ETV Final Report Business Case Annexes

DETAILED ASSESSMENT OF THE MARKET POTENTIAL,
AND DEMAND FOR, AN EU ETV SCHEME

BUSINESS CASE ANNEXES
To the European Commission
DG Environment
Under Framework Contract No.

DG BUDG No BUDG06/PO/01/LOT no. 1
ABAC 101931 EU ETV Scheme
EPEC
June 2011
Contact name and address for this study:

Jonathan Lonsdale, Principal
E-mail: [email protected]
Tel: +4420 7611 1100; Fax: +4420 3368 6900
GHK Consulting, Clerkenwell House, 67 Clerkenwell Road
European Policy Evaluation Consortium (EPEC)

Brussels contact address: 146 Rue Royale B-1000 Brussels
Tel: +32 2 275 0100
Fax: +32 2 275 0109
E-mail: [email protected] URL: www.epec.info
This report has been produced by the EPEC consortium with contributions from:
Jonathan Lonsdale
Mark Peacock
Nihar Shembavnekar
Ali Erbilgic
Tamara Kulyk
Philippe Larrue
Patrick Eparvier
Carlos Hinojosa
The opinions expressed in this study are those of the authors and do not necessarily
reflect the views of the European Commission
CONTENTS
Annex 1
Annex 2
Annex 3
Annex 4
Annex 5
Annex 6
Annex 7
EPEC
BUSINESS CASE: INSULATION ......................................................... 1

BUSINESS CASE: BIOBASED PRODUCTS ..................................... 18
BUSINESS CASE: SITE INVESTIGATION TOOLS........................... 32
BUSINESS CASE: IN-LINE WATER MONITORING.......................... 54
BUSINESS CASE: MICRO COMBINED HEAT AND POWER........... 70
BUSINESS CASE: SOLAR HYBRID TECHNOLOGIES .................... 91
BUSINESS CASE: ANAEROBIC DIGESTION................................. 111
ANNEX 1 BUSINESS CASE: INSULATION

The following business case has been prepared on the basis of seven interviews. The
interviews include four company representatives and three certification bodies. A total
of eight companies and eight certification bodies and testing centres were contacted.
A1.1
Introduction
This business case builds on market analysis findings of the Cleaner Production and
Processes technology area and Low Carbon Building Materials technology group (see
main report). This showed that overall, the low carbon building materials technology
group could strongly benefit from an ETV due to the lack of international recognition of
existing certification schemes and the barriers to growth this may create.
The insulation sector is a very large market (e.g. floor, wall and roof insulation as well
as pipework) within which companies are required to obtain certification within different
member states in order to access new markets. Despite the presence of a number of
very large companies that dominate the current supply side, the insulation sector is also
characterised by the presence of a large constellation of SMEs, often working at the
local or national level, bringing to market both renewable-based and leading edge
innovative insulation products (e.g. aerogels). These producers often have to prove to
the market the extent to which some of their products offer both superior performance
and stronger environmental credentials than traditional solutions.
There are two dimensions to the environmental innovation of new insulation materials.
In some cases, innovation is oriented towards the content of the insulation product (i.e.
insulation panels made of biomass). In other cases, insulators are produced using
traditional materials while achieving higher levels of performance, notably in terms of
thermal transmission. Most often however, these two dimensions go hand in hand.
There are two points which are important to consider when analysing the potential of an
ETV in this sector. First, because insulation materials are parts of buildings, the safety
for use dimension is crucial in product testing and certification. Second, buildings are
long-term creations and as such, establishing long-term performance of innovative
insulators is also a key element.
The construction sector is highly conservative, because producers often have to deal
with safety and insurances issues. Performance claims are not only insulation-related,
they also concern the water, fire or sound resistance of the product.
There are two major and overlapping uncertainties over performance claims in the
insulation sector: medium to long-term performance (dynamic performance), and
performance under real-life operating conditions. This is highly relevant for the market
because the performance of the insulation product is dependent on the surrounding
environment and materials. In other words, performance of insulation materials may
vary considerably based on the types of additional products used in the construction of
the building. In addition, the ease with which these products can be manipulated by
installers is also a key priority for consumers.
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A1.2
Current status of the market and technology
A1.2.1
Nature of the market opportunity

