Water heating and solar thermal Sweden

Transcription

1 Water heating and solar thermal Sweden World heating 2014 A multi client study By Piero Russo March 2014

2 Water heating and solar thermal Sweden A multi client study Contract: Report 57200/65 Date: March 2014 Issued by: BSRIA Limited Old Bracknell Lane West, Bracknell, Berkshire RG12 7AH UK Telephone: +44 (0) Fax: +44 (0) E: bsria@bsria.co.uk W: Compiled by: Name: Piero Russo Approved by: Name: Zoltan Karpathy All rights reserved. This document may not be reproduced, transmitted or redistributed in part or full without prior written consent from a BSRIA Director. BSRIA Page 3 of 40 Report 57200/65

3 WATER HEATING AND SOLAR THERMAL CONTENTS CONTENTS 1 MARKET BACKGROUND OVERVIEW Economy and construction Population and climate Economy Construction New house building Commercial construction Overview Residential gas supply Electricity supply Heating stock Local heating practices District heating MARKET SIZE AND SEGMENTATION Market size Technical segmentation by type of water heater Electric storage Electric instantaneous Gas instantaneous and gas storage Indirect cylinders Solar thermal market Market size Average manufacturer selling prices End users system price Type of systems Applications Number of SHW and combi systems MARKET DRIVERS AND TRENDS Market drivers Energy-efficient housing Building regulations Energy prices Market trends Market forecasts WATER HEATERS STRATEGIC OVERVIEW Macro-environmental analysis Market attractiveness analysis STRUCTURE OF SUPPLY Market shares Electric storage Electric instantaneous Gas instantaneous and gas storage Indirect cylinders Flat plate collectors Vacuum tubes Product range DOMESTIC VERSUS OVERSEAS TRADE Domestic production Imports and exports DISTRIBUTION AND END USER SECTOR Overview...38 BSRIA Page 4 of 40 Report 57200/65

4 WATER HEATING AND SOLAR THERMAL CONTENTS 7.2 Distribution of water heaters Major distributors Distributor profiles End user sector...39 TABLES Table 1 Background data economy and construction, f... 7 Table 2 Average age of the population by sex and year... 8 Table 3 Housing permits and completions, thousand dwellings... 9 Table 4 Non-residential construction Table 5 Energy balance for Sweden, ktoe Table 6 Heating stock by type of heating product, Table 7 Water heating market size, volume and value, 2012 and 2013e Table 8 Electric storage heaters by product type, volume, 2012 and 2013e Table 9 Electric storage heaters by capacity, volume, 2012 and 2013e Table 10 Electric storage heaters by material type, volume, 2012 and 2013e Table 11 Electric instantaneous by power rating, volume, 2012 and 2013e Table 12 Electric instantaneous water heaters by type, volume, 2012 and 2013e Table 13 Indirect cylinders by capacity, volume, 2012 and 2013e Table 14 Indirect cylinders by heating element, volume, 2012 and 2013e Table 15 Total market volume and value at MSP*, 2012 and 2013e Table 16 Average selling prices ( /m²), 2012 and 2013e Table 17 End user price of the most typical type of system in Sweden, 2013e Table 18 Solar thermal market by type of circulation, 2013e Table 19 Solar thermal market by application, 2012 and 2013e Table 20 Average size for SHW and combi systems, m2, 2012 and 2013e Table 21 Number of systems based on average sizes, units, 2013e Table 22 Comparison of energy ratings in dwellings Table 23 Comparison of energy ratings in non-residential premises Table 24 Electricity prices in Sweden, in per kwh Table 25 Historical trends, water heating, volume ( 000 units), Table 26 Forecasts, water heating, volume ( 000 units), Table 27 PESTLE analysis of Sweden heating products market Table 28 Competitive forces analysis Table 29 Market attractiveness analysis Table 30 Market shares for electric storage water heaters ( 000 units), 2012 and 2013e Table 31 Market shares for electric instantaneous water heaters ( 000 units), 2012 and 2013e Table 32 Market shares for indirect cylinders ( 000 units), 2012 and 2013e Table 33 Market shares for flat plate collectors (m2), 2012 and 2013e Table 34 Market shares for vacuum tubes (m2), 2012 and 2013e Table 35 Product range of water heaters suppliers Table 36 Overseas trade traditional water heaters ( 000 units), 2013e Table 37 First point of distribution for manufacturers / importers, 2013e Table 38 Major heating products distributors, Table 39 Water heating market by end user sector, 2013e BSRIA Page 5 of 40 Report 57200/65

5 WATER HEATING AND SOLAR THERMAL CONTENTS FIGURES Figure 1 Map of Sweden... 7 Figure 2 Water heater sales by type, volume, 2013e Figure 3 Electric storage heaters by material type, volume, 2012e Figure 4 Solar thermal market volume %, 2012 and 2013e Figure 5 Solar thermal market value %, 2012 and 2013e Figure 6 Solar thermal market by type of circulation, volume %, 2013e Figure 7 Solar collectors by application, volume %, 2012 and 2013e Figure 8 The water heater market forecasts, volume ( 000 units), Figure 9 Competitive forces analysis Figure 10 Market shares for electric storage water heaters, volume, 2013e Figure 11 Market shares for electric instantaneous water heaters, volume, 2013e Figure 12 Market shares for indirect cylinders, volume, 2013e Figure 13 Market shares for flat plate collectors, volume, 2013e Figure 14 Market shares for vacuum tubes, volume, 2013e Figure 15 First point of distribution, water heaters, 2013e Figure 16 Sales by end user sector, 2013e BSRIA Page 6 of 40 Report 57200/65

6 Water heating and solar thermal systems Czech Republic World heating 2014 A multi client study By Richard Bejlek May 2014

7 Water heating and solar thermal systems Czech Republic A multi client study Contract: Report 57200/16 Date: May 2014 Issued by: BSRIA Limited Old Bracknell Lane West, Bracknell, Berkshire RG12 7AH UK Telephone: +44 (0) Fax: +44 (0) E: bsria@bsria.co.uk W: Compiled by: Approved by: Name: Richard Bejlek Name: Krystyna Dawson All rights reserved. This document may not be reproduced, transmitted or redistributed in part or full without prior written consent from a BSRIA Director. BSRIA Page 3 of 42 Report 57200/16

8 CONTENTS CONTENTS 1 MARKET BACKGROUND OVERVIEW Economy and construction Population and climate Economy Construction Energy supply Heating stock Local heating practices District heating MARKET SIZE AND SEGMENTATION Market size Technical segmentation by type of water heater Electric storage Gas storage Electric instantaneous Gas instantaneous Indirect cylinders Solar thermal market Market size Average manufacturer selling prices End users system price Type of systems Applications Number of SHW and combi systems MARKET DRIVERS AND TRENDS Market drivers Market trends Market forecasts WATER HEATERS STRATEGIC OVERVIEW Macro-environmental analysis Market attractiveness analysis STRUCTURE OF SUPPLY Market shares Electric storage Gas storage Oil storage Electric instantaneous Gas instantaneous Indirect cylinders Flat plate collectors Vacuum tubes Product range SWOT analysis DOMESTIC VERSUS OVERSEAS TRADE Domestic production Imports and exports DISTRIBUTION AND END USER SECTOR Overview Distribution of water heaters Major distributors Distributor profiles...40 BSRIA Page 4 of 42 Report 57200/16

