Heatrae Sadia comment: Q4 2018

Jeff House, Head of External Affairs Heatrae Sadia is BMBI’s Expert for Water Heating.

There has been a mixed picture in Q4, with BMBI showing a good performance for plumbing and heating, particularly during October and November. The EUA (Energy & Utilities Alliance) stats on boiler sales by volume (that also include hot water storage) were less positive.
Looking at the overall market for the year, it has been relatively flat. Private housing starts are expected to grow in 2019, which is good news for our product offer from this important sector.

There is a continuing positive trend for combination boilers in housing RMI, something which has led to a 5% reduction in demand for hot water cylinders in the residential sector. In commercial construction, there has also been a softening in demand – particularly for office space and retail. This is potentially attributable to prolonged uncertainty during the negotiations over Brexit and its outcome.

In the short to medium term, there are a range of regulations under review; all potentially affecting demand for products in our sector.

Increases in domestic RHI (Renewable Heat Incentive) tariff levels have stimulated an increase in air source heat pump installations in 2018, which have driven cylinder volumes to an extent. The RHI scheme is due to end in April 2021 with no firm policy proposals for a successor as yet, which may dampen enthusiasm in the RMI sector for currently incentivised technologies in future.

This year, we expect a consultation on revisions to Building Regulations (including Approved Document L for energy efficiency). As such, the Standard Assessment Procedure (SAP) framework will be updated to reflect the lower carbon intensity of grid electricity, which will mean that electric heating and hot water products will be more attractive in new build compliance calculations. Consequently, we expect an increase in market demand for heat pumps in the early 2020’s, which means in turn a requirement for hot water cylinders.

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Launched in 2015, the award winning monthly Builders Merchant Building Index (BMBI) report is the only reliable measure of repair, maintenance & improvement (RMI) activity in the UK. Filling an important gap, it can be widely used in construction, and by economists, Government, national media, commentators and influencers outside the industry.