The insulation market is a mature market, with a large number of technologies
available. However, innovative technologies represent a small share of the total
turnover of the insulation market in the European Union (around 5%). Some member
states dominate the innovative market: Nordic countries, Germany and Austria. With
policy makers and civil society increasingly focusing on energy efficiency and the
environmental impact of construction products, more innovative products are entering
the market. Due to the highly competitive nature of the market, there is an innovation
push for highly energy-efficient technologies. The new building business relies
increasingly on green-oriented products, and the same process is starting in the retrofit
sector even though retrofit activities are far less targeted by regulation.
Potentially, the market for new high efficiency technologies in the insulation sector is
unlimited. Even when taking into account the diversity of insulation needs across
Europe (depending for instance on climate specificities), all individual homes, buildings
and industries could be the target of these technologies. Growing environmental
regulation is likely to provide producers with great opportunities to expand this market.
Overall, the market opportunity for EU producers of new insulation technologies is high.
With energy efficiency being a European flagship action in the EU 2020 strategy,
awareness among producers and end users should rise, and drive the market to further
take into account the environmental-related performance of the products.
A1.3
Innovation drivers
A1.3.1
Main EU and Member states regulations influencing the development of the

technology
At EU level, the Energy Efficiency in Buildings Directive 2002/91/EC (2002) is the
central piece of regulation. This directive has far reaching implications for home-owners
and the construction sector. It has helped turn attention towards the energy efficiency of
construction products, especially insulating products. This has stimulated R&D
expenditure in insulation technologies.
At the member state level regulation is indeed particularly relevant to the insulation
sector. The diversity in climate and land conditions across countries has meant
construction regulations vary significantly. Several member states have adopted very
demanding regulation for insulation. For example, in France, the new building
regulation code (RT 2012) demands high energetic performance for new buildings and
takes into account the insulating capacity of the building. The UK has developed a
special code for sustainable homes (2007), aimed at changing practices in the
construction of new houses by introducing minimal standards for energy efficiency.
Owing to differences in national construction regulations and building standards, the
construction material market is highly fragmented. Companies have a very difficult time
entering new markets due to the cost of adapting their products to local regulations.
A1.3.2
Non-regulatory end user requirements on innovation and performance

With rising energy prices, reduction of energy needs is of great concern for final users.
Fundamentally, insulating products aim to reduce the demand and use of energy. This
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explains the high level of acceptance from home and building owners regarding the use
of high performing insulating materials. End users choice is also price-driven: the
product and duration (life-long cycle price) have great influence on end users,
explaining why innovative companies focus on R&D in order to develop products at
competitive prices. The economic efficiency of new technology use is therefore as
important as their environmental impact.
In addition to the demand for products with greater insulating properties, users also
express concerns regarding safety for use. In particular, high performance against fire
and water damages. In the end, the users demand guarantees across supporting
aspects of the insulation products that go beyond its core function.
A1.4
Current and future performance of technologies
A1.4.1
Current technology provision

A small number of large companies, such as Rockwool (Denmark), Saint-Gobain
(France), Knauf insulation (Germany) or Uralita (Spain) dominate the European
insulation market. These companies generally offer traditional products, derived from
glass or plastic and invest heavily in R&D activities, focusing on increasing the lambda
value of their products and making the products thinner. At the same time, hundreds of
innovative micro and SMEs are trying to access the insulation market, offering highly
innovative products (e.g. aerogels, eco-based materials, etc.). These SMEs however
more often target local or national markets, whereas large companies operate
internationally.
A1.4.2
Indication of State-of-the-art for current technologies

Because building-related energy consumption represents a large share of the total
energy consumption, the opportunity to introduce more effective insulating products is
obvious. Reducing energy consumption and the carbon footprint of buildings at the
same time is possible, by relying on new materials but also by working on the
interaction between very diverse products. It is indeed the effective combination of
these different products that helps increase the energy efficiency of buildings. The idea
is to reduce as much as possible the lambda () value of the entire building1. The
development of more energy efficient technologies has then to be coupled with
development of technologies used to monitor and assess a buildings real performance.
Technology developers are also trying to reduce the thickness of insulating products
while increasing their insulating properties. Providing the general public with thinner and
more efficient insulating products is a good opportunity for new technology producers to
introduce radically innovative products.
A1.4.3
Likely developments of technology performance standards