9 CONTENTS Wholesalers DIY stores End user sector...41 TABLES Table 1 Background data economy and construction, f... 7 Table 2 Building starts and housing completions, Table 3 Residential heating by type of heating, Table 4 Residential heating by type of fuel, Table 5 Water heating market size, volume and value, 2012 and 2013e Table 6 Electric storage heaters by product type, volume, 2012 and 2013e Table 7 Electric storage heaters by capacity, volume, 2012 and 2013e Table 8 Electric storage heaters by material type, volume, 2012 and 2013e Table 9 Gas storage by capacity, volume, 2012 and 2013e Table 10 Electric instantaneous by power rating, volume, 2012 and 2013e Table 11 Electric instantaneous water heaters by type, volume, 2012 and 2013e Table 12 Gas instantaneous heaters by flow rate, volume, 2012 and 2013e Table 13 Gas water heaters by type of technology, volume, 2012 and 2013e Table 14 Indirect cylinders by capacity, volume, 2012 and 2013e Table 15 Indirect cylinders by heating element, volume, 2012 and 2013e Table 16 Total market volume and value at MSP*, 2012 and 2013e Table 17 Average selling prices ( /m²), 2012 and 2013e Table 18 End user price of the most typical type of system in the Czech Republic, 2013e Table 19 End user price of the most typical type of system in the Czech Republic, 2013e Table 20 Solar thermal market by type of circulation, 2013e Table 21 Solar thermal market by application, 2012 and 2013e Table 22 Average size for SHW and combi systems, m2, 2012 and 2013e Table 23 Number of systems based on average sizes, units, 2013e Table 24 Historical trends, water heating, volume ( 000 units), Table 25 Forecasts, water heating and solar thermal systems, volume ( 000 units), Table 26 PESTLE analysis of the Czech Republic heating products market Table 27 Competitive forces analysis Table 28 Market attractiveness analysis Table 29 Market shares for electric storage water heaters ( 000 units), 2012 and 2013e Table 30 Market shares for gas storage water heaters ( 000 units), 2012 and 2013e Table 31 Market shares for gas instantaneous water heaters ( 000 units), 2012 and 2013e Table 32 Market shares for indirect cylinders ( 000 units), 2012 and 2013e Table 33 Market shares for flat plate collectors (m2), 2012 and 2013e Table 34 Market shares for vacuum tubes (m2), 2012 and 2013e Table 35 Product range of water heaters suppliers Table 36 SWOT analysis of DZ Drazice Table 37 Overseas trade traditional water heaters ( 000 units), 2013e Table 38 First point of distribution for manufacturers / importers, 2013e Table 39 Major heating products distributors, Table 40 Major heating distributors and brands, Table 41 Water heating and solar thermal collectors market by end user sector, 2013e BSRIA Page 5 of 42 Report 57200/16

10 CONTENTS FIGURES Figure 1 Map of Czech Republic... 7 Figure 2 Water heater sales by type, volume, 2013e Figure 3 Electric storage heaters by material type, volume, 2013e Figure 4 Gas instantaneous heaters by flow rate, volume, 2013e Figure 5 Solar thermal market volume %, 2012 and 2013e Figure 6 Solar thermal market value %, 2012 and 2013e Figure 7 Solar thermal market by type of circulation, volume %, 2012e Figure 8 Solar collectors by application, volume %, 2012 and 2013e Figure 9 The water heater and solar thermal systems market forecasts, volume ( 000 units), Figure 10 Competitive forces analysis Figure 11 Market shares for electric storage water heaters, volume, 2013e Figure 12 Market shares for gas storage water heaters, volume, 2013e Figure 13 Market shares for gas instantaneous water heaters, volume, 2013e Figure 14 Market shares for indirect cylinders, volume, 2013e Figure 15 Market shares for flat plate collectors, volume, 2013e Figure 16 Market shares for vacuum tubes, volume, 2013e Figure 17 First point of distribution, water heaters and solar thermal collectors, 2013e Figure 18 Sales by end user sector, water heating and solar thermal systems, 2013e BSRIA Page 6 of 42 Report 57200/16

11 1 MARKET BACKGROUND OVERVIEW Figure 1 Map of Czech Republic Source: ECONOMY AND CONSTRUCTION Table 1 Background data economy and construction, f Units (f) 2015(f) Population Million Change of GDP % Inflation % Unemployment % Construction output bn Number of households Million New dwellings (completions) Thousands Residential bn Non-residential bn Civil Engineering bn Source: ČNB, Ministerstvo Financí ČR, ČSÚ, Euroconstruct Population and climate According to the latest figures, the number of inhabitants of the Czech Republic reached million in Around 12% of all inhabitants live in the capital Prague. Due to an unprecedented low birth rate (around 1.2), comparable only to Slovakia and Ukraine, the Czech population is ageing quickly. From 2006 a slight increase in birth rate has been recorded. The population is still growing very slightly mainly due to the immigrants arriving to live in the country. According to forecasts of the Czech Statistical Office, the population will remain flat until 2030 and then start to decline rapidly to 9.8 million in 2040 and 9.4 million in The share of inhabitants over 65 years of age would more than double from 14% in 2002 to 31% in The climate of the country is characterised by cold winters and mild summers. The heating season usually lasts from mid-october until mid-april. BSRIA Page 7 of 42 Report 57200/16

12 1.1.2 Economy The Czech economy remained in recession during the whole of 2012 and most of Technically, the recession started back in Q and every consecutive quarter brought further contractions (quarter-on-quarter). First sign of growth was only registered in Q Even though the Czech economy started to revive during the second half of 2013, a decline of 1.1% was registered for the whole year 2013 (y-o-y). In January 2012, a substantial hike of the lower bracket of VAT rate was introduced: from 10% to 14% (applies for all services including heating system installations and construction). The higher bracket remained at 20%. One more VAT hike came in January 2013 when another 1 percentage point was added to both VAT rates. As a result, the lower bracket now stands at 15%, while the standard rate is 21%. This gradual increase of indirect taxes has been undercutting the purchasing power of households. VAT rates back in 2007 stood at 9% and 19%. In general, the Czech Republic remains economically solid due to a comfortable level of external financing, fiscal consolidation carried out by the government and a stable financial sector. On the other hand, it is very vulnerable to external demand shocks, as it is very much biased towards manufacturing and exports to Germany. The inflation (measured by average annual CPI) hit record lows (1.1% in 2013), which largely undershot the Central Bank s target of 2.0%. The Central Bank warned of persisting deflationary pressures, which could undermine the fragile economic recovery. As a result, in autumn 2013, the Central Bank (CNB) launched quantitative easing by artificially depreciating the Czech currency. Koruna fell within hours by around 9% on CNB s interventions and remained above 27 CZK per euro since then. The CNB plans to intervene further to keep the rate above 27 CZK until the target inflation is reached, at least until early So far there has been no political commitment regarding the planned entry into the eurozone. However it is believed the new central-left government sworn in in January 2014 could carry out steps leading to adoption of the euro Construction New house building The number of dwelling completions has been decreasing since This trend is expected to continue also in 2014 as new dwelling starts have not yet stopped declining. One of the reasons for this negative trend is several VAT hikes from Real estate up to a certain size is taxed with a lower rate. Since VAT hikes usually dampen demand for new dwellings, developers rushed to complete and sell residential projects before end Then, however, demand for new flats plummeted. Since 2014, even a plot underneath a building is taxed with 15% or 21%, depending on the type of building. On the other hand, a significant positive impact on the demand for housing could come from excess liquidity in the banking sector that caused mortgage rates to fall to historical lows during 2013 and early Nevertheless all other negative aspects might easily mitigate this positive mortgage effect. In 2013, planning and building control authorities granted 13.2% fewer building permits (84,864 in total) than in previous year. That does not provide any hope for a near recovery. As already mentioned above, dwelling starts dropped again (-7.3% to 22,108 units in total), pulled down mainly by starts of family houses, while starts of dwellings in apartment blocks surprisingly reversed the negative trend and grew by 21% to 4,857 units. Dwelling completions experienced a another sharp fall by 13.4% to 25,246 units. BSRIA Page 8 of 42 Report 57200/16

