BSRIA World Market Intelligence Industry Briefing - AHR Expo 2016

1
Excellence in Market Intelligence 1
BSRIA World Market Intelligence
Industry Briefing - Agenda
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
Heating markets worldwide: Everything changes so - everything
stays the same?
Krystyna Dawson
Senior Manager – Heating &
Renewables
08:00 - 08:15 am
Intelligent Building Controls Market and the IoT Revolution –
how much is hype and how much is really happening?
Raphael Chalogany
Business Development
Manager NAM
08:15 - 08:30 am
Connected, Smart HVAC Technology is here – Fact or Fiction?
Jeremy Towler
Senior Manager – Energy &
Smart Technologies
08:30 - 08:45 am
Global HVACR trends – finding the sweet spots?
Anette Holley
Senior Manager – Air-
conditioning
08:45 - 09:00 am
2020 and Beyond – how menacing will the new supply chain
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

2
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
stays the same?
Krystyna Dawson
Renewables
08:00 - 08:15 am
Raphael Chalogany
Manager NAM
08:15 - 08:30 am
Jeremy Towler
Smart Technologies
08:30 - 08:45 am
Anette Holley
conditioning
08:45 - 09:00 am
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

Latest trends in the World
Traditional & Renewable Heating
Markets
AHR Expo 2016
Krystyna Dawson
Heating & Renewables
Manager - BSRIA
Worldwide Market
Intelligence
January 2016

4
Excellence in Market Intelligence
Agenda
What drives and prevents changes in the heating world
How do renewables perform in the overall heating markets
Sales trends in domestic boilers up to 2020
Latest development in solar thermal and heat pump markets
Half-hearted support for heat pumps so far
Status of heat generators by 2030
4

5
Move towards
Integrated HVAC
systems
Controls & energy
management are
growing
Low penetration of
renewables in
existing buildings
Increasing
gasification in
China, Russia
and S. Korea
5
Main trends in traditional
Heating Markets, 2015 - 2017
Importance
Urgency
Growing importance of
Energy networks
In cities
Substitution
of boilers by
renewables
in new build
Increasing
penetration
of wall-hung
boilers
Gas-fuelled boilers
dominance grows
• Energy efficiency
legislation for
buildings &
products
• Increased RES &
distributed energy
generation
• Low oil/gas prices
• Economics
uncertainty
Global Drivers:
ErP
and other efficiency
targets drive sales
of condensing
products

6
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
Fuel cell
Minimum energy performance and
Labels mandatory from 26 Sep. 2015
A ≥175%
B ≥150%
C ≥125%
D ≥100%
E ≥75%
F ≥50%
G ≥34%
New scale from 2020 probable
Empty classes?
Gas boilers on the
way out?
ErP – Impact on products
Hydrogen boilers ?

7
World Water Heating markets by type of technology
7
Includes: Europe, North America, SA Asia, Japan, Brazil, Australia
Total market in 2015: 107.1 mln units
- 3%
‘
Electric storage
32%
Gas storage
6%
Electric
instantaneous
31%
Gas
instantandous
17%
Domestic hot
water heat
pump
2%
Solar Thermal
12%

8
Water Heating market Europe
Technology overview
European Water Heating market,
by type, 2015
DHW HP sales, units, 2012 - 2018
• Electric storage dominate the market but
their share is decreasing.
• Instantaneous water heaters are considered
more energy efficient.
• Condensing WH will become prevalent from
2018 due to the legislation.
• DHW heat pumps are gaining momentum
mainly in France.
ST Water
Heaters
SHW HP
Combi boilers
Electric storage
Electric
instantaneous
Gas
instantaneous
Total market: 14 mln units ca +3%
Includes Turkey, excludes Russia
-
50,000
100,000
150,000
200,000
250,000
300,000
2012 2013 2014 2015 2016 2017 2018
CAGR 15%

9
Solar thermal markets
51,264
4,324
1,690 1,778 914
2,719
-
10,000
20,000
30,000
40,000
50,000
60,000
China Europe Turkey Brazil India Other countries
World main solar thermal markets 2012 - 2015
* 29 countries
Total world* market: 62.7 million m2 in 2015e (-3%)
• ~ -4% growth in 2015
• ~ 79% of world market
‘000 m2
2012 2013 2014 2015

