Takeaways from ISH, Europe's leading heating exhibition

In this episode LCP Delta's heat team discuss their key takeaways from ISH, Europe's leading heating exhibition, held every two years in Frankfurt. The team explore what these takeaways mean for the evolution of Europe's heating sector, and look into the crystal ball to see what they expect to see at the next ISH.

Episode transcript

[00:00:04] – Jon Slowe

Welcome to Talking New Energy, a podcast from LCP Delta. The new energy experts. In the podcast, we'll be exploring how the energy transition is unfolding across Europe through conversations with guests from the leading edge of the transition.

Hello and welcome to the episode. As you will all know, decarbonisation of heat is going to be one of the hardest parts of the energy transition. The heating industry is, of course, stepping up innovating, developing new technologies, products, services, offerings to help us decarbonise heat in Europe as fast as we can. And every two years, there's a very large heating exhibition in Frankfurt called ISH. And today I'm talking with our heat team, or three people from our Heat team who were at ISH recently on the main takeaways. And what they saw, what they learned, what they found interesting, what they didn't see, that they were expecting to see, and what this tells us about how quickly we'll be decarbonizing Europe's homes in the next years. So, let's welcome my three colleagues. Klara Ottosson. Hello, Klara.

 

[00:01:22] – Klara Ottosson

Hi.

 

[00:01:23] – Jon Slowe

Thomas Barquin. Hello, Tom.

 

[00:01:24] – Thomas Barquin

Hi.

 

[00:01:25] – Jon Slowe

And Guillermo Yañez. Hello, Guillermo.

 

[00:01:29] – Guillermo Yañez

Hi, Jon.

 

[00:01:31] – Jon Slowe

Now, some listeners will have been to the ISH at Frankfurt. Many listeners will have been to a trade fair or many different trade fairs in the energy sector. I think ISH is something a bit different. And this was Klara. Am I right? This was the first ISH for a longer period of time than normal because of COVID?

 

[00:01:53] – Klara Ottosson

Yeah, exactly. So, I think the last one in person will have been in 2019.

 

[00:01:57] – Jon Slowe

Okay. So, this is your first ISH, I think. Could you paint a bit of a picture from what's it like? Small? Big?

 

[00:02:09] – Klara Ottosson

It's massive. It's very overwhelming. There are people everywhere, which is still like, a year after COVID basically wasn't an issue anymore. It still feels a bit weird being this massive crowd of people it takes to give you an idea of how big it is. It takes, like, 20 minutes to walk from one of the halls to where the train station is. And you're still inside the trade show buildings.

 

[00:02:37] – Jon Slowe

Yeah.

 

[00:02:37] – Klara Ottosson

So, it's basically kilometres of buildings.

 

[00:02:40] – Jon Slowe

So, you did a lot of steps on those few days at ISH.

 

[00:02:43.930] – Klara Ottosson

Yeah, I think it was more than 20,000 steps each day that we were there.

 

[00:02:47] – Jon Slowe

Wow. I remember as well talking with one of the big heating manufacturers and they fly plane loads of installers from Germany to the heating fair. I think it's the sort of thing you can only really get the feel of when you're there. But it is absolutely massive.

 

[00:03:09] – Klara Ottosson

Yeah. And the stands as well, the stands that these big manufacturers build up are, like, bigger than I think, much bigger than our office.

 

There are trees in there. It's like forests on some of them. Very surreal.

 

[00:03:25190] – Jon Slowe

Yeah. So, certainly the meeting place for the European heating sector. Now, we'll structure this by, I think, going through top five takeaways from the ISH and introduce each point and then have a little chat around what that means and the implications of that. Thomas, let's start with you. What's our first takeaway?

 

[00:03:51] – Thomas Barquin

I guess the first takeaways was Propane air to water heat pumps everywhere. So, all the key manufacturers in Europe were showcasing their air to water heat pump with propane monoblock products.

 

[00:04:10] – Jon Slowe

So, when you say with propane, Thomas, some of our listeners, I think all of our listeners, want to air to water heat pump, but where does Propane come into it with the heat pump?

