The hvac market - France

1.2 The global HVAC market

The global HVAC systems market was valued at ***.* billion USD in ****, and is expected to grow at a CAGR (***) of *.*% over the period ****-****, reaching a value of ***.** billion USD. The biggest consumers of HVAC systems are Asia-Pacific, which accounts for **% of the market, and the USA, with a market share of **.*%. Growth in the European market is mainly driven by Germany, whose market is expected to grow at a CAGR of *.*% between **** and ****[***]

HVAC market sales trend World, ****-****, in billions USD Source: ****

According to the International Energy Agency, cooling will account for **% of global electricity consumption in **** and **.*% of the HVAC market. Heating accounts for **.*% of the market[***]

Market breakdown by use World, ****, in Grand View Research The residential sector is the largest user of HVAC. Global HVAC market breakdown by location of use World, ****, % (***) Source: ****

1.3 HVAC engineering in France: a sector linked to construction and changing regulations

According to the trade federationUniclimathe HVAC market in France represented **.* billion euros in ****, including *.* billion euros in exports. As a result, the French HVAC market represented *.* billion euros in ****.

If we consider that the evolution of the sales index for the "heating and air-conditioning installation work" sector corresponds to that for HVAC, then we obtain the following graph:

evolution of HVAC market size France, ****-****, in billions of euros Source: ****

This shows that market growth will accelerate between **** and ****. Continued growth can be observed over the period, despite a decline in **** due to the Covid-** pandemic.

Most of the market's sales come from the "maintenance-improvement" segment, which accounted for **% of the market in ****, compared with **% for "own-build work in new construction".

Breakdown of HVAC market sales France, ****, in Source: ****

This market in volume corresponds in particular to :

Source: ****

To this must be added tertiary air conditioning, comprising liquid coolers(***), building air handling units and building ventilation systems.

1.4 Impact of the Covid-19 pandemic

given the variety of services included in the HVAC sector, the impact of the pandemic varied according to activity. In general, the HVAC sector was able to limit the impact of the crisis thanks to growth in certain sectors, even if some segments were hard hit, for example due to the decline in new construction, particularly the radiator segment (***).

It is also important to note that the Maintenance-Renovation segment, which accounts for around */* of market sales, fell by *.*% in ****, but is expected to grow by **% in ****, following the Covid-** crisis.

The chart below illustrates the evolution of sales/installations related to the main HVAC segments.

Sales of HVAC specialists France, ****-****, in Source: ****

2.1 Overview of the sector and business segments

The construction sector as a whole

The HVAC sector is closely linked to the construction industry. We therefore need to take a close look at the available data on construction in France, demand and its evolution.

On the building market, the FFB (***).

Source: ****

The different markets for metal construction; Public procurement.

The first market in which climatic engineering companies can take an interest is that of public contracts, i.e. orders placed by the State and local authorities - regions, départements or communes.in other words, orders placed by the State and local authorities - regions, départements or communes.

Depending on their size, public-sector contracts can be more or less interesting for builders. Smaller contracts generally involve the renovation or construction of small elements in local communities. The larger ones, however, can involve far more imposing structures.

The size of communities and their wealth therefore play a decisive role. The richer they are, the more they can spend on infrastructure. To clarify the table below, we need to define the per capita financial potential (***).

By comparing this data with the distribution of communes according to size, we can gain an overview of the most interesting infrastructure construction markets for ...

2.2 Renewable energies gain ground

Among heating and energy options, renewable energies seem to be playing an increasingly important role in consumption.

Total primary consumption of renewable energies for heat production France, ****-****, in thousands of kilotonnes of oil equivalent Source: ****

In ****, total primary consumption of renewable energies in France amounted to approximately *,*** kilotonnes of oil equivalent (***). By ****, consumption had risen to approximately **,*** ktoe, an increase of **.**% over the period ****-****.

In ****, this primary consumption of renewable energy for heating purposes corresponded to *** TWh (***), **% of which came from the wood-energy sector.

Breakdown of renewable energy consumption for heating purposes by sector France, ****, in Source: ****

share of renewable energy in gross final consumption France, ****-****, in % Source: ****

From the above observations we can see that the share of renewable energy sources in the heating and cooling sector in France has seen almost uninterrupted growth from **** to ****. This proportion almost tripled from **.*% in **** to **% in ****.