10
1 2 3 4 5 6 7 8 9 10
Market drivers for heat pumps
Building regulations . . .
Energy efficiency regulations for products . . .
PV & storage market development . . .
Smart grid development. . .
But only relate to the
new build
But they are done
half hearted so far
Storage batteries needed to
support own consumption
Ongoing but slow and
not everywhere favourable to
heat pumps
2010 2015 2020 2030
timeline
market size

11
Thank you
Krystyna Dawson
Senior Manager – Heating & Renewables
Worldwide Market Intelligence
Old Bracknell Lane West, Bracknell, Berkshire RG12 7AH
D : +44 (0)1344 465638 F : +44 (0)1344 465626
M : +44 (0)7990 595 836 E : krystyna.dawson@bsria.co.uk
W : www.bsria.co.uk
More information at
www.bsria.co.uk/market-intelligence

12
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
stays the same?
Krystyna Dawson
Renewables
08:00 - 08:15 am
Raphael Chalogany
Manager NAM
08:15 - 08:30 am
Jeremy Towler
Smart Technologies
08:30 - 08:45 am
Anette Holley
conditioning
08:45 - 09:00 am
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

Intelligent Building Controls
Market and the IoT
Revolution -
How much is hype and how
much is really happening?
AHR Expo 2016
Raphael Chalogany
Manager NA & Head of
Office - BSRIA Inc.
January 2016

14
Agenda
• BACS – Lighting – Convergence: 2015 market size, champions,
drivers and threats, smart lighting controls, changing business
models
• BACS and IoT
• Impact of IoT on BACS
• IoT and Cloud Services
• Cybersecurity
• Is North America leading the way?
• BSRIA USA
14

15
Energy Efficiency Legislation & Emerging
Countries Driving US$22bn World BACS* Market
World CAGR <3% World CAGR <4%
US$Millions
* Building Automation & Control Systems (BACS)
Source: BSRIA
Source: BSRIA
Product
33%
Value-Add
44%
Service &
Maintenance
23%
0
5000
10000
15000
20000
25000
30000
2012 2013 2014 2015 2016 2017 2018 2019
5%

16
World BACS Market Champions
16
Product & Installed Systems Market
Category
Total BACS Business by all players (Incl. Third
Parties)

17
NA Lighting Controls Market
17
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2012 2013 2014 2015 2016 2017 2018 2019
Source BSRIA
CAGR >10% CAGR <13%
• Need to reduce energy costs
• Necessity to comply with
energy codes
• Need to promote sustainability
• Need to increase occupant
comfort & productivity
Systems (Product + VAD)
Maintenance 3%
US$Millions
New Study coming out in 2016!

18
Smart Lighting Networks:
a Huge Growth Potential
18
Luminaires &
Controls
Integrated
Lighting
Solutions
Smart
Lighting
Networks
ValueAdd
Evolution

19
…expected to grow at a
CAGR of 31.72% to pass 17
billion2014-2019
(TechNavio)
IoE Creates $14.4 Trillion
of Value at Stake for
Companies and Industries
(Cisco)
25 billion devices
connected to the Internet
by 2015 and 50 billion by
2020 (Cisco)
15 billion devices will be
communicating over the
network by the year 2015
(IDC)
Our IoT world is growing at
a breath-taking pace -- from
2 billion objects in 2006 to a
projected 200 billion by
2020 (Intel)
The Internet of Things (IoT)

20
All heading for the cloud?
20
The Cloud –
• 24h Universal Access
• OPEX not CAPEX
Cyber security

21
IoT and the Cybersecurity Threat
21
Example of 2015 data breaches include:

22
Is NA Leading the Way?
22

23
New BSRIA office opened in Chicago in 2014, and operational since
October 2015!
• Closer to North American clients
• Enhanced coordination of the network of research partners
…US focused content proposition!
New office…
Chicago
Multi-client market reports
 US Air Conditioning
 US Renewable Technologies
 US Heating reports
 US IBC (BACS, Smart Homes, Lighting
Controls, Fire & Security
 US Energy
 US IT & Cabling
US Custom and Consultancy Projects
 Market entry, acquisitions and partner
identification and market positioning
 Competitor intelligence (in/outside USA)
 Distribution channels analysis, vertical
markets analysis, pricing analysis, marketing
mix analysis, and more…
 Forecasts and trends
23
BSRIA NOW OPEN IN USA!