 

[00:04:20] – Thomas Barquin

So, I guess it's a natural refrigerant and is becoming more of a theme for the industry because of the F-Gas revision that potentially we ban the use of refrigerant with GWP – it’s global warming potential.

 

[00:04:45] – Jon Slowe

Even though in theory and often in Practise, the refrigerant is sealed in the system, the drive is to try and get rid of high global warming potential refrigerants and replace them with things that are less harmful.

 

[00:04:59] – Thomas Barquin

That's correct. Yes, because in case of leakage, for example, even if leakage are quite not the norm, but just because of that, there's, I guess, decision to move towards less harmful refrigerant and potentially more natural refrigerant like propane.

 

[00:05:22] – Jon Slowe

And is this quite a big thing for the heat pump industry, then?

 

[00:05:26] – Thomas Barquin

Yes, it is a big thing. And what was actually really surprising is to see all the big Asian brands that have been using a lot more, as we call it, the HFC (hydrofluorocarbons) refrigerant, moving to natural refrigerants, which are normally more used by the European brands. So, you can see that all the industry is clearly moving towards the use of the same refrigerant.

 

[00:05:54] – Jon Slowe

And what implications will that have if you're not a heat pump techie and you don't care about the refrigerant? If the industry moves to propane, does this affect the performance, the design, the installation, or does it not? Is it more of a techie heat pump thing?

 

[00:06:13] – Thomas Barquin

I guess they will have to be in general, they will have to be monoblock products that will be installed outside because propane has high flammability, so, they are limited on the quantity of propane you can have inside the house. Which means that for now, the only monoblock products installed outside and no split heat pumps that will have refrigerant running through the house.

 

[00:06:41] – Jon Slowe

Yeah, okay. And some countries monoblocks are the norm today. But some countries splits are quite popular, aren't they?

 

[00:06:47] – Thomas Barquin

Yes. France, for example, in Italy, the two key countries with more than 70% of the market would be split models at the minute. So, yes, there would be a big change.

 

[00:07:00 – Jon Slowe

Sounds like quite a lot for the heat pump industry to manage then, at a time when their markets are really growing quickly, at a time when heat pumps time has come in the market in many ways or is coming to manage this as well. Must be quite tough.

 

[00:07:13] – Thomas Barquin

Yes, I think there's a growing concern from the industry that they might not be able to produce enough heat pumps with new refrigerants to meet the targets, the European targets. So, there's been a lot of lobbying from manufacturers with the European Commission to try maybe to water down a little bit, the revision of gas. And it's going to be I think it's the vote in the next few weeks, so, we will know exactly what they will have to do. At least we can see that they are ready for some applications. For the single-family homes with monoblock where they space, the question is more than what happened for segments where they can't be installed outside.

 

[00:08:08] – Jon Slowe

Yeah. Okay. So, heat pumping to be moving in a different direction with refrigerants propane. I guess the fact that propane is becoming the norm helps the supply chain because you've got one supply chain propane, refrigerants, and the associated components. But a challenge for the heat pump industry, particularly west splits, are common. Takeaway number two. Klara, what have you got for us?

 

[00:08:35] – Klara Ottosson

Yeah, so, I think Tom touched on it in his last sentence there, that there was a very clear focus on heat pumps for single-family homes where there is a lot of space both outside and inside the home. So, we saw a couple of innovations or different heat pump designs that probably work great in a German home where there's traditionally more space than you might find in your average Dutch or English home or British home.

 

[00:09:04] – Jon Slowe

Because German homes often have a basement or a room for heating equipment and a hot water tank, et cetera.

 

[00:09:12] – Klara Ottosson

Exactly. And more perhaps standalone homes with gardens and things where you can fit an outside unit. Because I think a lot of the outside units that we did see at the fair were fairly large. It might be that they were showcasing larger heat pumps with larger outputs, but they were very big. I think there was one or two that was taller than I am, and I'm pretty tall. I love that Guillermo agreed with me. But we saw a lot less innovations for heat pumps of different designs that might fit in other types of homes. There was one or two, at least one multi-family home solution that we saw from a company called Quantum. But that was the only one that I saw, I think. And not much else in terms of what happens in the homes where you can't have a massive heat pump outside or you don't have the space for both the inside unit and a big tank and all of those.

