SUMMARY OF REPORT CONTENTS

          UK Domestic Central Heating Market by Value

                             (£m MSP) 2008-2012

The UK domestic central heating market is substantial, with an estimated total value of over £1 billion at manufacturers’ prices in 2010. Over recent years this market has benefited from energy efficiency legislation and the drive to sustainability. The market is now essentially mature but still offers further growth potential through product innovation to improve thermal performance, energy efficiency and control/flexibility.

The UK domestic central heating market is part of an overall UK heating market, estimated to be worth around £1.75 billion in 2010.

Over the last five years the UK central heating market has experienced variable levels of growth. In particular, the market was influenced by legislative measures concerning the compulsory installation of high efficiency condensing boilers in 2005 and 2007.

However, like other products in the building industry, the market for domestic central heating products has been impacted by the global financial crisis. Market performance across 2008-09 has been relatively difficult, with a decline of around 13% - primarily due to the major fall in the levels of housebuilding.

The market situation in 2010 was more positive, particularly in the first half of the year. The Boiler Scrappage Scheme lifted the market, with 125,000 boiler installations completed in England plus there were schemes for a further 5,000 in Wales and 5,000 in Scotland.

The outlook for the UK domestic central heating market in 2011 remains uncertain. With cuts announced in the Comprehensive Spending Review in October 2010, it will undoubtedly prove to be a difficult year as disposable incomes fall, tax rises are implemented, and unemployment is likely to rise. In 2011, the market for domestic central heating products is estimated to be around £1.06 billion at MSP.

A major area of support for the market is expected to come from the domestic refurbishment sector. With rising fuel prices and new legislative measures, householders are now more aware of energy efficiency and the environmental impact of energy using products, such as those used in domestic central heating systems. Developments in renewable technologies are likely to have a significant impact on the domestic central heating market. For example, the next generation of micro-CHP units will use fuel cell technology to generate electricity and heat by chemical means. These create more power and less heat from each unit of fuel, which means less energy waste and greater carbon savings.

In the medium to longer term, the domestic central heating market is expected to grow steadily; and by 2015 the market value is forecast to be around £1.17 billion at MSP, which would represent an increase of 11% compared to the market size in 2011.