Potential market

PART B: valorisation plan

SECTION I: The product


1a The innovation potential of this product is related to: 


  • Technology-driven innovation (under the influence of the development of science – the market is not ready for the product)
  • Market-driven innovation (as a result of market surveys, the market expects the product)
  • Replacement of existing product
  • Product related to cost reduction
  • Radical new product
  • Other, what…
Note: Select and explain for one of above options or (in case of non relevance) define another. We try to identify why this potential product constitutes an innovation offer

The innovation potential of this product is related to market-driven innovation. This product answers indeed to an increasing demand for new energy conversion systems and renewable energy sources.

Micro Combined Heat and Power (micro-CHP) is believed to play an important role, because of its capacity of satisfying both thermal and electric demand at the same time.

Micro-Cogeneration Unit gets in this market offering a product that suits in particular the needs of the home users.






1b What added value for end-users does the product hold?
• higher quality
• Better technical characteristics
• Other …
Note: Select and explain for one of above options or (in case of non relevance) define another. We try to identify what new this potential product constitutes in accordance to the existing market status.
The most important added value for end users is the significant saving: the end user indeed warms up the house and, at the same time and with no other costs, he/she can also use domestic appliances. 

So, the main advantage from the implementation of this device is the strong reduction of the final energy cost.


In general terms, the diffused energy generation and cogeneration can yield to effective energy savings, thus reducing pollution and global warming.


1c What is the Unique Sales Proposition of the potential product?
Note: What makes your product unique in marketing terms? This helps your prospects to understand why they should buy from you rather than other existing product options.

The Micro-Cogeneration Unit for Domestic Application has the ability to adapt itself to different sources (including renewables), then it is not dedicated but flexible to different types of fuel.

The size is the real innovative feature of this product. It is suitable for the residential user. The installation in the home is as easy as replacing the conventional boiler used in heating systems.





SECTION 2: The Market


2a What is the target market for the product?  

National ¨

European ¨

Global þ

Please describe the characteristics of your target market.

Note: Define the market range, the size of the target market (if possible) in terms of maximum product units

The product is targeted for a global market.

The market is very large but the possibility to use this kind of unit depends on the laws, that are different in every country.

Europe has actively incorporated cogeneration into its energy. The European Union’s Cogeneration Directive 2004/08/EC indeed intends to support cogeneration and establish a method for calculating cogeneration abilities per country.

As a whole, the European Union currently generates 11% of its electricity using cogeneration. However, there is large difference between Member States with variations of the energy savings between 2% and 60%. Europe has the three countries with the world’s most intensive cogeneration economies: Denmark, the Netherlands and Finland (Source: Cogen Europe).

Other European countries are also making great efforts to increase their efficiency.

According to the IEA 2008 modeling of cogeneration expansion for the G8 countries, expansion of cogeneration in France, Germany, Italy and the UK alone would effectively double the existing primary fuel savings by 2030. It would result in a 16% to 29% increase in each country’s total cogenerated electricity by 2030.


The U.S. DOE has an aggressive goal of having CHP comprise of 20% of the US generation capacity by the year 2030. Eight Clean Energy Application Centers have been established across the nation whose mission is to develop the required technology application knowledge and educational infrastructure necessary to lead “clean energy” (Combined Heat and Power, Waste Heat Recovery and District Energy) technologies as viable energy options and reduce any perceived risks associated with their implementation. The focus of the Application Centers is to provide an outreach and technology deployment program for end users, policy makers, utilities, & industry stakeholders.





2b How the product is characterized from the following options? Number of companies producing similar products in the field. 

• Base – applied by all companies in the industry

• Leading – applied by a single or limited number of competitive companies

• Key –at a development stage, but has already proven its potential


The product can be characterized as leading because the development of domestic unit cogeneration systems is in an embryonic stage.

The CHP technology has now reached a stage where production of very small units begins to be feasible and “micro-cogeneration” have been developed.

This has brought domestic cogeneration forward as a realistic development in the (near) future.

Although the technological solutions for micro-cogeneration are available, it is still an emerging technology.

The rules for the connection of the system to the grid are essential factors in this process. If micro-cogeneration systems are not safe and simple to connect to the electrical network, they will never penetrate the domestic market.






2c What type of market demand will be satisfied? 