2.3 Regulations drive demand for less polluting products

Number of eco-loans granted in ****France, in units

Source: ****

Supported byeco-loan "a zero-interest loan granted by the French government to finance energy-efficient home improvements, the number of insulation and heating systems using renewable energies is on the rise. The number of eco-loans granted is rising year on year, reaching **,*** in **** (***).

number of eco-loans granted France, ****-****, in units Source: ****

The following graph shows a gradual reduction in sales of traditional gas and oil-fired boilers of almost **% between **** and ****. At the same time, sales of gas and oil condensing boilers, which are eligible for eco-loans, increased by **% over the same period.

Number of gas and oil-fired boilers delivered by type France, ****-****, in thousands Source: ****

Finally, there has been a marked increase in the number of condensing gas and oil boilers over the past * years, to the detriment of conventional gas and oil boilers.

Regulations to drive future growth

In the wake of the covid-** crisis, France's stimulus package has earmarked a substantial budget for building renovation. Whether public or private, this renovation is part of the energy transition, and nearly *.* billion euros have been earmarked for energy-efficient building renovation and sustainable construction. The government plans to spend this sum over a ...

3.1 Market value chain

According to the Bouygues Energie website, the HVAC value chain has four main components

Large companies oversee work for the public and corporate sectors. They can draw on their complementary activities and strong geographical coverage. Smaller companies focus on work and maintenance for private customers.

3.2 Companies in the market

We can use NAF code **.**B to study companies in the HVAC sector in France. Companies registered under this NAF code mainly install heating and air-conditioning equipment.

growth in the number of HVAC companies France, ****-****, in units Source: ****

The graph above shows that the number of companies operating in the HVAC sector is growing steadily over the period ****-****, even during the Covid crisis in ****. The number of companies in this sector will increase by **.*% in **** compared to ****.

This growth goes hand in hand with the increase in the number of HVAC employees over the same period:

change in the number of HVAC employees France, ****-****, in number of employees Source: ****

With ***,*** employees in ****, representing a **.*% increase in the salaried workforce compared to ****, this sector is doing well. According to UNICLIMA, new jobs are expected to be created in **** by the association's member companies. A working group has even been set up in **** to attract more employees and facilitate recruitment in a buoyant market that appears to be unattractive.

As for the geographical distribution of HVAC companies, they are mainly located in the southern and northeastern parts of the country. Île-de-France is the region with the most companies (***).

3.3 Strong competition due to proximity to market

According to forceplus.comthere are a wide variety of channels that can be used to capture customers

Telephone prospecting Website attractiveness: referencing, content, etc. Targeted e-mail prospecting Chat bot Creation of HVAC content Relations with technical centers

According to a Force Plus study, **% of customers in this sector use at least three different channels to get in touch with a company. What's more, in such a technical sector, the quality of customer relations is essential. In fact, */* of HVAC customers are willing to pay more for excellent customer service.

Source: ****

According to Forceplus, the distribution of HVAC systems is fairly complex, but it's the installers who offer the solution to the end customer, and the energy suppliers who provide the fuel. Installers buy from distributors (***).

3.4 The main market players

The HVAC market is dominated by the major energy services companies: Engie, Dalkia, Veolia and SPIE. Engie is by far the market leader. In ****, following the acquisition of a majority stake in SUEZ, Véolia saw a sharp increase in sales, placing it in third position in this market.

These groups' biggest competitors are companies that dominate the construction sector: Bouygues, Vinci and Eiffage, followed by Atalian, which have specialized energy services divisions.

The chart below shows these major groups present in the HVAC sector according to their sales in **** (***):

Main players in the HVAC sector France, ****, in millions of euros Source: ****

4.1 Different types of installation

Heating and air conditioning

Due to the many areas included in HVAC, there is a wide variety of offers and solutions. When it comes to heating, the solution to be adopted depends primarily on the volume of the building to be heated. Depending on requirements, heating may be gas or electric, radiant or forced-air (***), centralized or decentralized.