The development of performance standards in this particular sector will be determined
by the regulation and building requirements adopted at the national and European level.
Therefore, predicting the evolution of performance standards is not always easy.
The lambda value, or thermal conductivity, is the rate at which heat is transmitted through a material, measured in watts
per square metre of surface area for a temperature gradient of one Kelvin per meter thickness, simplified in W/mK. The
lower the value, the better the thermal efficiency of the material.
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However, todays trends in the sector provide us with hints regarding likely development
of technology performance standards. First, companies focus on increasing the
insulating capacity of their products, in order to cope with national or European
regulations. Second, production is becoming increasingly green-oriented, using
renewable materials as raw materials and aggregates to their final product. Third, some
producers are trying to reduce the thickness of their products (that is especially the
case with aerogels, which is two times thinner than standard products, with better
insulation properties). In addition, the long-term performance of new products is also
tested, and is likely to increase in oncoming years.
A1.5
Technology developers being examined in this business case

Company A - develops aerogel-based insulation products that may be used in all types
of buildings. It characterises itself as an R&D company working mainly on a businessto-business basis. It develops aerogel-based materials for producers of insulation
materials, for final users. The company spends a large amount of its budget on R&D, in
order to reduce the total cost of its products (aerogel-based products are generally
more expensive than traditional products).
Company B - has developed pre-insulated wall panels from recycled material such as
paper. The product is currently in a pre-commercial stage, within two months of being
available on the market. Regarding environment-related performance, the product has
a very low carbon footprint in comparison to traditional solutions, mainly as a result of
the low-carbon content of the product (a paper industry by-product).
Company C - has developed insulating panels from hemp. Constructors have been
using hemp as an insulation product for a very long time, but the raw material is now
being used as an innovative material, given its green credentials combined with high
insulation properties. With three products on the market, and two in development, it
operates across the EU including in Germany, France, Sweden and Czech Republic.
Company D - is a multinational producer of construction materials. It recently
developed a highly innovative binding technology, used in traditional insulation products
(mineral or glass wool). The new product is derived from renewable materials, making
the binding more sustainable. It is a radical innovation, in comparison to oil-based
chemicals generally used for binding insulation materials. The company also is
nowadays working on instruments to better assess the overall insulation properties of
buildings.
Table A1.1: Overview of technology developers in this business case
Organisation
information
Technology
developer A
Technology
developer B
Technology
developer C
Technology
developer D
Member State
Sweden
UK / Ireland
Germany
Germany
Size
Micro
Small
Small
Large
Age (years)
11
15
13
30+
Products in
development
NA
NA
Market ready
products
NA
NA
Products in
market
NA
100+
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Product
description
Environmentally
friendly and recyclable
aerogels for insulation
purposes
Pre-insulated panel
from recycled
materials
Insulating panels
from hemp
Glucose-based
insulation binder
technology
NEED FOR ETV

A1.6
Routes to market for companies
A1.6.1
Summary of the key barriers to market acceptance

Table A1.2 illustrates the main barriers encountered by companies wishing to place
new insulation products on the market. Responses generally depend on the type of
company and the product being considered. The main barrier, encountered by three
companies, is that their product costs more than incumbent technologies... Two
companies have difficulties demonstrating performance in real world operational
conditions.
Table A1.2: Rationale for ETV - Barriers
Technology Developer
Barriers
Our new product price is higher than incumbent technologies

Customers are uncertain as to how suitable our product is to their
operations (i.e. fitness for use)
We lack legitimacy for our environmental performance claims