• Existing demand – the market is already developed

• hidden (latent) demand – the market has yet to be developed

The product satisfies an existing end users demand. 

The micro-CHP technology could be attractive to consumers when a) excess electricity production can be sold back to the distribution grid and b) when domestic electricity production is cheaper or convenient than electricity from the distribution company.

Micro-CHP, for domestic scale applications where there is an intermittent heat demand is rated around 1kWe.





2d What is the current stage of the product’s market life cycle? 

• Implementation, implementation in production (leading to a radically new product offers)

• Growth (rapid spread within the industry or outside it)

• maturity (parameters of the technical characteristics of manufactured products reached their maximum, higher-grade products can be manufactured on the basis of technological substitution)

Note: At this point we refer to the life cycle of the market related to the product. I.e. a product based on a new technology area (e.g. solar energy cars) is considered to be in the first phase of the life cycle when e.g. a typical TV set is in the maturity phase

In Italy, the current stage of the product’s market life cycle is Implementation, because there are few examples of domestic unit cogeneration.

In Europe instead, the product’s market life cycle is in the growth phase. In Germany, in particular, the government financially rewards the investment in the environment-friendly technology with a subsidy.

Combined heat and power technologies have long been used to reduce energy costs and carbon emissions in commercial buildings, from hospitals to hotels. Other European countries are already benefiting from the large-scale use of CHP technology in the home. In Denmark for instance, CHP accounts, incredibly, for 55% of all electricity generation.




2e Strategic partnerships (existing or potential).

There is the possibility to create a potential partnership with a multinational company, whose core business is the production of electricity generators. This company works in the renewable energy field, producing small wind turbines.





SECTION 3: The Competition

3a What is the competition within your target market?
Note: Refer to other companies producing the same product
There is a limited number of companies working in the small size cogeneration system field. 

While in Italy there aren’t competitors at the moment, the most important companies that produce Micro Combined Heat and Power (micro-CHP) Systems are located in Germany and United Kingdom.

In particular some producers are:

  • Vaillant (Germany), produces gas-powered micro-cogeneration heat and power systems and thus test the technology under real operating conditions
  • Cogen Microsystems (Australia), they produce micro CHP systems, whose working principle is not clear
  • Genlec (UK), has developed a low cost microCHP technology comprising an innovative Organic Rankine Cycle (ORC) module and control and power board
  • Baxi (UK), the Baxi Ecogen is the first widely available wall-hung domestic micro-CHP boiler in the UK



3b What competitive advantages will the introduction of the new product ensue? 

• lower prices based on lower production costs

• product differentiation (uniqueness of the product proposal)

The introduction of the micro cogeneration unit for domestic application in the market will ensue a product differentiation. 

micro-CHP enters the market to compete with a mature and proven technology for domestic heating and provides the following key benefits:

  • allows the supply of both heat and electricity from a single energy source
  • Carbon emissions are reduced by generating electricity at the point of use – avoiding the system losses associated with central power production.
  • Economic savings are generated for the user, by reducing imported electricity and by selling surplus electricity back to the grid.
  • Concretely this means lower energy bills for energy customers.
  • Security of supply is greatly enhanced by reducing reliance on centralised power production
  • allows gas to be used more efficiently.




3c Potential products relate to the following price range: 

• High price range

• Average price range

• Low price range


The potential price policy is based on an average price range, that is about 5.000 €.





3d Potential products will be marketed: 

• To regulated markets (e.g. heat supply, water supply, universal telecommunication services, agricultural products, fishing industry, architectural services)

• To markets operating on the principle of free negotiation between agents on the market


The product will be marketed to markets operating on the principles of free negotiation. In any case, it will be important to monitor both national and international regulations related to government incentives to support the use of micro cogeneration units for domestic application.






SECTION 4: Indicators


Estimated cost of the new products 2-4.000 €
Expected market volume (potential / maximum number of users) In Italy 2.000/200.000
Expected sales volume 1st year: 20 

2nd year: 40

3rd year: 65

4th and 5th years: 100

Expected market share of the company (proportion between sales and total company sales in the relevant market) 7-8%



Please encircle as appropriate.



Added-value potential 1 2 3 4X 5
Size of future market demand 1 2 3 4X 5
Competitive positioning of the product 1 2 3 4X 5


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