 

[00:10:19] – Jon Slowe

And everyone knows, I think, that it's not new homes, it's existing homes where the challenge lies with decarbonising heat.

 

[00:10:27] – Klara Ottosson

Exactly.

 

[00:10:29] – Jon Slowe

Do you think it was because the fair was in Germany, so, we saw more German market solutions? Do you see that innovation happening in other markets where space is a bigger issue? Klara?

 

[00:10:41] – Klara Ottosson

Yeah, no, definitely. I think, of course, we were in Germany, so, might not be too surprising that that's the kind of products that we saw. But we've seen last year at a Dutch fair, we saw a lot more products that were very much geared towards the Dutch market, with outside units shaped like a chimney that you put on top of the roof or completely flat outdoor units that also kind of look like a big solar panel or a thick solar panel that you would put on the roofs. Units that you can put in the attic, which is more common in the Netherlands. So, it might be yes, that there is a very kind of country focus at these fares as well. But the ISH being as big as it is and as international as it is, we might have expected a bit more diversity in the designs.

 

[00:11:30] – Jon Slowe

Yeah. So, do you think there's, in general, enough focus from the heating industry on innovation around retrofits, or do you think there needs to be more? Maybe that's the wrong question to ask, but you know what I mean.

 

[00:11:48] – Klara Ottosson

Yeah, I guess everyone's kind of focused on the low hanging fruit first. So, that will be a new build. It will be the off-gas segment where you might have bigger homes with more space that have previously had an oil or LPG boiler or wood stove or whatever they may have had. And then I guess, as we humans like to do, we'll push that issue further ahead once we've maybe had some more time, like terraced homes and flats will be very difficult to decarbonise.

 

[00:12:23] – Jon Slowe

So, some focus on the heart, on the higher fruits up the tree, but a lot more is going to be needed in the next years.

 

[00:12:32] – Klara Ottosson

Yeah, I definitely think so.

 

[00:12:36] – Jon Slowe

Okay. Thanks, Klara. Let's move on to takeaway number three. Tom, I think we're back to you.

 

[00:12:43] – Thomas Barquin

I guess, yes, the next one was again focusing on the retrofit side, been, I think, a strong focus this year on hybrids, on hybridisation of existing systems. So, compared to I want to Trocadéro in Paris and Takima, where hybrids were not really featured while in an ice, every single player had at least one or two hybrid model. And I guess that makes sense because as the market is moving towards heat pumps, especially in Germany for boilers manufacturers, it remain important for them to keep their solution in place. So, they start to offer that hybridisation of their existing solution that are already in the park instead of, I guess, replacing them completely with just a heat pump, then they can keep them.

 

[00:13:46] – Jon Slowe

I've been excited about hybrids for a long time because I think it's slightly counterintuitive because why have a boiler and a heat pump instead of just a boiler or just a heat pump? But they offer so many advantages in terms of a small capacity heat pump and a boiler working together. The flow temperatures, the replaceability lots of things. Of the hybrids you saw, Thomas, how many were what I'd call it's unfair to say dumb hybrids, but standard hybrids, where you have a heat pump and a boiler separately and a control system that manages them. And how many were what I'd say is really clever hybrids where you package the heat pump and the boiler in a really compact way that makes it retrofittable.

 

[00:14:37] – Thomas Barquin

I think we've seen more of the first option. So, having separate units, with the exception of one Italian manufacturer that showcasing their compact hybrid that has in one box the turbo and the heat pumps and no outside unit. So, that's really, I guess, clever technology and really targeted at areas where apartments or houses with less space.

 

[00:15:13] – Jon Slowe

Is that sucking in the air? How is it extracting the heat from outside? Is it sucking air in from the outside?

 

[00:15:20] – Thomas Barquin

It has, I think, a flue that extracts the air from the outside through the wall.

 

[00:15:28] – Jon Slowe

Okay, so were you encouraged by what you saw on hybrid?