We are unable to demonstrate the performance of our technology in real
world operational conditions
X
X
Our customers are highly risk averse and prefer to buy market proven
technologies
Validation procedures for this new technology are very onerous
A1.6.2
X
X
Current standards, norms and labelling that are used for the technology (family)
Due to the high level of maturity of the insulation sector, there is a wide array of
standards and certification schemes that apply to this type of material. Existing
mechanisms are either implemented at the European level or at the national level.
European standards and norms
In order to sell their products in the European Economic Area (EEA), building products
have to conform with legally required minimum safety characteristics, leading to the CE
marking. This is one of the outcomes of the Energy Efficiency in Buildings Directive.
This Directive also paved the way for the development of European standard (EN).
European standards are adopted by the CEN (European Committee for
Standardization2) and apply to all Member States, and supercede all existing conflicting
CEN draws up voluntary technical specifications to help achieve the Single Market in Europe
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national standards. Members of the CEN have now developed the Keymark for thermal
insulation products. This is a voluntary quality mark, aimed to show insulation products
conformity to the array of European product standards. The Keymark is a voluntary
third-party certification based on the following product standards:
DIN EN 13162:2001-10 "Thermal insulation products for buildings - Factory made mineral
wool (MW) products - Specification"
DIN EN 13163:2001-10 "Thermal insulation products for buildings - Factory made

products of expanded polystyrene (EPS) Specification"
DIN EN 13164:2001:10 "Thermal insulation products for buildings - Factory made

products of extruded polystyrene foam (XPS) Specification"
DIN EN 13165:2001-10 "Thermal insulation products for buildings - Factory made rigid
polyurethane foam (PUR) products Specification"

products of phenolic foam (PF) - Specification"
DIN EN 13167:2001-10 "Thermal insulation products for buildings - Factory made cellular
glass (CG) products - Specification"
DIN EN 13168:2001-10 "Thermal insulation products for buildings - Factory made wood
wool (WW) products - Specification"

products of expanded perlite (EPB) Specification"

products of expanded cork (ICB) - Specification"
DIN EN 13171:2001-10 "Thermal insulation products for buildings - Factory made wood
fibre (WF) products - Specification"
Another way to gain European technical approval is to obtain its approval from a
member of the UEAtc (The European Union of Agrment3). The UEAtc was created in
the 1960s in order to facilitate international trade of construction products from one
European country to another. Members of the UEAtc are responsible for issuing
national technical approvals, and through the UEAtc it is possible to obtain approval in
another country based on work already carried out. The technical approval is a useful
tool to assess the fitness of use of a product. Membership to the UEAtc is voluntary and
the methodology for approvals is made through consensus among members.
National Agrments and technical assessments
Most national approval/certification bodies offer voluntary product certification that
relate to testing and assessment to national standards or other normative documents.
The British Board of Agrment (BBA - UK), or CSTB (in France) offer Agrment
certificates, based on rigorous examination of the product, the production process and
its fitness for use and safety. This process helps move the product from a confidential
market to the general market. However, this type of certification is regard by producers
as onerous because it is a long and expensive process and better fit for mature
products with a history on the market. As a result, there is demand for a similar, less
3
UEAtc is the European network of independent institutes, Centres or Organisations that are engaged in the issue of
technical approvals for innovative construction products or systems
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burdensome, type of certification which which is more adapted for market-ready

innovative products.
In response to this demand, a limited number of national certification bodies such as
BBA and CSTB have developed specific mechanisms for innovative products, known
as assessment reports4. These offer producers a first point of entry into the market and
larger scale performance testing (they can be a precursor for an Agrment certificate
for example). Assessment reports also help innovative producers reassure first
consumers and insurance companies about the readiness of the products and the
fitness for use.
It is worth highlighting however that the certification landscape in Europe in the field of
construction materials remains strongly fragmented and confined to each Member
State. This reflects differences g among national regulatory frameworks and building
requirements; and the differences in testing and certification cultures in each Member
State. For instance, Belgian or French certification bodies take into account the fitness
for intended use of a product when assessing its performance (dynamic performance),
whereas in Germany certification tends to concentrate performance of the product in
itself (static performance).
Additional National labels
Several member states have developed green labels, such as Natureplus in Germany,
Ecolabel in Scandinavia or Environmental Profile certification (issued by the BBA).
These labels aim to differentiate eco-friendly products from traditional products.
However, most of these labels do not provide consumers with data on the insulating
performance of the product. At the European level, the EU Ecolabel aims to provide
consumers with sufficient information about the environmental performance of a
product.
A1.6.3
Trialling and demonstration of technologies

