PRESS RELEASE BY MBD...

UK RESIDENTIAL ENERGY EFFICIENCY PRODUCTS MARKET RESEARCH REPORT

RELEASED: JANUARY 2008

After researching the UK residential energy efficiency products market development and taking into account various other factors the following conclusions can be drawn from MBD's report:

MARKET REVIEW 2003-2007:

The UK market for energy efficiency products is not one market, but a group of diverse markets all of which can have a substantial effect on fuel consumption through improving efficiency. The primary product sectors can be defined as double glazing, central heating and thermal insulation.

The data for the double glazing sector includes windows in the domestic sector and the conservatories sector. The value of the sector has fluctuated during the five year review period, with the overall development lagging behind growth recorded in the central heating and thermal insulation sectors. Demand increased by 7% in 2003 to a review period peak of £3212 million. However this was followed by declines of 2% and 3% in 2004 and 2005 respectively. This is believed to have been partially offset by growth of 1% in both 2006 and 2007, taking sales to £3122 million in the latter year. However, this still represents a decline of 3% in comparison with 2003. Furthermore the proportional importance of double glazing to the total residential energy efficiency market is estimated to have declined from 65% in 2003 to 56% in 2007, although double glazing continues to command the largest share. During recent years growth in the market has remained somewhat restricted, partly due to a slowdown in consumer spending and the housing market during the middle part of the review period and latter part of 2007. Furthermore, MBD believe that demand for retro-fit double glazing is reaching a certain level of saturation in the private residential sector. However, a buoyant construction market and the government’s Decent Homes programme are believed to have provided a positive impetus for the market during recent years.

The central heating sector within the residential energy efficiency market has increased each year of the review period. Double digit growth was demonstrated during each year between 2003 and 2005. However in 2006 growth moderated to 6%, which is believed to have been followed by further moderate growth of 5% in 2007, taking demand to a five year peak of £1598 million. This represents strong cumulative growth of 40% in comparison with 2003. Moreover the proportional importance of the sector has increased from 23% in 2003 to an estimated 29% in 2007. The sector has benefited from strong levels of construction output during the majority of the review period. However, in the latter part of the review period, house builders have slightly reduced construction activity due to more uncertain economic conditions and a slower housing market, although output growth continued to be recorded. Rising interest rates have also impacted spending on refurbishment activity, as consumers are more cautious on spending on home improvements such as replacing central heating systems. Nonetheless, central heating sales have been boosted by a number of government programmes, including Warm Front, the Energy Efficiency Commitment, and the recently introduced Home Information Packs.

The UK building thermal insulation sector is believed to have demonstrated the strongest growth rate in the residential energy efficiency market. Overall between 2003 and 2007 demand is believed to have increased by a significant 43%, taking the value of the sector to a review period peak of £828 million in the latter year. Annual growth rates in the sector have fluctuated between 7% and 16%. This sector benefited from the continued upturn in new construction activity, tighter thermal insulation standards set out in the building regulations and in particular the government’s EEC programme, which was introduced during 2002 and will run until 2011. The EEC programme (known as Cert from 2008 onwards) has been a main driver for the building thermal insulation market, in particular for loft and cavity wall insulation, which have proved to be key measures used by utility providers to reach their individual energy savings target. The proportional importance of thermal insulation to the total residential energy efficiency market has increased from 12% in 2003 to an estimated 15% in 2007.

MARKET FORECAST 2008-2012:

The UK market for residential energy efficiency products, including double glazing, central heating and thermal insulation, is anticipated to increase throughout the five year forecast period. By 2012, the value of the sector is projected to reach a peak of £6151 million (at 2007 prices), representing real term growth of 11% compared with 2007. The double glazing sector is expected to decline by 3% in real terms in 2008, partially reflecting more difficult economic conditions and the expected slowdown in consumer confidence. This is forecast to be followed by growth during each year between 2009 and 2012, taking demand to £3253 million (at 2007 prices) in the latter year. This is equivalent to 52% of the residential energy efficiency market. Sales of central heating are anticipated to increase throughout the five year forecast period, taking the value of the sector to £1781 million (at 2007 prices) by 2012. Overall between 2007 and 2012 demand is expected to increase by 11% in real terms. The proportional importance of the building insulation sector is projected to increase from 15% in 2007 to 17% by 2012. This is equivalent to sales of £1117 million (at 2007 prices) by 2012, representing strong real term growth of 35% since 2007. The Energy White Paper, changes in the Building Regulations that came into effect in 2006, as well as government programmes such as the extension of EEC, the Code for Sustainable Homes, and the recent introduction of Home Information Packs, are believed to further boost UK demand for energy efficiency products over the next five years.

NOTE TO EDITORS:

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