13 The country s residential and non-residential sector was in decline in 2013, with a contraction of 8.1%. Table 2 Building starts and housing completions, Dwelling construction starts family dwellings 20,990 22,918 18,750 16,611 17,829 16,035 13,734 Flats 22,806 20,613 18,569 11,524 9,706 7,818 8,374 Total 43,796 43,531 37,319 28,135 27,535 23,853 22,108 Dwelling completions 1+2 family dwellings 16,988 19,611 19,124 19,763 18,627 18,643 16,447 Flats 24,661 18,769 19,349 16,683 10,001 10,834 8,799 Total 41,649 38,380 38,473 36,446 28,630 29,477 25,246 Source: Czech Statistical Office New commercial construction Throughout 2013 the construction industry kept on declining. Due to lower public funding for infrastructure investments and a cautious approach of private investors, the sector has been contracting fifth year in a row. Compared to its peak back in 2008, the construction industry lost already 25.1% of its output. In 2013 the overall construction output in constant prices fell by 8.3%. Building construction contracted by 8.1%, while civil engineering declined by 8.8% in According to Euroconstruct, growth could return in 2014 for building construction while civil engineering would be contracting until Energy supply The primary energy supply is dominated by coal (nearly 50%), followed by oil and gas. Since January 2001 electricity and gas prices have been regulated by ERU, the state-run regulatory body, and should follow world market prices. Gas price for households was cross-subsidised by the state-owned Transgas until the end of 1990s, and since then households registered gradual price hikes. Since 2001 the price for households already should reflect market price (import price). Transgas was privatised to RWE Gas at the end of RWE then sold the 3,600 km-gas network in 2013 to financial investors Allianz/Borealis. In the period , gas price for households rose gradually by around 38%, which made gas heating less competitive. The previous right-centre government introduced a carbon tax imposed on coal and heating oil for residential heating. The tax, in line with EU directive, is coming into effect in The price of heating oil will rise by 15% and coal by 20%. It does not affect natural gas though. Heating based on a solid fuel (brown coal or logwood) is currently the most economical, although also the least comfortable and is only possible in family houses. Heat pumps supported by low electricity rates also have relatively low running costs. The Czech Republic is a net exporter of electricity given the current oversupply, especially with the nuclear power plant Temelin at full power. Total electricity production reached 87 GWh in 2013, however out of it 27 GWh was exported and imports made 10 GWh. Nuclear power accounted for 35%, steam coal-fired plants 51% and gas-fired plants 6% of total 2013 electricity production. Domestic consumption reached 70 GWh in Due to the excess electricity supply in the country, off-peak electricity prices are relatively low and favour off-peak accumulation heating and storage water heating or deployment of heat pumps. BSRIA Page 9 of 42 Report 57200/16

14 Electricity price for households rose in 2012 due to a hike in distribution fees and increased surcharges to renewable energy production (mainly solar PV), while the trend was reversed in thanks to a decline of wholesale electricity and stiff competition among suppliers. Electricity supply from solar photovoltaics (PV) The installed peak output of solar photovoltaics in the country reached 2,132 MWp at the end of All renewables combined produced 14.5% of domestic electricity consumption in 2013, which included hydropower, wind, biomass and biogas. In 2013, it was still is possible to connect a solar PV roof-system under 30 kwp and receive a feed-intariff for the following 20 years. However, since 2014, there is no more state support for solar PV. On the contrary, a consumption of solar electricity from own PV production is taxed at CZK 495 per MWh since This negative stimulus increases the payback period of a small-scale solar PV plant. 1.2 HEATING STOCK The census undertaken in 2010 brought an update of heating stock data although its structure is difficult to compare with previous results. Please refer to the following tables below: Table 3 Residential heating by type of heating, 2010 Type of heating Units % District and collective heating 2, % Individual central heating (boiler in 526,562 14% the dwelling) Space heating (heater, stove) 432,390 11% Others/unknown 129,945 3% Total 3,894, % Source: Census 2010 (CSU) Table 4 Residential heating by type of fuel, 2010 Type of heating Units % Boiler room outside the house 1,269,875 33% Coal, coke, coal briquettes 345,991 9% Natural gas 1,468,488 38% Electricity 284,175 7% Wood 293,660 8% Others/unknown 232,021 6% Total 3,894, % Source: Census 2010 (CSU) According to the census, around million dwellings were connected to natural gas mains in BSRIA Page 10 of 42 Report 57200/16

15 1.3 LOCAL HEATING PRACTICES In general, heating practices differ in urban and rural areas. In urban areas, dwellings in blocks of flats rely either on district or block heating. If this option is not available, a wall hung gas boiler or the old space heating system (gas convector) is used. In case of renovation, a combination boiler is installed in almost all cases. In rural areas, it is either a floor standing gas boiler or a solid fuel boiler (coal, wood) that heats the house. When gas prices were soaring, people switched to solid fuel, namely the cheapest brown coal, which in winter time makes air in rural areas hardly breathable, if not outright toxic. Due to the price gap between coal and gas, many households decided to keep or upgrade the old coal boiler even though there is a natural gas pipe in front of the house. Holiday homes in the Czech Republic are usually located in the mountains in forest areas and are heated by wood stoves, sometimes by electric convectors. In new housing, the situation is different: in multi-storey buildings (blocks of flats), commercial gas boilers are usually installed. Individual central heating is nowadays not very common in new blocks of flats, due to cost reasons. In new family housing, the options are wide, including: wall hung gas boiler and indirect cylinder backed up by a wood fireplace stove coal/wood boiler and electric storage water heater coal/wood boiler backed up by a wall hung gas boiler electric off-peak boiler with very large indirect cylinder air-to-water heat pump and electric boiler (possibly combined with solar PV) other heat pump (ground-water) with an electric boiler (possibly combined with solar PV) other combinations, also including solar water heating. Propane (LPG) or fuel oil is not a common choice due to its very high price. Automatic pellet boilers are increasingly popular even though sales are still marginal. The cheapest heating solution is currently logwood, or (unfortunately) high-sulphur brown coal (lignite). The Czech government adopted a Law on air quality in As a result, Czech households will have to gradually change the heating stock. Heating with low quality coal using high emission boilers (Class 1 and 2) will be banned after 2022, when only Class 3 solid fuel boilers would be allowed in heating stock. No solid fuel boilers below Class 3 should be allowed on the market from According to estimates, as much as 480,000 boilers will have to be replaced by The measure regards only boilers connected to central heating or water heating with the heat capacity kW. Small boilers or stoves designed to heat one or two rooms only (e.g. in holiday chalets) will be still available on market. The law also regulates sales of new gas boilers. Since 2014, no gas boilers with emissions of NO x over 120 mg/m 3 may be sold on the market. Practically, that means only condensing boilers, while non-condensing will have to feature a low-no x burner. The threshold relates approximately to a NO x class 4, while the majority of cheaper boilers feature class 3 at the moment. Larger municipalities such as Prague or Brno currently only allow NO x class 5 boilers in city centres for retrofit and new installations. BSRIA Page 11 of 42 Report 57200/16