 

[00:15:36] – Thomas Barquin

Yes, I think so. I think this clearly acknowledgement from the industry that hybrid would become at least a solution for the short to medium term before maybe moving to pure electric heat pump. And in the meantime, there will be some new regulation in Germany with a minimum 65% renewable share when replacing it system, then hybrids will be able to meet that requirement. So, definitely, I think suited to the German situation. I'm not saying that would be the case in other countries, but at least for Germany, we know hybrids will have some years of success.

 

[00:16:28] – Jon Slowe

Yeah, okay. So, we'll see jumps from jumps to full electric system, but we'll also see steps where gas and electric systems work together.

 

[00:16:38] – Thomas Barquin

Yes.

 

[00:16:39] – Jon Slowe

Okay. Thanks, Thomas. Guillermo, number four, what have you got for us for takeaway number four?

 

[00:16:45] – Guillermo Yañez

So, actually, Tom already mentioned it. The 65% renewable heating regulation in Germany is very, very important and something we saw being on site. I was impressed of how this topic is already permeated into the public media. I mean, it's all over the news. You could find it on television, on radio, people are talking about this.

 

[00:17:16] – Jon Slowe

What this means, if I understand right, it means that if you're in Germany and you have a gas boiler, if you want to replace that gas boiler, the new system to have some renewables in it, is that correct?

 

[00:17:31] – Guillermo Yañez

Yes, exactly. You would not be able to replace a gas boiler for a gas boiler by next year.

 

[00:17:39] – Jon Slowe

So, that's a really big thing for the market, isn't it?

 

[00:17:42] – Guillermo Yañez

Yeah, it is very important. The average consumer is already aware of this. So, more sooner than later we will start, the consumer will be fully aware of the topic, and we can expect some sort of rebound effect coming up because as people are trying to upgrade the boilers as soon as they can this year before the regulation kicks in.

 

[00:18:12] – Jon Slowe

So, when does the regulation kick in?

 

[00:18:15] – Guillermo Yañez

Beginning next year.

 

[00:18:17] – Jon Slowe

Okay.

 

[00:18:17] – Guillermo Yañez

This is on the draft, on the current draught proposition of the regulation, which is still a little bit of a grey area, and we're still waiting for the final resolution on this coming up soon.

 

[00:18:31] – Jon Slowe

But from what you saw, is the industry coming forward? Is the industry ready to provide the solutions to meet this if it does come into play next year?

 

[00:18:43] – Guillermo Yañez

Well, it is a challenge definitely for the industry and they are already trying to get ahead on this. So, very much the focus is on heat pumps as a solution for new builds, high rates, a solution for retrofits, but it will be definitely a challenge for the industry, for the consumer, for the installer. For example, we know that the European Commission, they visited the fair, they were present there, and they might get the impression that the industry is ready for propane, for example, and that's not completely the case. Some OEMs (Open Energy Markets) are still trying to get ready for the transition. As we know, much of the products in exhibition are only a preview of what's coming in the next couple of months.

 

[00:19:42] – Jon Slowe

Yeah, I guess when you have these sorts of big if we have this big step change, it's always a bit of a shock and I don't think everyone's always perfectly ready. But yeah, I think that's a very if that regulation does come into play, for sure in Germany, is that Klara and Tom? Are there any other markets where that's already the case? Or would Germany stand out as no longer being able to retrofit a boiler with a boiler?

 

[00:20:14] – Thomas Barquin

I think Klara is the Dutch expert. I think the Netherlands.

 

[00:20:17] – Klara Ottosson

Yeah, I guess Germany would be they would not be the first country to propose such a legislation. That might be the first one who actually implements it. So, Tom mentioned the Netherlands at the VSK Fair. So, the kind of Dutch equivalent to ISH last year they did make a big announcement about potentially mandating, or they're proposing to mandate that from 2026, you will no longer be able to replace a gas boiler with a gas boiler. It should be minimum a hybrid solution.

 

[00:20:46] – Jon Slowe

Yeah, okay.

 

[00:20:47] – Klara Ottosson

As far as I understand, that has still not gone ahead either. It hasn't been approved.

 

[00:20:55] – Jon Slowe

We're getting closer to the times when this is going to happen. We're not quite there yet where it's definitive, but the direction of travel is good.

 

[00:21:04] – Klara Ottosson

But, I mean, 2024 is only a couple of months away, so it feels like the German government is cutting it pretty close.