The CEDIBAT website, affiliated to GRDF, provides us with the following chart, which details solutions using gas, which is the system most frequently used for heating large volumes:

In the case of single-family homes, a large proportion of heating is provided by electricity. According to Voltalis, **% of French households used electricity to heat their homes in **** .

The main types of electric heating used are electric convectors, inertia radiators, electric boilers, air-to-water or air-to-air heat pumps, and electric radiant panels.

As for air conditioning, as the website Energeek individual homes are divided between low-power individual systems and more efficient centralized systems: reversible heat pumps, underfloor cooling or ductwork.

Ventilation

In single-family homes, ventilation is designed to renew "stale" air, due to the humidity and odours it carries, and replace it with fresh air from outside. According to Economiedenergie.com there are several systems for ventilating ...

4.2 Price trends and the quality challenge for installers

To get an idea of price trends in the HVAC sector, we can observe the evolution of the price index - base *** in **** (***) given byInsee.

In the graph below, we can see a steady rise in the price index, from *** in **** to ***.** in ****, an increase of **.**%. This sharp acceleration in **** can be explained by the effect of inflation and the upheaval of the war in Ukraine on the energy sector, particularly on gas prices.

evolution of the price index for "plumbing, heating and air-conditioning services in the field of maintenance and improvement". France, ****-****, price index - base *** in **** Source: ****

The quality challenge for installers

Following on from the financial incentives for energy-efficient building renovation (***) label so that their customers can obtain these subsidies. By creating this label, the French Ministry of the Economy wanted to guide private customers towards competent installers, whose expertise would best ensure the energy savings achieved by their renovation work. The qualification, valid for * years, is broken down into several specializations: Eco artisan for energy performance advice, Qualifelec for energy-efficient electrical installations, etc.

5.1 Strong government incentives for the residential sector

The regulatory environment changes regularly, but remains highly promising for the residential sector

The French Ministry of Ecological Transition and Solidarity has launched the " A helping hand for energy savings " which enables households to benefit from a bonus ranging from ** to *,*** euros to reduce their carbon footprint. Available according to income and number of people in the household , it can be used to finance a more environmentally-friendly heating system (***)

In addition, since January *, ****, MaPrimeRenov replaces the Tax Credit for Energy Transition (***). The work must be carried out by an RGE-certified professional on a principal dwelling built more than two years ago.

A Zero-rate eco-loan (***).

The CEE (***) premium is a bonus that private companies qualified as polluters must pay to private individuals to enable them to carry out energy-saving renovation work. The CEE targets a company must achieve are set by the government for a three-year period, on pain of a heavy fine.

Although the energy voucher scheme is well known for helping low-income households to pay their energy bills, it can also be used as a means of reducing energy poverty. pay their energy bills, they can also be used to carry out work on energy installations.

Finally, a subsidy from ...

5.2 Non-residential regulation supports industry activity

The decree on the renovation of tertiary buildings, published in the Journal Officiel on May *, ****, aimed to improve the energy efficiency of commercial buildings. The aim is to achieve a **% reduction in energy consumption between **** and ****. Intermediate targets have been set for each **-year period

**% reduction in energy consumption by **** **% reduction in energy consumption by ****

It should be noted that after the revision in july **** the obligation to save **% energy by **** has been removed, but the above thresholds are maintained.

This text applies to hotels, shops, offices, educational and administrative buildings over *,*** m² .

6.1 Segmentation

Generalist" companies whose activities include HVAC

Dalkia Engie Spie CDL Elec Vinci Eiffage Bouygues Construction Daikin

Specialized" companies

Air conditioning Climat de l'air Idex Snef Patricola MCI

• Dalkia
• CDL Elec
• Vinci Groupe
• Eiffage Groupe
• Bouygues Construction
• Daikin (France)
• Climater Groupe
• Air Climat
• Snef
• Patricola
• MCI
• INEO (Engie Energie Service)
• Jimmy Energy
• F2A
• Eiffage Énergie Systèmes
• Vinci Energies
• Axima Concept (Engie)
• Suez Groupe
• Axenergie
• CEME Groupe
• Idex
• Airwell (Systemair Groupe)
• Joncoux Sphering Groupe