16 1.4 DISTRICT HEATING There are 1.48 million households supplied heat and DHW from district heating, which makes around 38% of the population (source: Energostat.cz). District heating belongs to one of the more expensive means of space and DHW heating in the country. Local monopolies charge in average 38% premium over the cost of individual central heating by means of a non-condensing boiler, while the difference would be even higher for condensing boilers (+46%). The cost gap is in reality even larger given the fact that consumers can switch off a boiler when the dwelling is not occupied during holidays or weekends, while charges for district heating would be running. According to Energostat.cz, district heating prices averaged CZK 594 per Gigajoule in 2013 (as measured at the base of a building) and grew by around 3% against There are however large differences between regional heat suppliers, mainly depending on fuel type and company ownership. District heating systems burning brown coal supply the cheapest heat. Prices start from CZK 405 (Pardubice) and range till CZK 648 per GJ in Tábor. Gas-fired district heat suppliers range between CZK 604 and 806 per GJ. All the above prices include VAT 15%. Municipal-owned suppliers tend to be somewhat cheaper than private companies. The cost of heat from such central systems is to rise further, especially for brown coal fired sources. Price of domestic brown coal is set to rise dramatically during the next years as a result of commercial negotiations between the major mining company Czech coal on one side and ČEZ and the district heating companies on the other. BSRIA Page 12 of 42 Report 57200/16

17 2 MARKET SIZE AND SEGMENTATION 2.1 MARKET SIZE In order to provide a more accurate understanding of the European water heating markets, BSRIA decided to include solar water heating systems and air to water - cylinder-integrated water heaters in its studies on water heating. An in-depth analysis of the solar thermal market in the Czech Republic is provided in Section 2.3 of this report. On the other hand, further information on air to water - cylinder-integrated water heaters are included in BSRIA s dedicated publication on Heat Pumps. The Czech water heater market reversed the trend and rose by 2.5% in Increased refurbishment activity and re-launch of subsidies supported the indirect cylinder market that has mainly contributed to the overall market growth. Sales of electric water heaters also rose slightly. Sales of gas water heaters dropped in 2013, with gas storage water heaters registering a 15% sales decrease and gas instantaneous units decreasing by nearly a half. Gas water heating in the Czech Republic is a slowly disappearing niche market. Sales of gas storage water heaters were estimated below 10,000 units in The market for gas instantaneous water heaters reached around 6,100 units. The main local supplier of the product Moratop claimed insolvency during The breakdown of indirect cylinders for 2012 has been revised following more comprehensive information gathered in the market. The share of double coil and dedicated renewable cylinders has been adjusted upwards while share of the traditional ones has been reduced. The share of thermal stores rose in 2013 as it is required within the Nová zelená úsporám subsidy framework. Table 5 Water heating market size, volume and value, 2012 and 2013e Volume ('000 units) Euros (million) US $ (million) Volume ('000 units) Euros (million) US $ (million) Traditional water heaters , , , ,591.3 Storage water heaters , , , ,910.7 Electric , , , ,921.7 Gas , , , ,989.0 Oil Instantaneous water heaters , , , ,680.7 Electric Gas , Solar thermal systems Air to water - cylinderintegrated water heater Indirect cylinders , , , ,642.5 Traditional cylinders (1 coil) , , , ,834.1 Renewable cylinders * 9.3 2, , , ,107.3 Thermal stores Buffer tanks Total , , , ,422.6 * Please note that renewable cylinders include 2 & 3 coil cylinders + 1 coil dedicated renewable cylinders Exchange rate: 2012: 1 = US$ 1.29; 2013: 1 = US$ 1.33 BSRIA Page 13 of 42 Report 57200/16

18 Figure 2 Water heater sales by type, volume, 2013e 2.2 TECHNICAL SEGMENTATION BY TYPE OF WATER HEATER Electric storage Non-pressurised water heaters account for relatively low share of the market. They are found only in the category up to 15 litres. Pressurised products account for 85% of the market and the most popular units are in the storage capacity of litres. No significant changes are noted in this market segment. Table 6 Electric storage heaters by product type, volume, 2012 and 2013e '000 units % '000 units % Single point / non-pressure % % Multi point / pressurised % % Total % % BSRIA Page 14 of 42 Report 57200/16

19 Capacity Table 7 Electric storage heaters by capacity, volume, 2012 and 2013e '000 units % '000 units % 5 litres % % 6 to 15 litres % % 15.1 to 30 litres % % 31.1 to 50 litres % % 51.1 to 120 litres % % to 300 litres % % Over 300 litres % % Total % % Material type The predominant material for electric storage water heaters in the country is enamelled mild steel. Stainless steel is overly expensive and is hardly offered. All the manufacturers in the region produce enamelled products (Drazice, Tatramat). Plastic and sometimes also copper tanks are used for smaller capacities (5 litres,10 litres and 15 litres). Table 8 Electric storage heaters by material type, volume, 2012 and 2013e '000 units % '000 units % Glass lined steel % % Stainless steel % % Galvanised steel % % Stone lined % % Copper % % Plastic % % Other % % Total % % Figure 3 Electric storage heaters by material type, volume, 2013e BSRIA Page 15 of 42 Report 57200/16

20 2.2.2 Gas storage The most popular models sold to households include those up to 100 litres. Around 1000 units, with capacity over 200 litres are sold for light commercial applications. Table 9 Gas storage by capacity, volume, 2012 and 2013e '000 units % '000 units % < 30 litres % % litres % % litres % % litres % % > 200 litres % % Total % % Electric instantaneous Single phase Single phase units is the predominant type of water heater since lower outputs are mostly sold. Often, three phase would not be available for dwellings in blocks of flats and extra work as well as an application to the electricity supplier would be necessary. Three phase These products are reserved for larger outputs, mainly in family houses, weekend houses and commercial premises. Connecting larger outputs may be a problem if electric capacity is not available. With increasing electricity prices, instantaneous electric water heating with peak power, represent now, probably, the most expensive way of producing hot water. Table 10 Electric instantaneous by power rating, volume, 2012 and 2013e '000 units % '000 units % < 3 kw % % 3 9 kw % % kw % % > 20 kw % % Total % % Table 11 Electric instantaneous water heaters by type, volume, 2012 and 2013e '000 units % '000 units % Electric showers % % Single-phase (< 6-8 kw / 3-4 litres / min.) % % Three-phase (> 6-8 kw / 3-4 litres / min.) % % Total % % Gas instantaneous An estimated 90% of water heaters are sold in the range of 5-13 litres per minute. Most of the water heaters run on natural gas mains although some of the smaller outputs are more often used with bottled gas, mainly in weekend houses. BSRIA Page 16 of 42 Report 57200/16