24
USA Contact
24
Raphael Chalogany
Business Development Manager, North America
225 West Washington Street,
Office 2218, Chicago, Illinois, 60606, USA
D : +1 312 753 6800 M : +44 (0) 7776 148 949
E : raphael.chalogany@bsria.com
W : www.bsria.co.uk

25
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
stays the same?
Krystyna Dawson
Renewables
08:00 - 08:15 am
Raphael Chalogany
Manager NAM
08:15 - 08:30 am
Jeremy Towler
Smart Technologies
08:30 - 08:45 am
Anette Holley
conditioning
08:45 - 09:00 am
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

Connected - Smart HVAC
Technology is here -
Fact or Fiction?
AHR Expo 2016
Jeremy Towler
Senior Manager - Energy &
Smart Technologies –
BSRIA Worldwide Market
Intelligence
January 2016

27
Agenda
1. VRF - Connected HVAC - Communicating room controllers impacts
2. Hydronic controls
3. Building energy management systems (BEMS)
• The new players
• Differentiated offers
• Retrofitting the aging building stock
4. Data centre cooling
27

28
Lots of older medium sized
buildings require renovation
28
Commercial
buildings =
83% of all
non-resident.
buildings
Of building stock:
Of floor space:
• Outdated &
inefficient HVAC
technologies
• Only about 20-25%
buildings have a
BACS
• Even fewer have
BEMS
• BACS rare in
buildings under
100,000 ft2 (c.
10,000 m2)
• Latent opportunity!
Source: BSRIA / DOE /
EIA CBECS
5.4 million
buildings
94.8%
50%
3.0%
14%
1.5%
14%
0.5%
11%
0.2%
11%

29
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
2012 2013 2014 2015 2016 2017
Global Sales - VRF and Chillers 2012 - 2017
(US $ Million)
VRF
Chillers
VRF Systems threatening
BACS market
• VRF solutions gaining market share - gap continues to widen
• Majority of leading HVAC suppliers include VRF solutions in their portfolios
• VRF solutions provide more localised control
• VRF control capability eating away at BACS system functionality & market
Source BSRIA

30
Cloud connected
solutions emerging
30

31
Smart Home Evolution
• Mass-market breakthrough
• Telecoms/Utilities offer
“connected home” solutions.
• IoT enables “ubiquitous Home”
• Systems learn user behaviour/
lifestyle - respond accordingly
“50 billion devices
by 2020” (Cisco)

32
Gen-Z expect solutions
32

33
PHASE 1
1. Germany
2. France
3. UK
4. Italy
5. Poland
6. Other
Europe
Big market for Hydronic valves - valve actuators –
controls in residential and commercial buildings
33
PHASE 2
7. China
8. North America
Belimo
Bosch
Danfoss
E-on
Honeywell
IBP
IMI
Intermatic (Grasslin)
Freese
Mohelenhoff
Pegler
Rehau
Oventrop
Siemens
Tacnova
Wilo
Vaillant
Sauter
Contributors include:
JCI
Nexus Valves
Xylem
Bray Controls
Kele
Taco Comfort Solutions
Watts Water Technologies
Valve Mfrs Assoc. of Am. (VMA)
Invensys / Schneider Electric
• First study of its kind
• Already bought by
22 major clients
Available
Jan/Feb
2016
Published
Jan 2015

34
Hydronic controls market
residential / commercial split (by value)
34
Europe China North America
(prov)
Residential USD
Commercial Market USD]

35
World BEMS*
Market growing at 14% CAGR
* Building Energy Management Systems
Source: BSRIA Quarterly update – Nov 2015
EU, 1,550,
45%
USA, 1,158,
33%
Rest of
World, 764,
22%
Global BEMS Market Value 2014
Million
US
Dollars
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
MillionUSDollars
.
Total
EU
USA
Rest of World

36
Data Centre precision
cooling market
36
Source: BSRIA
Relentless economies of scale of companies like
Amazon Web Services, Google, Microsoft
IT Sector
88%
Telcoms
9%
Other
Non-IT
3%
Enterprise
33%
Co-location
25%
"Web giant"
42%

