Hydronics Sellers Cautiously Optimistic

BY ROBERT P. MADER of CONTRACTORs staff HYDRONICS INDUSTRY manufacturers and suppliers are cautiously optimistic about the industrys sales forecast for this year. On the negative side, new housing construction is expected to be down slightly. On the other hand, the radiant industry is expected to continue its double-digit growth. The real wildcard, however, is the impact of energy prices and whether

BY ROBERT P. MADER of CONTRACTOR’s staff

HYDRONICS INDUSTRY manufacturers and suppliers are cautiously optimistic about the industry’s sales forecast for this year. On the negative side, new housing construction is expected to be down slightly. On the other hand, the radiant industry is expected to continue its double-digit growth. The real wildcard, however, is the impact of energy prices and whether they will get homeowners to change the types of equipment they buy.

Radiant heating is growing at average rate of 19% a year, noted Lisa Hathy-Riles, product manager for hydronic products for Bell & Gossett.

“Ground-source heat pumps are another area where there’s some growth,” Hathy-Riles said. “Overall, energy efficiency is more of an issue and is going to be more of an issue in the future. That’s why radiant is growing. People willing to spend more money if they get efficiency out of it in the end.”

Dan Chiles, vice president of Watts Radiant, wants to be able to quantify those radiant energy savings.

“We’ve always had the argument to make that radiant is energy efficient and the audience for that was pretty small,” Chiles said. “People didn’t seem to care. Now that the headlines drove people to buy energy efficient cars like the Toyota Prius, we’re seeing the focus on new solutions to save energy costs. And that’s when the radiant industry dusts off its ideas about energy efficiency and bring them right to the forefront.”

The problem thus far is that radiant heating energy savings are anecdotal.

Chiles is a vice president on the board of the Radiant Panel Association and he is campaigning for an effort to do research with the Department of Energy and with the American Society of Heating, Refrigerating and Air-Conditioning Engineers to develop hard numbers.

A major boiler manufacturer, who requested anonymity, when asked if the industry would ante up to pay for such research, enthusiastically said yes. It would be to everyone’s benefit, the manufacturer noted.

Increasing energy costs have also resurrected solar water heating, said Jeff Mahoney, solar marketing resource manager for Rheem Water Heaters. All of the incentives are state and local, Mahoney said, and a number are run by utilities.

“Oregon has a $1,500 state tax credit for the installation of a solar water heating system that meet certain criteria,” Mahoney said. “Also in Oregon different utility districts offer rebates or zero interest loans for the purchase. For example, the Eugene (Ore.) Water & Electric Board offers a 0% interest loan for four years up to $2,500. Wisconsin does it a little differently. They give $3,000 cash back directly for the installation of new solar water heating system. The State of Hawaii has a 35% tax credit.”

The best resource for solar rebate information is www.dsireusa.org that’s run out of North Carolina State University, he said.

Energy costs and the vagaries of the housing market aside, the hydronics market, overall, should be up 1%-2%, said the major boiler manufacturer. Because the boiler market is at 400,000 units a year, another 8,000 boilers could be significant for some manufacturers, he said.

“The radiant market seems to be growing in the mid-teens range pretty consistently over the past couple of years,” said Uponor Wirsbo President Joe Pauley, “and I suspect that’s what’s going to happen again in 2005 and for the foreseeable future until we see what it will take to get over hump.”

Getting over the hump will require expanding outside the current market by selling the benefits of radiant to homebuilders and to HVAC contractors. HVAC contractors can be nudged into the market by selling radiant as a way to heat hard-to-heat areas, Pauley said.

Material price increases have hit both hydronics and the water heater market. Ted Sikorski, vice president/marketing for Bradford White Corp., said his firm had three price increases in 2004 because of raw material costs.

One of the more significant effects of more expensive metals is the increased use of PEX to replace steel and copper.

Ray Tichy of HeatLink, foresees huge growth in PEX for domestic water supply, especially in larger sizes up to 2-in. and larger pre-insulated PEX.

“PEX as a plumbing pipe gaining market share rapidly,” said Wirsbo’s Pauley. “Everybody’s developing manufacturing processes, getting more efficient at making pipe and looking at their requirements for the next 12 to 18 months. We will be able to replace some copper and CPVC, and that transition is occurring faster than other slower moving markets.”

Watts Radiant is now selling its WaterPEX line, said Chiles, and the firm is focusing on NSF-listed materials specifically for water supply. NSF has created a test protocol, P-171 for CL-R PEX pipe produced for domestic water. The P-171 test is for continuous duty at elevated temperatures with chlorinated water.

The unanswered question is whether PEX will prove to be so popular for water supply pipe that its price will go up and/or it will become hard to get.

Finally, the water heater market is experiencing some odd behavior that’s caused by high raw material costs, new regulations, or both.

Last year was a strong year for residential new construction, pointed out American Water Heater President Bob Trudeau, yet sales were essentially flat. Water heaters increased in cost because of the flammable vapor ignition resistant requirements put in place in July 2003 and there seems to have been a flurry of buying of the old style, and cheaper, water heaters. That affected shipments for most of 2004, but then this past December was strong, perhaps because new Department of Energy efficiency standards took effect for water heaters produced after Jan. 1.

Trudeau also noted that the normal gas/electric ratio has shifted in favor of electric and it will take until mid-2005 to see if that’s an aberration or a trend.

Alan Cape, Rheem’s wholesale market manager, said power vent products are growing at 10%-12% a year, and the firm isn’t sure why because the units are more expensive than atmospherically-fired water heaters. It could be that conventional water heaters are no longer a commodity due to all those price increases, plus the power-vented units have more installation flexibility.

Consumers seem to be going in opposite directions when it comes to capacity. Rheem has seen a lot of interest in its tankless product, Cape said, while Bradford White’s Sikorski said the 50-gal. water heater has become standard and homeowners are putting in 75-gal units.