21 The bulk of the market is open flue, although room sealed versions can also be found. The major suppliers Moratop (now insolvent) and Karma mainly sell simple open flue products. Only the imported products feature also fan-assisted water heaters. Smaller outputs are sold with combustion discharge into the room. Table 12 Gas instantaneous heaters by flow rate, volume, 2012 and 2013e '000 units % '000 units % < 5 litres / min (< 8.8 kw) % % 5-13 litres / min ( kw) % % > 13 litres / min (> 22.7 kw) % % Total % % Figure 4 Gas instantaneous heaters by flow rate, volume, 2013e To be inserted by BSRIA No condensing gas water heaters were identified on the market in Table 13 Gas water heaters by type of technology, volume, 2012 and 2013e '000 units % '000 units % Gas storage % % Condensing % % Non condensing % % Gas instantaneous % % Condensing % % Non condensing % % Total % % Indirect cylinders The share of indirect cylinders with electric heating elements is relatively high with 56% as the product offers flexibility in terms of energy options and the incremental investment cost is low. Indirect cylinders with an electric element are installed with solid fuel boilers (off-season water heating) and solar thermal panels. Indirect cylinders without the element are installed with condensing boilers and heat pumps. Almost all heat pumps are sold with an electric boiler (external or supplied with the heat pump). The most popular capacities are now 100 to 300 litres (representing 60% of indirect cylinders market) which are sufficient even for larger family house, although there is a clear trend towards higher capacities due to solar thermal and heat pump installations. Indirect cylinders are basically all made of enamelled steel although larger capacities may be of stainless steel. Recent BSRIA findings show that installations are mainly specified with single coil cylinders (70% of all installations), around 26% with double coil and other renewable coils and around 4% with a thermal storage tank. Thermal storage is also required by the Nová zelená úsporám subsidy scheme for all subsidised solar thermal installations. Buffer tanks are deployed with small scale heat pump installations or often with solid fuel boilers. In these cases, an additional smaller cylinder is used for DHW provision in the summer. BSRIA Page 17 of 42 Report 57200/16

22 Table 14 Indirect cylinders by capacity, volume, 2012 and 2013e '000 units % '000 units % < 100 litres % % litres % % 301 1,000 litres % % > 1,000 litres % % Total % % Table 15 Indirect cylinders by heating element, volume, 2012 and 2013e '000 units % '000 units % With electric heating element % % Without electric heating element % % Total % % 2.3 SOLAR THERMAL MARKET Market size The Czech solar thermal market contracted again by around 30% in 2013 given the weak support by means of subsidy. The subsidy program called Nová zelená úsporám (New Green Light to Savings) was only launched during 2013 and the conditions for solar thermals are not very favourable there. The solar thermal market plummeted to reach an estimated 27,000 m 2 in 2013 far from over 70,000 m 2 reached back in Flat plate collectors accounted for the vast majority of the market and are now a mainstream. Their share has been even increasing, probably as a reaction to low quality vacuum tubes imported in the past from the Far East. The market is now more demanding than it used to be 5 years ago; moreover, the aforementioned subsidy program set technical and legal requirements in order to guarantee quality of the product and installation. The split between flat plate collectors and vacuum tubes is estimated at 89% to 11% in favour of flat plate. Installations of solar thermal panels are more frequent in residential buildings (houses and multidwellings) than in commercial properties, which account for only 6% of total sales (also as a result of the subsidy conditions). The solar thermal market in 2014 and beyond is mainly dependent on subsidies and its competition with solar photovoltaics. As a result of price drop of solar PV modules, installed prices of solar PV systems are now similar to solar thermal. On top of it, solar PV is easier to install (no piping, insulation, pumps, valves, etc.), bears no danger of overheating, and works fairly well also in winter. Table 16 Total market volume and value at MSP*, 2012 and 2013e Volume m 2 Euros (million) Volume m 2 Euros (million) Flat plate collectors 33, , Vacuum tubes 6, , Total 39, , *MSP = manufacturer selling price BSRIA Page 18 of 42 Report 57200/16

23 Figure 5 Solar thermal market volume %, 2012 and 2013e e Figure 6 Solar thermal market value %, 2012 and 2013e Average manufacturer selling prices Table 17 Average selling prices ( /m²), 2012 and 2013e msp/m² msp/m² Flat plate collector Vacuum tube collector Source: : BSRIA Notes 1: MSP = manufacturer selling price of collector Exchange rate: 2012: 1 = US$ 1.29; 2013: 1 = US$ End users system price The price range on the Czech market for solar collectors is wide, from Chinese unbranded products over quality local produce to upper range German vacuum tubes. Figures for total end user price include panels, circulation pump, indirect cylinder, piping and insulation, expansion vessel, fittings, regulation, installation works. The price of panels and of the whole system remained stable in 2013, although some suppliers increased prices for imported products in local currency due to the autumn devaluation of the Czech koruna. BSRIA Page 19 of 42 Report 57200/16

24 On top of that, VAT rose from 10% to 14% in 2012 and furthermore to 15% in The lower VAT bracket of 15% applies to residential end users provided that a solar thermal system is invoiced including installation. The 21% VAT rate is applied if the system is purchased without installation or for non-residential installations. Unfortunately for the Czech households, the solar thermal system price without a subsidy is still too high compared to a conventional energy source - and payback period too long (over 15 years). Table 18 End user price of the most typical type of system in the Czech Republic, 2013e (1) (2) (3) (4) (5) (6) (7) Type of system and collector Application Total collectors surface Storage tank Total cost of system at MSP* (Euro) Installation cost (Euro) Total end user price (Euro) (including margins, excluding VAT and incentives) fc-fp dhw , ,038 Notes: 1. Thermosiphon (TH) or Forced Circulation (FC); Flat Plates (FP) or Vacuum tubes (VT) 2. Domestic Hot Water (DHW) or Domestic Hot Water and Space Heating (Combi) 3. m2 4. litres 5. including incl. collectors, storage tank and components Table 19 End user price of the most typical type of system in the Czech Republic, 2013e (1) (2) (3) (4) (5) (6) (7) Type of Application Total Storage Total cost Installation cost Total end user system collectors tank of system (Euro) price (Euro) and surface at MSP* (including collector (Euro) margins, excluding VAT and incentives) fc-vt dhw , ,754 Notes: 1. Thermosiphon (TH) or Forced Circulation (FC); Flat Plates (FP) or Vacuum tubes (VT) 2. Domestic Hot Water (DHW) or Domestic Hot Water and Space Heating (Combi) 3. m2 4. litres 5. including incl. collectors, storage tank and components Type of systems Due to climatic conditions in the country, forced circulation systems are more practical as compared to thermosiphon or drain-back systems. Consequently, the vast majority of installations in the country use a circulation pump. Drain-back systems are offered only by a limited number of suppliers, and the market is therefore rather small. Thermosiphon systems are not particularly efficient in Czech Republic since during harsh winters the fluid in the system may freeze. The share of thermosiphon systems is negligible and is limited in summer houses, where the system is not used in winter. BSRIA Page 20 of 42 Report 57200/16