37
Thank you!
37
Jeremy Towler
BBA (GSBA Zurich).
Betriebsoekonom dipl. oek.
Senior Manager
Energy and Smart Technologies
D : +44 (0)1344 465573 F : +44 (0)1344 465626
M : +44 (0)77 2527 8637 E : jeremy.towler@bsria.co.uk
W : www.bsria.co.uk
More information at

38
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
stays the same?
Krystyna Dawson
Renewables
08:00 - 08:15 am
Raphael Chalogany
Manager NAM
08:15 - 08:30 am
Jeremy Towler
Smart Technologies
08:30 - 08:45 am
Anette Holley
conditioning
08:45 - 09:00 am
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

Global Trends in
AC&R – Finding
the hot spots
AHR Expo 2016
Anette Meyer Holley
General Manager, AC&R &
Consultancy
Intelligence
January 2016

40
AC Global Trends
Critical
Very Certain
Energy efficiency and renewables
Market globalization &
industry consolidation
Refrigerants
VRF vs. Chiller and
Unitary
Market Drivers
European economy slow to pick up
Market Restraints
Chinese
slowdown
AC products
going into
the cloud
Legislation
Increasing focus
on Chillers &
Ventilation
US slowdown/ uncertainty
Smart buildings
smart homes
40

41
AC Global Trends
World Air Conditioning Market from 2013
to 2020 (F) in unit terms
Total Units in 2015: 128 million
World Air Conditioning Market from 2013
to 2020 (F) in value (US$ million)
Total Value in 2015: US$ 95 billion

42
Quantitative
1. Demographics and value curve: criteria for specification
3 Brand and product perception
4.Comparison of products: VRF vs. alternatives
5. Market expectations for VRF
6. Pain point analysis: rating of shortcomings, challenges,
weaknesses
7. Needs and requirements for VRF sales
Qualitative
1. Why VRF? Advantages and disadvantages
2. VRF controls: Scalability, integration, advantages, disadvantages
and implications
3. VRF suppliers
4. Market trends
5. Decision making process in commercial AC with reference to VRF
in particular
Residential
1. Why VRF in residential applications? Advantages and
disadvantages
2. VRF suppliers
3 Market trends
4. Decision making process in residential AC with reference to VRF
in particular
Selected Case Studies
Market Potential for VRF in the USA:
A VOC study
42
Total Sample: 115
Audiences:
system specifiers
Published: July 2015

43
AC Chiller Market
World Market for Chillers from 2013 to 2018
in value (US$m)
USA
2nd in
the world

44
Global Market Shares 2014, % by value
Global AC Market Shares 2014

45
2016 US AC Service and
Maintenance Market study
Part Sale Service Contract Sale
(may include part and
labour)
On Call Assistance
(no service contract)
Subcontracting
45

46
Residential /Light
commercial
Commercial
Boxed fans (exhaust)
for central house
ventilation (typical
250 m³/h @ 150 Pa)
Rooftop fans (exhaust)
for central house, small
office, school
ventilation. Includes fire
resistant (400°C)
Small central HR
ventilation unit (250-
500 m³/h)
2016 Ventilation study- US, China, Europe
Central extract /
supply. Includes
mechanical extract
(400°C) fire
resistant.
Category:
Roof fans
Category:
Central
extract
Category:
Central
Heat
Recovery
Central HR
ventilation unit
(500~5,500 m³/h)
Category:
Central Heat
Recovery
Category:
Central balanced
extract/supply
Air handling unit
(~5,500-
>100,000 m³/h)
Category:
AHU
Category:
Central
supply
Positive
input
/multiple
input
ventilation
Need a better
segmentation
than airflow
range alone
46

47
2016 World AC&R & HP compressors
47
2013-14 –
World
refrigeration; 9
countries
Regional reports with
Global overview
RESEARCH EXPECTED
TO START APRIL 2016

48
Anette Meyer Holley
BA Economics & Business Administration
General Manager, VACR and Consultancy
D : +44 (0)1344 465636 F : +44 (0)1344 465626
M : +44 (0)7725 278638 E : anette.meyer.holley@bsria.co.uk
W : www.bsria.co.uk
Thank you!
48
More information at