Company A - has conducted extensive in-house trials, in addition to working with
intermediaries (installers, architects, construction companies) who provide the company
with specific on-site testing requests.
Company B - uses internal tests to carry out demonstration of its product. It has
already spent 100,000 in R&D for its product, with an annual testing budget of about
20,000. The key challenge is to find a way to differentiate its product from traditional
products to increase its access to the market. Their product has very good carbon
footprint credentials, but there are no existing mechanisms that allow the display and
marketing of this.
Company C - has carried out a number of tests, both internally and through third-party
testing. Through this it has obtained several national or international labels, such as
Natureplus or Stiftung Warentest. It is well able to carry out trialling and demonstration
of technologies and as a result, these do not necessarily represent a burden for them.
Company D - has developed over the years considerable experience in quality
procedures and internal testing within its own facilities
A1.7
Rationale and value added for technology developers from undertaking

an ETV
Pass Innovation in France
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A1.7.1
Overview of companies issues

Table A1.3 illustrates the mixed views insulation companies have regarding the benefits
from the potential introduction of an ETV scheme. Aside from company A which did not
identify any potential benefit from an ETV scheme, the other companies thought an
ETV would increase the speed at which their product could reach the market.
Additional benefits would be to facilitate entry into other EU markets and increase
market
acceptance
by
customers.
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Table A1.3: Benefits from having an ETV for technology developers

Benefits of ETV
Facilitates market entry for our product into other EU markets
Facilitates market entry for our product into non-EU markets
Increases the speed at which our product reaches market
Increases market acceptance of our product by customers
Clients gain insights on environmental impacts from our product
No benefit from an ETV
X
X
Company A - carries out itesting internally, working with final producers to develop
specific products. An ETV scheme would have limited added value, because the
product has no real problem entering the European market. Their production is largely
driven by high consumer demand and their aerogel-based products are only slightly
more expensive than usual products, allowing them to be competitive in the market.
Company B - sees the lack of differentiation between its environmentally-friendly
product and traditional products as its main barrier to market entry. It is looking for a
way (label, etc.) to show the added sustainability value of its product, in terms of its
content and method of production. It has no problem testing the insulating properties of
its product, so the added value of an ETV scheme would be limited. However, it would
help to access the market faster, by increasing end user confidence in the product.
Company C - uses both internal and external product testing, but could use ETV as a
complementary route to market, both inside and outside the EU. The increased speed
for entering the market which an ETV scheme could facilitate would be an additional
benefit given the large amount of money it has spent in developing and testing its
product.
Company D - sees the real added value of ETV in reducing the number of testing and
verification processes required to enter national markets. ETV could increase the
speed at which its product reaches market. It should also help reduce end user (as well
as insurance companies) reluctance to use innovative products (include also insurance
companies).
A1.7.2
Conclusions - why developers of this technology would want to undertake an

ETV
In the insulation market, where there is already a significant number of national and
European performance certifications, testing and labels, an ETV scheme would have
added value for developers. It would:
allow them to gain credibility among end consumers;
potentially reduce the number of testing and certification processes SMEs would
have to undergo before entering different European markets;
increase the speed at which products enter the market.

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A1.7.3
Stakeholder views on the need for ETV in this technology area

The development of ever more stringent regulations for improved insulation
performance is stimulating the need for more innovative products to enter the market.
Tightening regulations have also paved the way for more demanding testing and
evaluation from certification and verification bodies. According to representatives from
several verification bodies, the use for ETV would be great if it gives developers a way
to differentiate products on the market.
However, verification bodies in the UK, France and Belgium have found it difficult to
understand the added value of an ETV, compared to the services they are already
carrying out, and how it could be built and structured. The common concern is that the
methodologies and priorities among verification bodies across Europe, as well as
among national regulators is too diverse. Differences in geography (i.e. climate) or
evaluation history have led to very different views about what should or should not be
assessed and accepted when testing a new product.
In conclusion, verification bodies want to emphasize the specificity of testing in the
context of insulating products. Because buildings must have specific safety and fireresistance standards, testing and verification are not always simple and come become
highly politicised. An ETV scheme would help innovative producers as long as it relies
on rigorous testing of fitness for intended use and life-long performance.
COSTS AND WILLINGNESS TO PAY FOR ETV