25 Table 20 Solar thermal market by type of circulation, 2013e Residential segment Commercial segment Volume m² % share Volume m² % share Forced circulation (with pump) 19, % 6, % Thermosiphon % 0 0.0% Drainback % % Total 19, % 7, % Figure 7 Solar thermal market by type of circulation, volume %, 2012e Residential Commercial Applications In family houses, domestic hot water heating represents the main reason for investing in solar thermal systems. It is estimated that around 95% of households in family houses installed solar collectors only for domestic hot water (DHW) in The rest is installed for both hot water heating and space heating (combi systems). Combined use of solar thermal systems was promoted by previous rounds of subsidies: its share rose in 2010 but then fell again during 2011 and The 2014 subsidy scheme also provides an incentive for combined use however the difference between a subsidy for a DHW and combined use system is not large enough (CZK 35,000 for DHW vs. CZK 50,000 for combined use). Without a subsidy, solar thermal systems are not economically viable given the relatively low off peak price of electricity. In the non-residential segment, water heating plays also the most important role (estimated 90%). Table 21 Solar thermal market by application, 2012 and 2013e Volume m 2 % Volume m 2 % 1+2 family dwellings 32, % 19, % Sanitary hot water provision 29, % 18, % Space heating support / combi 3, % % Multi-dwellings 1, % 5, % Sanitary hot water provision 1, % 5, % Space heating support / combi 0 0.0% 0 0.0% Non-residential buildings 4, % 1, % Sanitary hot water provision 4, % 1, % Space heating support / combi % % Total 39, % 27, % BSRIA Page 21 of 42 Report 57200/16

26 Figure 8 Solar collectors by application, volume %, 2012 and 2013e Number of SHW and combi systems Table 22 Average size for SHW and combi systems, m2, 2012 and 2013e SHW Combi SHW Combi 1+2 family dwellings Flat plate collectors Vacuum tubes Multi-dwellings Most common size Non-residential buildings Most common size Table 23 Number of systems based on average sizes, units, 2013e 1+2 family dwellings SHW Combi SHW Combi Flat plate collectors 4, , Vacuum tubes 1, Multi-dwellings Non-residential buildings Total 5, , BSRIA Page 22 of 42 Report 57200/16

27 3 MARKET DRIVERS AND TRENDS 3.1 MARKET DRIVERS The dedicated water heater market in 2013 was mainly driven by replacements in the residential and non-residential sector. Gas appliances then live entirely from replacements. Electric storage water heaters benefit from a long-term support in low off-peak electricity tariffs (around half of peak tariffscurrently around 10 euro cents per kwh). The variable items are indirect cylinders, fluctuating with sales of renewable water heating, mainly solid fuel boilers, solar thermal and heat pumps. It is expected that the heat pump market would grow in 2014 and onwards. Solar thermal installations are dependent on the Nová zelená úsporám subsidy scheme. This scheme would support also demand for indirect cylinders and thermal stores. There are several issues influencing the Czech heating market in 2013 and 2014, mainly the following: Law on air quality. This law regulates gas and solid fuel boiler emissions and bans sales of low efficiency Class 1 and 2 solid fuel boilers starting from Moreover, the ban includes sales of gas-fired boilers with NO x emissions exceeding 120 mg/m 3. The law affects boilers between 10 and 300 kw, hence both domestic and commercial. It is expected sales of condensing boilers would rise, while supply of low-efficiency non-condensing gas boilers should diminish. Given the resulting price hikes, the measures possibly would also translate in decline of demand for boiler replacement. It is to note, that air pollution due to local heating by means of brown coal is a real social and environmental problem in rural areas and has to be targeted by means of legislation as well as subsidies. Namely, those households heating with brown coal usually belong to the least economically sound. As a result, thousands of such Czech households will have to gradually change their heating stock. According to estimates, as much as 480,000 solid fuel boilers will have to be replaced by 2022 a date stipulated by the law; Replacement and retrofit are currently one of the main drivers, fuelled by the push for increased energy efficiency, the above legislation and improving economic indicators throughout 2013; Family houses completions fell to a mere 15,471 units plus 976 extensions in Dwelling completions in blocks of flats are less relevant to the domestic boiler market as these are predominantly heated collectively; Regional subsidies for replacement of high-emission solid fuel boiler stock in Moravskoslezský, Ústecký and Středočeský kraj (province). The regional subsidies are fairly easy to reach with limited red tape especially as compared to subsidies of the Ministry of Environment such as Zelená úsporám. In 2013, the subsidy for a replacement of an old solid boilers for a modern biomass or automatic coal boiler made CZK 40,000 (Class 3) or CZK 60,000 (Class 4 or above). The program is budgeted to run also in Each winter, air pollution levels in Moravskoslezský kraj are alarming and belong to the worst nationwide; A new nationwide subsidy program Nová zelená úsporám, following the previous Zelená úsporám, was launched in mid-2013 and is scheduled to run till Subsidy is offered only for fully or partially insulated houses. The main part of the funds is meant to be allocated for building insulation, incl. new doors and windows. Moreover, the subsidy is applicable for an exchange of an old solid fossil fuel boiler for a less polluting source of energy such as condensing boiler, biomass boiler, solar thermal collectors, heat pump, etc. Solar thermal installations in new and existing family houses are supported by max. 40% of eligible costs and max. CZK 35,000 for DHW production or CZK 50,000 for DHW and space heating. The whole budget comprised CZK 15 billion ( 550 million) at the time of writing, which should last until Around CZK 1 billion out of the pot was already allocated during 2013 and another CZK 1.9 billion should be spent during The government promised to top up the funds to reach a total of CZK 27 billion. BSRIA Page 23 of 42 Report 57200/16

28 The subsidy for solar thermal is significant enough to make an impact on the market, however the administration related to the subsidy is discouraging. All in all, it is expected the subsidy scheme would somewhat support the solar thermal and indirect cylinder market at least during MARKET TRENDS Dedicated gas water heating is not expected to perform well, due to cannibalisation by combi boilers and due to relatively high gas price. The risk of gas supplies from Russia is another point. Even though prices of off-peak electricity are rising in the long term, electric water heating (using accumulation) is still relatively cheap and comfortable. Electric storage water heaters are, hence, a more logical solution for dedicated water heating than gas, even where gas is available. A new trend has been water heating by means of cylinder integrated A2W heat pumps. The market has been dynamic recently, albeit it took off from virtually zero. Sales of such heat pumps reached an estimated 280 units in An interesting option is the combination of on-grid solar photovoltaics (with inverter) and an A2W heat pump used for heating and water heating. Although a feed-in tariff for solar photovoltaics is no more granted to new installations since 2014, it can be expected that after a further price drop of solar PV and A2W heat pump technology, this combination may well record a significant growth in the future. Solar PV can be economically also combined with direct electric water heaters (DC solar PV water heating, i.e. even without inverter). The local manufacturer DZ Drazice (owned by Nibe) offers an electric storage water heater with an interesting solar PV feature (OKFE model). The water heater can be heated by both direct current from the solar PV and (at the same time) by alternate current from the grid. Regulation is separate by means of two electronic thermostats. This allows consumers to harvest solar energy at low cost, with simple installation and is free of bureaucracy otherwise associated with on-grid PV systems. This solar PV system is in fact entirely off-grid: the grid connection is galvanically separated from the DC circuit. The backside of this particular solution is that the connected solar panels are not controlled by MPPT (maximum power point tracker) and hence its efficiency is rather low. New solar PV solutions using DC current and MPP trackers are however emerging rapidly (e.g. PV Heater 1.5 kw by Refusol). Solar collectors were introduced in the country already in the 1970s and the oldest still operating installation dates back to There were already three local manufacturers of solar collectors in the 1980s in the socialist Czechoslovakia: ZSNP Ziar nad Hronom (today Thermo/solar), Elektrosvit Nove Zamky and OPS Kromeriz. The last decade has seen an upsurge of solar panel installations in Czech Republic. The market has been driven by higher prices of natural gas and by increasing awareness of renewable sources among end users. The market has been growing by 20-50% between 2004 and Sales of vacuum tubes have been increasing at higher growth rates than flat plate collectors, but their total volume remains small. In 2010 the market experienced a boom pushed by subsidies, with the end of subsidies the market fell sharply after The future of the solar thermal market is uncertain and dependent on subsidies. In the long term, it seems solar thermal would not able to compete with solar PV in similar latitudes such as the Czech Republic. BSRIA Page 24 of 42 Report 57200/16