 

[00:21:13] – Jon Slowe

Yeah.

 

[00:21:14] – Klara Ottosson

And I expect that, as we heard with this Dutch regulation, there will be exceptions. And once you count all of those exceptions, it might be might not sound as dramatic as it is.

 

[00:21:27] – Jon Slowe

Yeah. For me, I remember when, a long way back, when the UK introduced a mandate requirement for condensing boilers and there was a lot of discussion that the industry wasn't ready for, that it wouldn't work. But at the time, I think looking at it, once you've got 20% penetration, you could have confidence that the industry can manage that new challenge. And in Germany, I would have thought we're roughly somewhere in the region that 20% penetration of replacements being not just a boiler. So, if that's the case, then that would tell me the industry probably can step up and meet that challenge.

 

[00:22:12] – Thomas Barquin

They can. I guess the question is around having enough installer capacity. I think we've been working on the reports on the study on that there's a big gap in terms of installation capacity and I think Guillermo and Klara would have been more insight on that. And I think it's been confirmed as well during the during ISH that we still need to upscale the existing workforce and then find new blood, find students or young that want to embrace this career and go and install heat pumps, hybrids and so on.

 

[00:22:58] – Jon Slowe

Lots of challenges coming, but some exciting challenges that will really drive forward decarbonisation of heat. Let's get our last and fifth takeaway in. So, Guillermo, when I started Delta-EE a long, long time ago, the first focus of my research was micro-CHP (combined heat and power) and fuel cells. And I think you've got some not so good news on those topics for our fifth takeaway.

 

[00:23:31] – Guillermo Yañez

Yeah, unfortunately we barely saw a couple of devices, a couple of fuel cells, but we didn't see any micro-CHP, I don't know, something, but it was a little bit disappointing on that side. But it was honestly something that we already expected to see. We were already expecting a tonne of heat pumps, new models, but yeah, I guess it's a difficult market for micro-CHP, for fuel cells.

 

[00:24:10] – Jon Slowe

Yeah. And I guess we might still see one or two small number of products in the market. But on a recent podcast we were talking with Luigi Tischer from Ariston about gas driven heat pumps. And partly I can understand the drive for electrification and away from gas, but I can also see we're going to keep using gas in our homes for quite a long time, so we need to use it as efficiently as we can. So slight shame to see that. But what about hydrogen? Was there much focus on, of course, we don't have hydrogen in the gas network. I don't think we're going to have hydrogen throughout the gas network anytime soon. But was the industry pushing hydrogen ready boilers much?

 

[00:25:06] – Klara Ottosson

I wouldn't say so, no. They were definitely there and basically all the boilers that were showcased had the kind of label for 20% hydrogen ready. So, that seems to be the norm. More than an outlier nowadays. There were a few hundred percent hydrogen ready boilers or pure hydrogen ready boilers showcased, but they weren't very visible. They were sometimes even kind of tucked away behind a wall, like they weren't being promoted. But they were still there, and they were still visible to some extent, but it felt quite clear that that was not where the focus was at.

 

[00:25:46] – Jon Slowe

This ISH it was more like, hey, if you want to know, we've got them. Yes, we've got them.

 

[00:25:53] – Klara Ottosson

No, exactly.

 

[00:25:56] – Jon Slowe

Well, I'm going to recap the five points and then we'll get the Talking New Energy Crystal Ball out. So,

 

• First point was propane heat pumps and the heat pump industry changing the use of refrigerants to propane.
• Second was, probably a lack of innovation around heat pump designs for retrofit, although that innovation is going on elsewhere in Europe.
• Third point was hybrids, and the emergence of hybrids is a real retrofit solution.
• Fourth point was the brave new German draft policy requiring contribution from renewable heating when you're changing your boiler, so you can't retrofit a boiler with a boiler. And,
• Fifth point was hardly any CHP or fuel cells being seen.

 

So, I'm going to set the crystal ball this week to just two years away, which is one of the shortest settings available on the Talking New Energy Crystal Ball. And I want each of you to imagine you're going to Is or coming back from ISH in two years’ time, and each of you to identify one innovation you would like to see or expect to see in two years’ time. So, Tom will start with you, and then Klara and then Gemma.