A1.8
Introduction
This section reviews the implementing, operating and user costs of an ETV scheme. It
provides an overview of the likely costs to developers including:
1.
Cost of testing the technology to enable it to apply to the ETV;
2.
Costs of testing the technology in the event that the verification Body requires
further testing;
3.
Official ETV fee which the developer / vendor will need to pay to the verification
programme;
4.
Other internal costs to the firms.
The section continues by looking at the costs of supplying verification services to

companies.
A1.9
The costs of potential verification for technology developers

Company A - has invested approximately 70,000 in testing equipment. A large
amount of work time is dedicated to R&D and testing, as the company works directly
with final producers to develop new products with very specific use.
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Company B - has invested over 100,000 to date in research and development, and
spends 20,000 every year on testing (with administrative cost being around 10,000).
It considers that the verification fee range should not be more than 5,000.
Company C - has invested around 200,000 in R&D for its hemp-based product, with
an annual testing budget around 15,000 (including 5,000 for operational costs). It
considers the verification fee range has to be around 3,000, emphasising the heavy
existing costs of product testing (6,000) and certification (4,000).
Company D - has spent approximately 200,000 per year in testing its product. Testing
for new products can take up to 10 years for very innovative or step-changing products.
The company is unable to assess specific costs of verification given the very large
amount of time and money spent on various testing and verification procedures.
Table A1.4 summarises the potential cost of verification for some of the companies
interviewed in this business case. Despite the limited information provided, it is possible
to conclude that companies are:
not willing to pay more than 5,000 for a verification;
generally only willing to wait approximately 2 months for verification;
Table A1.4: Costs to developers of undertaking testing and willingness to pay for
verification for ETV
A
NA
20k
15k
200k
NA
100k
200k
1m
Willingness to pay ETV fee (a)
NA
<5k
3k
NA
Administration costs for verification (b)
NA
10k
5k
NA
Total costs for verification (a + b)
NA
15k
8k
NA
Maximum amount of time willing to wait

for verification
NA
2 months
2 months
NA
Annual testing budget
Total R&D invested to date5
A1.10
The costs of supplying verification services to technology developers
A1.10.1 Overview of costs

The following tables show that the cost of testing largely depends on the results
companies want to achieve: simple testing can be relatively cheap; further evaluations
(including assessment report of certification) can however cost up to 35,000
depending on the complexity of the tests.
Table A1.5: Costs of providing testing and verification services across the
insulation sector
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Certification
Assessment report
Testing
Belgium
10k
France
15-20k
12k
3-4k
17 to 35k
12k
UK
A1.10.2 Summary of what would be the cost for developers of this technology when
undertaking an ETV
From the various interviews carried out with companies and verification bodies, it is
possible to draw some conclusions regarding the potential cost of an ETV for
developers in the insulation sector. Most of the estimates provided in the following
sections are calculated by using existing testing and certification costs as proxies. The
verification fee for an insulating product should range from 5,000 to 15,000, if no
additional testing is required. Verification fees will vary depending on the:
number of parameters that firms are seeking to verify - insulation properties,

moisture, fire or noise resistance, relation with other building products;
number of parameters ETV encompasses;
complexity and novelty of the technology;
tests the company has previously done and the need for additional testing;
location of the certification and testing bodies.
Compared to the cost technology producers are willing to pay for technology
verification, there could be a difference of up to 5,000 approximately between the
real price of verification and the maximum price producers would be willing to
pay.
Certification and testing bodies estimate the time for certification to be between 3
months and one year, depending on the numbers of parameters and the novelty of the
products. They also stated the time needed for verification must be not too long, the life
cycle of an insulating product being generally around 5 years.
ETV MARKET POTENTIAL