29 Table 24 Historical trends, water heating, volume ( 000 units), CAGR % Traditional water heaters % Storage water heaters % Electric % Gas % Oil % Instantaneous water heaters % Electric % Gas % Indirect cylinders % Total* % *please note that this table does not include solar thermal systems Table 25 Forecasts, water heating and solar thermal systems, volume ( 000 units), CAGR % Traditional water heaters % Storage water heaters % Electric % Gas % Oil % Instantaneous water heaters % Electric % Gas % Solar thermal systems % Air to water - cylinder-integrated water % heater Indirect cylinders % Traditional cylinders (1 coil) % Renewable cylinders * % Thermal stores % Buffer tanks % Total % * Please note that renewable cylinders include 2 & 3 coil cylinders + 1 coil dedicated renewable cylinders BSRIA Page 25 of 42 Report 57200/16

30 Figure 9 The water heater and solar thermal systems market forecasts, volume ( 000 units), Market forecasts Forecast assumptions Energy prices remain flat in 2014, after a decline in 2013; The Czech economy grows between 1.4% to 2.2% in 2014; Declining family house completions in 2014, while completions of dwellings in block of flats could already start to rise (limited impact on the domestic boiler market); CZK/EUR rate is to be kept weak above the CZK 27 threshold by the ČNB during the entire 2014; Gas supply from Russia over Ukraine to the Czech Republic remains uninterrupted during given the current events in Ukraine; There will be no open war in Ukraine in the forecast period. BSRIA Page 26 of 42 Report 57200/16

31 4 WATER HEATERS STRATEGIC OVERVIEW 4.1 MACRO-ENVIRONMENTAL ANALYSIS The following table looks at factors that may affect the market, covering political, economic, social, technical, legal and environmental issues. The factors are assessed in terms of their certainty and relevance or importance to the market. Table 26 PESTLE analysis of the Czech Republic heating products market Political C. I. Economic C. I. Social C. I. On and Off approach of the Ministries towards subsidies New centre-left government may unblock renewables Extension of NPP Temelin under discussion Stagnating/declining residential construction Subsidies available for displacement of old solid fuel boilers Adoption date of euro 5 5 Lower price elasticity of Czech consumers with higher living standards Technical C. I. Legal C. I. Environmental C. I. Heat pumps gaining share in new construction 7 6 New law on air quality adopted in 2012 Need for upgrade of solid fuel boiler park until Air pollution in rural areas caused by coal boilers High VAT rate even in the 10 8 lower bracket (15%) Scores: I: Importance. From very important (10) to irrelevant (0) C: Certainty. From very certain (10) to very uncertain (0) 4.2 MARKET ATTRACTIVENESS ANALYSIS The following chart analyses the market in terms of 5 forces which affect the market s attractiveness and profitability for manufacturers. Figure 10 Competitive forces analysis Threat of New Entrants: Low-Medium Bargaining Power of Suppliers: Low Competitive Rivalry: Medium-High Bargaining Power of Customers: Medium-High Threat of Substitutes: High BSRIA Page 27 of 42 Report 57200/16

32 Table 27 Competitive forces analysis Force Bargaining power of suppliers Threat of new entrants Bargaining power of customers Threat of substitutes Competitive rivalry Comments Local manufacturers source material and components at global prices. The market is saturated in terms of volume and market players in the existing segments. There are however emerging segments such as heat pumps for water heating that attract major global players including the Chinese and Japanese air-conditioning manufacturers. The local wholesaling is divided between several large groups and very competitive. There is a high threat of substitutes, especially of gas water heaters. First of all, a long term substitution of gas water heating by electric storage water is already happening. Secondly, combined indirect cylinders registered high growth rates in the past years to the detriment of pure electric storage water heaters. Thirdly, new segments such as solar powered A2W heat pumps for water heating or solar PV direct water heaters may soon gain a substantial share on the market to the detriment of traditional water heaters. DHW namely represents the simplest way of storing renewable energy. As for solar water heating, it is expected photovoltaics would gradually drive solar thermal to a market niche. The market is highly competitive, especially in electric storage and solar thermal. Table 28 Market attractiveness analysis Market Attractiveness* High Medium Low Wall hung condensing Solar PV systems for water boilers heating Heat pumps (A2W) for Cylinder integrated heat pumps combined space (A2W) heating and DHW production Gas instantaneous water heaters Gas storage water heaters Electric instantaneous water heaters Solar thermal Indirect cylinders Electric storage water heaters Wall hung non-condensing boilers Low Medium High Market Size Source: Note: BSRIA *Market attractiveness measured by market growth, competitiveness and manufacturer profitability BSRIA Page 28 of 42 Report 57200/16

33 5 STRUCTURE OF SUPPLY 5.1 MARKET SHARES Electric storage DZ Drazice, Tatramat/Stiebel Eltron and the brands of Ariston Thermo Group dominate the Czech electric storage water heater market. DZ Drazice (part of Nibe Industrier) is the largest domestic manufacturer with 250 employees and sales of around 62,000 electric storage water heaters and 90,000 indirect cylinders (2012). The company is a market leader in the country in electric storage water heaters and indirect cylinders. Drazice was acquired by the Swedish Nibe Industrier in The manufacturer now supplies the Nibe Group with indirect cylinders and is also the basis for distribution of Nibe heat pumps in the country. In the Czech Republic Ariston Thermo Group sells water heaters through DIY stores (Regent, Simat) and wholesalers (Ariston). Tatramat is located in Poprad, Slovakia, and has been long present in the market. The company was acquired by Stiebel Eltron at the end of Stiebel Eltron supplies AEG, Stiebel Eltron and De Dietrich products (plus Tatramat). Immergas (through VIPS Gas) sold some storage water heaters back in 2011 but ceased to offer this product in The wholesaler and installation company Enbra also imports Ferroli units. Table 29 Market shares for electric storage water heaters ( 000 units), 2012 and 2013e Importer / Holding group Company / brand representation 000 units % 000 units % Nibe DZ Drazice Local Manufacturer % % Ariston Thermo Group Ariston, Simat Subsidiary % % Stiebel Eltron Tatramat Subsidiary % % Stiebel Eltron Stiebel Eltron/AEG Subsidiary % % Ferroli Ferroli Enbra % % Thermona Thermona Local Manufacturer % % Vaillant Group Vaillant Subsidiary % % Others Others % % Total % % BSRIA Page 29 of 42 Report 57200/16

