
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
2010
2011
2012
2013
2014
2015
2016
2017
Air to water –cylinder-integrated water heater HP
Growth
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2020 European heating market
Top 6 Heating market by volume of sales, 2012 – 2020 – wall hung condensing, wall hung non-condensing , floor standing, biomass, solar thermal & heat pump
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‘000 units
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2012
2020
2012
2020
2012
2020
2012
2020
2012
2020
2012
2020
UK
Italy
France
Germany
Spain
Netherlands
HP
ST
Biomass
FS
WH non-cond.
WH cond.

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Renewables sales curve until 2035 Powerful drivers for new technologies after 2020
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2012
2015
2020
2030
2035
Heat Pumps
Hybrid HP
ST systems
micro CHP
Fuel Cells
Units
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Water heater market declining
15
3,600
3,800
4,000
4,200
4,400
4,600
4,800
5,000
2013
2014
2015
2016
2017
Thousand units
Electric storage
Air-water cylinder heat pump
Solar thermal residential system
Electric storage
Air-water Cylinder
integrated heat pump
Rise of combination boilers means less market for traditional electric storage

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JCI
Midea
Acquisition speed
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Diversification degree
Degree of diversification appreciated outside of the core HVAC business
Acquisition speed analysed over the last five years, based on company literature and industry sources
Low
Low
High
High
Acquisition speed
AO Smith
Ariston
BDR Thermea
Bosch
Daikin
Dimplex
Ferroli
Gree
Haier
Hitachi
LG
Mitsubishi Electric
Panasonic
Riello
Toshiba Carrier
Trane
Vaillant
Viessmann

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European Analysis
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European Market Shares by value in Heating, AC and Renewables of Top 20 Companies, 2012
0.1%
4.3%
8.6%
10.3%
0.2%
0.1%
2.0%
1.0%
0.2%
10.2%
4.4%
14.2%
0.6%
0.5%
2.3%
2.2%
2.6%
1.6%
8.1%
3.0%
0.0%
3.5%
2.2%
0.4%
1.3%
2.1%
8.8%
5.0%
3.8%
0.1%
0.4%
0.1%
1.6%
0.4%
0.5%
0.6%
4.0%
6.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
European MS in Heating
European MS in AC
European MS in Renewables

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THANK YOU
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