 

[00:27:26] – Thomas Barquin

I guess innovation. I think some of the products already are under development, but, yeah, what I would like to see maybe is having heat pumps with maybe going beyond using refrigerant. Like, we've had players working on thermo acoustic heat pumps that would not need any refrigerants at all, or maybe a new refrigerant, then that doesn't have an issue with flammability and then has no global warming potential, so that will be really on that aspect of the product.

 

[00:28:06] – Jon Slowe

Okay, so more innovation to come with heat pump technology in particular refrigerants.

 

[00:28:10] – Thomas Barquin

Exactly.

 

[00:28:11] – Jon Slowe

Thanks, Tom. Klara?

 

[00:28:14] – Klara Ottosson

Yeah, so, maybe less focus on innovation and perhaps more focus on the installer. So, we've touched upon it briefly previously in this chat, but installer shortage is one of the absolutely biggest bottlenecks for not just heat pump deployment, but any decarbonisation of heat. And this year we only saw a few manufacturers who clearly had activities directed towards heating engineers and installers. But it is one of their key focuses to attract, to upskill existing installers, but also to attract new talent from trade schools and from high schools.

 

[00:28:52] – Jon Slowe

Basically, becoming a heating engineer has got to become a thing that people want to do more, otherwise we're not going to decarbonise heat in the way we need to.

 

[00:29:02] – Klara Ottosson

Yeah. And that might be by more kind of wooing of installers, like you said, flying them in from private planes and getting them champagne. I don't know exactly how they're going to do that, but there's also like, okay, once you have them, how do we make their jobs more easier and make it easier and more streamlined to fit heat pumps, but also to design the systems ahead of time. So perhaps more focus on software and design tools that help facilitate that process.

 

[00:29:30] – Jon Slowe

Okay, so an element maybe of digitalizing the supply chain or the installation experience and journey. That's Klara and Guillermo. I hope your takeaway, your prediction hasn't been taken by Tom or Klara?

 

[00:29:46] – Guillermo Yañez

No, I still have one.

 

[00:29:49] – Jon Slowe

What's your prediction then?

 

[00:29:51] – Guillermo Yañez

Well, I would love to see big brands from outside the hip hop industry get in as well. For example, why not a Tesla heat pump? Bringing in a new heating business model or something interesting in that arena?

 

[00:30:09] – Jon Slowe

Okay, so a new brand coming in to shake up the market, use the strength of the brand from a different industry and bring that brand strength to the heating sector.

 

[00:30:19] – Guillermo Yañez

Yes, exactly. I also would love to see more tools, software helping installers and customers to make more informed decisions about their heating systems.

 

[00:30:34] – Jon Slowe

Yeah, I'm quite encouraged by what you've all shared today, and I think the example of Germany, if that regulation comes in in a powerful way, heating then becomes a bit of a conversation. Well, I may be getting ahead of myself, but a conversation at the pub or around the dinner table, and that then may drive more innovation in the software tools gimmer that you mentioned. And Klara may see more in people wanting to get into that sector. See, it's an exciting sector to be in, more and flawless. So, sounds like there's a huge amount going on in the heating sector. It's been fantastic to get your distilled takeaways from ISH and your views as to what ISH takeaways will be in two years’ time. Let's see. So. Thanks, Klara.

 

[00:31:28] – Klara Ottosson

Thank you.

 

[00:31:29] – Jon Slowe

Thank you. Thanks, Guillermo.

 

[00:31:31] – Guillermo Yañez

Thank you.

 

[00:31:32] – Jon Slowe

And thanks, Tom.

 

[00:31:34] – Thomas Barquin

Thank you, Jon.

 

[00:31:35] – Jon Slowe

And as always, thanks to everyone listening. We hope you enjoyed those takeaways; the light being shown on the decarbonisation of heat sector and look forward to welcoming you back next week. Thanks, and goodbye.

 

If you enjoy the podcast, then please rate it, and share it with your friends and colleagues. If you're as passionate about the energy transition as we are, then you can keep in touch with us and look at our research, insights, podcast, transcripts and download reports all at www.LCPdelta.com