34 Figure 11 Market shares for electric storage water heaters, volume, 2013e Gas storage There are no domestic manufacturers and all gas storage water heaters are imported. The Czech brand Quantum is the leader on the market. Quantum sells the widest range of rebranded gas storage water heaters, sourced mainly from State Industries (USA), ATI and Ariston. The OEM from Ariston is included under Quantum sales in the table in order to avoid doublecounting. If we included these Quantum OEM from Ariston together with the Ariston own brand and with Junkers, then Ariston is the market leader in the Czech market. Ferroli is exclusively imported by Enbra, which also sells re-branded Boschetti products. The wholesalers of the GC Group import A.O.Smith, which is rebranded as Cosmocell. Karma Cesky Brod rebrands the Hungarian Fég Konvektor. Other imports include Baxi and De Dietrich. Tatramat also produces gas storage water heaters in Slovakia but exports to the Czech Republic are insignificant. Table 30 Market shares for gas storage water heaters ( 000 units), 2012 and 2013e Holding group Company / brand Importer / representation 000 units % 000 units % Quantum Quantum Quantum % % GSW Water Heating John Wood, Enbra Enbra % % Ariston Thermo Group Ariston, Chaffoteaux Subsidiary % % Vaillant Group Vaillant Subsidiary % % Bosch Group Junkers Subsidiary % % Others Others % % Total % % BSRIA Page 30 of 42 Report 57200/16

35 Figure 12 Market shares for gas storage water heaters, volume, 2013e Oil storage There is no market for oil storage water heaters Electric instantaneous The main players in the electric instantaneous market include the following: The domestic company Mirava (located in Prague); Stiebel Eltron/AEG (leader in 3-phase higher outputs); Nibe Backer Elektro DZ Dražice (Nibe Industrier); Clage; Hakl (from Slovakia); Gorenje, Minor brands include Elíz, Tesy (Bulgaria), Thermowell and others Gas instantaneous The local Moratop and Junkers from Portugal used to be two leading brands among gas instantaneous water heaters. However, Moratop entered insolvency procedures during 2013 and its production and sales plummeted. Moratop is both a wall hung gas/electric boiler and a gas instantaneous water heater manufacturer. The bulk of sales were the 17.5 kw modulating open flue wall-hung models with discharge into chimney. Moratop is part of Brano Group since The future of this brand remains unclear. There is another small Czech manufacturer of gas instantaneous water heaters - Karma Cesky Brod. The brand stands for an instantaneous gas water heater in the Czech Republic. It supplies open flue chimney versions and models with room discharge. Sales were however modest in the past several years. BSRIA Page 31 of 42 Report 57200/16

36 Table 31 Market shares for gas instantaneous water heaters ( 000 units), 2012 and 2013e Holding group Company / brand Importer / representation 000 units % 000 units % Bosch Group Junkers Subsidiary % % Moratop Moratop Local manufacturer % % Karma Karma Local manufacturer % % Vaillant Group Protherm Subsidiary % % Others Others % % Total % % Figure 13 Market shares for gas instantaneous water heaters, volume, 2013e Indirect cylinders The dominant domestic supplier of indirect cylinders is DZ Drazice. The Czech producer holds a large chunk of the domestic market of electric storage water heaters and indirect cylinders. In 2013, DZD sold around 122,000 various water heaters and cylinders alone on the Czech market. The Slovak Tatramat also manufactures indirect cylinders however quantities sold on the Czech market under the Tatramat brand are tiny. The rest of the market is mainly supplied by boiler manufacturers such as Junkers, Vaillant, Protherm, Thermona, Viessmann, Buderus, De Dietrich and others, which offer their own indirect cylinders. Ariston also has some sales. Austria is represented by the wholesaler Wolf Czech Republic. The wholesaler and installation company Regulus imports OEM indirect cylinders and sells under its own brand. Please note that sales figures depicted below include all types of indirect cylinders, also models equipped with an electric heating element. Thermal stores are supplied by DZ Drazice, Regulus, Reflex and suppliers of solar systems, while buffer tanks are mainly OEM imports. BSRIA Page 32 of 42 Report 57200/16

37 Table 32 Market shares for indirect cylinders ( 000 units), 2012 and 2013e Holding group Company / brand Importer / representation 000 units % 000 units % Nibe Drazice Local manufacturer % % Regulus Regulus Local brand (OEM) % % Vaillant Group Vaillant Subsidiary % % Vaillant Group Protherm Subsidiary % % Bosch Group Buderus Subsidiary % % Thermona Thermona Local manufacturer % % Bosch Group Junkers Subsidiary % % Viessmann Viessmann Subsidiary % % Immerfin Immergas VIPS Gas % % Quantum Quantum Local brand (OEM) % % Ariston Thermo Group Ariston Subsidiary % % Enbra Enbra Local brand (OEM) % % Stiebel Eltron Stiebel Eltron/AEG Subsidiary % % Stiebel Eltron Tatramat Subsidiary % % Others Others % % Total % % Figure 14 Market shares for indirect cylinders, volume, 2013e Flat plate collectors The major players in the Czech solar thermal market are both specialised solar thermal suppliers as well as conventional heating systems suppliers (boiler manufacturers), including the following: The local wholesaler and installation company Regulus, which imports flat panels as OEM and sells under own brand; Thermo/solar Ziar nad Hronom, Slovakia, selling through a range of local wholesalers; Viessmann; Local manufacturer Propuls; Bosch Group marketing flat panels under both Junkers and Buderus brands (from Ersol and Ritter Solar); Vaillant Group selling under Vaillant and Protherm; Reflex CZ sourcing from Sunex; Quantum sourcing from Solarfocus and GreenOneTec; Solar Power CZ, a representative of the Austrian Sonnenkraft and Ritter Solar; BSRIA Page 33 of 42 Report 57200/16

38 Schüco from Germany. Other suppliers not listed in the market share tables include Wolf CR, Apricus (imported by Profisolar), AMK Collectra (imported by Solarni systemy) and Varisol (distributed by Brilon). Table 33 Market shares for flat plate collectors (m2), 2012 and 2013e Holding group Company (% band) (% band) Regulus Regulus 31-35% 36-40% Thermosolar Thermosolar 21-25% 16-20% Viessmann Viessmann 6-10% 6-10% Propuls Solar Propuls 1-5% 1-5% Bosch Group Buderus 1-5% 1-5% Vaillant Group Vaillant 1-5% 1-5% Wolf Heiztechnik Wolf CR <1% 1-5% Reflex Winkelmann Reflex CZ 1-5% 1-5% Enbra Enbra 1-5% 1-5% Bosch Group Junkers 1-5% 1-5% Quantum Quantum 1-5% 1-5% Solar Power CZ Solar Power CZ 1-5% <1% Schüco Schüco International KG 1-5% <1% Others Others 11-15% 11-15% Total 100% 100% Figure 15 Market shares for flat plate collectors, volume, 2013e Vacuum tubes The vacuum tube market has been in serious decline since the completion of the first row of subsidy scheme Zelená úsporám. The reputation of vacuum tubes among end users was also badly damaged by ad-hoc imports of Chinese products of dubious quality by small hit-and-run traders. Nowadays, the only significant player is the small domestic manufacturer Vacusol followed by the boiler groups (Vaillant, Viessmann, Bosch). BSRIA Page 34 of 42 Report 57200/16

39 Table 34 Market shares for vacuum tubes (m2), 2012 and 2013e Holding group Company (% band) (% band) VacuSol VacuSol 16-20% 26-30% Viessmann Viessmann 11-15% 21-25% Vaillant Group Vaillant 1-5% 6-10% Quantum Quantum 1-5% 1-5% Bosch Group Bosch 1-5% 1-5% Solar Power CZ Solar Power CZ 6-10% 1-5% Reflex Winkelmann Reflex CZ <1% 1-5% Regulus Regulus 11-15% <1% Others Others 36-40% 26-30% Total 100% 100% Figure 16 Market shares for vacuum tubes, volume, 2013e BSRIA Page 35 of 42 Report 57200/16