The UK and France heat markets from a Swedish supplier’s perspective

In the last Sustainable Heating & Cooling member meeting, our partners and members shared their ambitions and experiences from the French and UK markets. It was very useful to put words to many of those challenges and opportunities that suppliers of products and services in the heating and cooling sector are facing.

 

During the digital member meeting there were a total of eight member companies sharing their experiences on internationalisation in the UK and French markets. It was interesting to hear about the similarities and differences in the challenges and opportunities that companies faced while entering a new market.

Opportunities in the United Kingdom

  • Waste-to-energy and low carbon schemes: There is not enough green gas in the UK to go around, hence a demand for waste-to-energy schemes and low carbon schemes is long overdue
  • City developments: There are many cities who are actively working within the field such as Enfield, Peterborough, Bristol and Leeds, which opens up the opportunity for establishing collaborative partnerships and knowledge exchange
  • A match in demand and capability: The UK has a possibility to get involved in more and larger schemes and Sweden has the capability, talent and resources to help
  • HNIP and HNDU: The UK is currently developing and implementing new key projects that are of high interest to follow
  • Skills in development: The brilliantly set up Heat Academy in Stoke-on-Trent has increased the potential for future skill development and increase the capacity in the market, also setting a precedent for new regions to follow
  • Fossil-free living in one generation: Vattenfall Heat UK has proven to be a fresh force in the market and will help pave the way for serious suppliers of products and services
  • Open-minded: With less legacy in the district heating sector, the UK has the potential to be more open-minded to new generations of more efficient district heating and cooling

Opportunities in France

  • Large market potential: The French energy market is deregulated, and the district heating and cooling market is large with many opportunities for foreign stakeholders. Although very small today, the district cooling market will grow in the future due to the French climate and increasing temperatures
  • Clear government goals: As part of the long-term plan to achieve an ecological transition, the French government plans to increase the proportion of renewable energies in the energy mix
  • Financial incentives in place: The government provides political support and incentives for the ecological transition; including the Heat Funds, CO2 tax on fossil fuel consumption, reduced VAT-rate for heat networks with renewable energies and White certificates
  • Local collaboration is key: To access the French market, Swedish companies are partnering up with local companies and agents in order to adapt to the local culture and language requirements. Investing in personal relationships in business is imperative in order to build trust and motivation with clients

With every opportunity comes a challenge, and all companies who have either established themselves in, exported to, or who are planning to expand into another country know of these hurdles.

Challenges in the United Kingdom

  • Low gas prices and initial high CAPEX: The gas prices in the UK are maintaining low levels, and are even protected from rising, which puts a hurdle on low carbon technologies that require high initial capital investments, such as district heating
  • Experience and skill: Projects can suffer from a lack of skill or experience, which could result in inefficient networks – strengthening the case for teaming up with Swedish know-how

Challenges in France

  • Cultural differences: Whether in the field of district heating and cooling or any other, linguistic and cultural differences are evident in France. The chain of decision-making, business culture and conservative thinking are mentioned as common challenges for foreign companies
  • In-house development: There is a trend among French energy operators to increasingly develop products and services in-house
  • Complicated tender processes: How to adhere to tender processes and requirements, as well as awareness of the release of a tender, is sometimes a challenge
  • High ambitions, less experience: France is a market with ambitious growth targets for district heating but can face efficiency challenges due to the lack of expertise in certain areas
  • Land of energy giants: The market is characterised by a few energy operators that hold a large market share – the three largest have 70% of the market. As such, it can be challenging for Swedish companies to access potential customers and the right level of decision-making

After hearing the companies share their experiences, we remain optimistic that there are ways to overcome challenges and realise the opportunities in the markets. While the challenges amplify familiar risks or highlight new ones, change at these levels can create new openings for making systemic changes in the industry, a way to build back better and stronger.

 

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Sweden is at the forefront of decentralised heat networks technology. Our aim for “Sustainable Heating & Cooling by Sweden” is to facilitate knowledge sharing between British, French and Swedish stakeholders and develop and encourage environmental and economic best practice.

To find out how we can help you and your organisation, please contact our London or Paris-based “SHC” teams. We can introduce you to leading consultants, suppliers of technology and services who will be pleased to share know-how of the development of sustainable heating & cooling solutions.


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