49
Topic Person Time
Welcome
Julia Evans
BSRIA CEO
08:00 am
stays the same?
Krystyna Dawson
Renewables
08:00 - 08:15 am
Raphael Chalogany
Manager NAM
08:15 - 08:30 am
Jeremy Towler
Smart Technologies
08:30 - 08:45 am
Anette Holley
conditioning
08:45 - 09:00 am
controller be?
Andrew Giles
General Manager
09:00 - 09:15 am
Q & A 09:15 - 09:30 am

How menacing will the new
supply chain controller be?
AHR Expo 2016
Andrew Giles
Intelligence
January 2016

51
Agenda
Which companies now head up the hvac supply chain & where?
What moves are the big hvac & controls companies making?
Smart companies? Can little guys compete in convergence?
Fundamental shift in residential/light commercial systems
Obliteration of the supply chain
The great divorce in the future of our industry & how to survive
51

52
Belimo
0.1%
Carrier / ALC
2.6%
Danfoss
0.2%
Delta
0.2% GFR
0.4%
Honeywell
6.3% Johnson Controls
9.8%
Kieback & Peter
1.8%
Neuberger
0.4%
Plueth
0.1%
Priva
0.1%
Regin
0.2%
Samson
0.2%
Sauter
1.9%
Siemens Building
Technologies
8.9%
Schneider Electric
3.2%
Trane
2.8%Trend
0.1%Other manufacturers
13.5%
Third parties
47.3%
Big players tightening their grip on the
installed BACS market
44% in 2013
Carrier / ALC
3.9% Honeywell
7.0%
Johnson
Controls
12.5%
Kieback &
Peter
1.2%
Siemens
Electronics
9.9%
Schneider
3.8%
Trane
3.7%
Other
manufacturers
17.7%
Third parties
40.3%

53
Access
Lighting
CCTV
AV - Signage
Power
Monitoring
Data, video
Energy
BACS/HVAC
Smoke detector
Small can be powerful

54
Greener electricity
Efficiency legislation
Market growth
Need for control
Smart grid
advances
More expensive
electricity
Complexity
of solutions
Decentralised
energy
generation
Low gas prices
Powerful drivers for the HVAC market
Challenging environment for customers and suppliers
54
Market difficulty

55
Hybrid heating installations
2020 and beyond
• Driven by low / zero / plus energy home standards
• Driven by energy prices (zero energy bill homes)
• Driven by legislation
Heat pump + Solar thermals
Heat pumps + PV
PV Thermal + Heat pump
HRV
Underfloor heating:
Electric -1st floor
Wet – ground floor
+ Solar PV + HRV
HRV
Solar thermals
55

56
Supply chain obliteration for China air
conditioning
56
 Until 2000 exclusive distributors
were commonly to sell nationwide
 Home appliance mass retailers
now purchase direct and control
the first and second tier cities
since 2000 – now 80% of sales.
 Also signalled death of flagship
company owned stores
 E commerce is used in third and
fourth-tier cities (<500,000
people)
– Suning and Gome do both
– JD online with own logisitics
– Tmall online mainly in small towns
using third party logistics
Source:JARN

57
Long term outlook 2020/25/30
Focus : UK
‘000 units
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2014 2015 2016 2017 2018 2019 2020 2025 2030
Fixed electric heat emitters
Heat Interface Unit **
Fuel cell
mCHP
Gas heat pump
Air to air heat pump
Exhaust air heat pump
Ground to water heat pump
Air to water heat pump
Biomass boiler
Coal boiler*
Oil boiler
Gas boiler
-
50
100
150
200
250
2014 2015 2016 2017 2018 2019 2020 2025 2030
‘000 unitsNew build
Existing dwellings
57
70%

58
Andrew Giles
MA
Director of Worldwide Market Intelligence
D : +44 (0)1344 456 624 F : +44 (0)1344 465626
M : +44 (0)7900 344 708 E : andrew.giles@bsria.co.uk
W : www.bsria.co.uk
Thank you!
58
More information at

BSRIA World Market Intelligence Industry Briefing - AHR Expo 2016

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BSRIA World Market Intelligence Industry Briefing - AHR Expo 2016