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European connected home market set to grow, despite COVID-19

More than 7.5 million homes across Europe now have connected home energy devices with 13% growth expected this year, despite COVID-19.

Arthur Jouannic, principal analyst at Delta-EE

That's according to Delta-EE, the specialist new energy market research consultancy, in its Connected Homes; State of the Market 2020 report. 

Connected home energy refers to a broad spectrum of items, including connected climate controls, remote heating diagnostics, home energy management and home automation products such as smart lighting. Smart thermostats remained the product where Europeans spent the most money, accounting for €371million of spending in 2019, compared to connected lighting, in second place, at €279million according to the report.

The research reveals that in the UK, for example, the first two weeks of lockdown saw almost no connected homes sales take place, even six weeks later sales hadn’t recovered. As lockdown didn’t hit during peak heat demand, this didn’t impact the sector was much as it could have done. However, Delta-EE expects the sector to recover and grow by 13% this year.

Reflecting on 2019, the report highlights three leading countries – the UK, Germany and the Netherlands. These countries accounted for 70% of all connected homes product sales. The UK and The Netherlands both have an interesting combination of a majority of gas boilers and a highly competitive market for heating and energy, boosting the deployment of smart thermostats.

Arthur Jouannic, principal analyst at Delta-EE, noted: “The growth of connected home devices in these countries shouldn’t come as a surprise. Both energy and heating companies have been keen to keep pushing the connected home energy market forward. The shift to more of us working from home places new emphasis on comfortable working conditions, including heating and home automation. This means connected devices have a key role to maintain comfortable conditions.”

In addition, the research sheds light on the dynamics of the new country entrants in the connected homes space, starting with France who has a big installed base of gas boilers and electric heating. Italy was the largest growing region in 2019, increasing by 50%, but it remains small. Like Spain, Italy has strong opportunities in connecting air conditioning systems. The report notes this to be a key growth area, particularly as heat waves become more frequent. Additionally, Eastern Europe and China are increasingly looking to design and manufacture devices as the market expands to new players.

“It’s a fascinating time in the connected homes space as changes are afoot.” Jouannic added. “Smaller markets are growing at pace; new innovations are being refined and commercialised such as remote boiler diagnostics; But one area of interest is the changing business models around connected homes. Heat-as-a-service is growing in popularity and this is working in tandem with more subscription-based approaches for connected homes devices. Many players are now bundling in energy, heating and repairs bearing much more risk than current energy suppliers. This makes connectivity key to ensure best in class customer experience is achieved while keeping costs down.”

2 September 2020

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