A1.11
Conclusions from the business case
A1.11.1 Business case conclusions

A European-wide verification scheme offers the possibility of gaining recognition of the
performance levels of a product in multiple countries, reducing the time and cost of
obtaining multiple certifications. An ETV scheme could also be set up to represent a
time and cost-friendly alternative to existing certifications and agrments, which are
often difficult to obtain for young companies. Insulation materials represent a dynamic,
high growth sector that will continue to expand because of rising consumer demand
from and more stringent building requirements and regulations. Innovation is thus
bound to flourish, particularly throughout the constellation of SMEs making up the
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sector. The market is still currently largely confined to national borders, and companies
often encounter difficulties entering new markets, due to the differences in stringent
building regulations and certification cultures among member states.
An ETV however would be created within the context of a pre-existing set of national
and European certification and testing schemes and risks being drowned in this
spaghetti bowl of schemes. In addition, Member States and additional stakeholders
may not recognise ETV as credible and relevant owing to the particular demands of
national construction sectors, for example safety issues, insurance certification and
national building requirements.
Key challenges for technology
The main challenges are:
how to assess the life-long performance of a new product. Evaluators and

product developers need to do more research in order to provide consumers
with valid indicators assessing the life-long performance of their products;
Assessing the suitability of a new insulation product according to insulation

performance as well as other criteria, for example safety, resistance to fire or
moisture. This could only rely on a set of well developed and recognised tests,
built on agreement between testing and certification organisations;
Accommodating differences in construction material markets and building

standards and managing a multiplicity of certifications in accordance to each
national market.
Value added for firms undertaking the ETV

For this technology family, the creation of an ETV scheme would:
facilitate access to the EU market, particularly for SMEs;
increase the speed for accessing the market for innovative companies;
allow greater possibilities for differentiation between average and high

performing products.
In a broader sense, an ETV scheme would provide a Europe-wide verification which

would sit above member state certifications. Assuming Member States accept ETV,
there is an opportunity to obtain fast track approval (saving costs to the developer).
Finally, ETV could represent a shorter, less expensive alternative to traditional
accreditations/certifications such as the European Keymark verification. This would be
benefit small companies in particular, which lack a sales record, as well as the
necessary cash flow in order to obtain full accreditation or certification.
Potential number of firms who might be interested in scheme
The number of firms who might be interested in the ETV scheme is difficult to assess. A
rough estimate of the number of firms who might be interested in an ETV is between
100 and 200 the insulation sector is dominated by 10-20 major companies across the
EU but there are a large number of SMEs and numerous innovative companies.
Overall, the number of products and national regulations is also very high, so the issues
companies face are rather unique. We estimate that given the fairly low demand for
ETV that the number of developers likely to apply for an ETV over the next 1-2
years would be between 10 to 20.
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A1.11.2 Sector wide conclusions

This business case can be used to draw conclusions about the need for an ETV
scheme across the wider low carbon building technology group. The insulation sector
faces the same commercialisation challenges and framework conditions (existing
standards, certifications, testing procedures) as other low carbon building sectors. It is
important to note however, that there may be differences among products which may
affect the rationale for an ETV scheme. These differences generally relate to the:
maturity of the technology group/family;
existence of methods of performance certification and testing, notably at the

European level;
existence of standards, and standardised testing methods;
size and reputation of the main innovators;
rate of innovation;
differences among Member State regulatory frameworks, and the willingness to

recognise a European verification scheme.
As a result, this case studys conclusions should be applied cautiously to other

technology families.
A1.12
Operational challenges for an ETV in this area
A1.12.1 Possible funding support mechanisms for ETV users

There are a limited number of member state and European funding mechanisms
available for market introduction projects in the insulation field. However a detailed
analysis of this issue, especially at the national level, would require looking into the
hundreds of innovation support mechanisms in all Member States. For example, in
France, companies may receive financial assistance for insulation projects within the
framework of the national competitiveness cluster policy. There is a dedicated cluster to
positive energy building technologies, Alsace Energivie. There are also a number of
funding opportunities at the European level, mainly through the Competitiveness and
Innovation Framework Programme (CIP). An example of a CIP-funded project is
MDFCYCLE, aimed at establishing a functional pilot plant to convert waste medium
density fibreboard into recycled wood fibre for insulation purposes.
A1.12.2 Number and location of verification bodies required to establish verification at
the European level
Due to the size of the European insulation sector, and the broader construction
materials sector, establishing an ETV scheme would probably require establishing at
least three verification bodies, whose work could be carried out in partnership with
member state certification and testing bodies.
A1.12.3 Potential barriers to market introduction and diffusion
The main challenges for the implementation of an ETV scheme dedicated to this
technology group are:
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The existence of a well developed and recognised set of testing and

certification organisations, which operate at the European level;
The fact that most companies must go through a long and expensive testing
and certification process, limiting their capacity to undergo additional
verification;
The importance of the safety dimension in construction product testing and

certification. Technology producers, public authorities and insurers are often
hesitant to recognise the value of any certification or testing scheme, unless
they can be fully certain of the precision and technical quality of these
schemes;
The considerable differences that exist among Member States in terms of

building requirements and regulations, as well as certification and testing
cultures. This may reduce the possibilities of an ETV being accepted and
recognised across all Member States.
In addition to this, technology producers and certification bodies expressed difficulties

identifying the exact role, objectives and added value of an ETV scheme. As a result,
their willingness to participate, and by extension their willingness to pay, is strongly
reduced.
A1.13
Making a success of ETV how to maximise value going forward

The success of an ETV will depend on a number of underpinning issues including:
Marketing the ETV brand: As most other labels and certifications, the ETV
brand will have to be strongly marketed in order to increase its visibility.
Technical excellence will not suffice to ensure ETVs success. Instead ETV
operators must ensure that ETV is branded correctly, to technology developers
and consumers.
Making the need visible and understood: Based on the experience

preparing this business case, it soon became clear that technology developers
and certification bodies were unable to identify the need an ETV scheme would
answer to. Despite their understanding of the general logic behind ETV
(improve market entry for market-ready innovative environmental technologies),
it was unclear to these stakeholders where the added value of an ETV lies in
comparison to existing routes to the market. It will therefore be necessary to
effectively communication on the rationale of an ETV, the potential benefits for
users, and its position in the landscape to existing certification, testing and
labelling schemes.
Building on complementarities: Due to the existence of multiple testing and

certification alternatives already on the market both at the national and
European level, an ETV scheme should seek to develop complementarities
with these mechanisms. For example, an ETV scheme could fast-track the
certification under the Keymark, or other multiple national certifications
schemes, those offered by the British Board of Agrment. The links between
these types of mechanism and ETV would have to be made clear and explicit,
and would have to be institutionalised.
Making it cost-competitive and reasonably simple: ETV will have to be cost

competitive in comparison to existing performance certification, testing and
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labelling mechanisms. In addition to this, the procedure to obtain the

verification should be as simple and transparent as possible.
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ANNEX 2 BUSINESS CASE: BIOBASED PRODUCTS

The following business case has been prepared on the basis of seven interviews. The
interviews include four company representatives, one R&D centre, one trade association,
one technology centre and one certification body. A total of 12 companies were contacted
as well as two certification bodies.
A2.1
Introduction
This business case builds on the market analysis of the biobased products6 technology
group (see main report) which found that the overall turnover for this market is huge and
growing with particularly large potential markets including automotive, aerospace and
construction sectors. Market opportunities exist for biocomposite materials to replace
expensive and energy intensive metals or finite fossil fuel derived plastics (particularly with
rising oil prices). This creates potentially large raw materials cost savings combined with
enhanced sustainability.
Several large players dominate the EU biobased product market, although a very large
number of SMEs are trying to enter it. However, these firms face considerable challenges,
including:
they are often in pre-profit phase due to the need for long-term investments required
to commercialise products;
there is a lack of existing standards for biobased products;
biobased products are a higher price than standard products; and hence,
the necessity of highlighting the additionality from specific characteristics of biobased products, such as biodegradability, recyclability, low toxicity, etc.
Being able to prove biobased product performance against standard products through an
ETV would help SMEs in accessing the EU market.
A2.2

Novel bioplastics have been sold for over 20 years. Manufactured from either biobased or
petrochemical feedstocks, they were originally intended to help reduce waste and free up
landfill capacity by rapidly biodegrading. Market interest for biobased plastics often came
from producers of single use applications. The focus has now shifted towards the
advantages of biodegradabilty in helping to counter climate change.
Bioplastics are compounds based on a polymer such as PLA or PHA and additives (e.g.
processing aids, stabilisers, colorants, etc.). The polymers can be made from up to 100%
renewable resources; colorants and additives can also be formulated from renewable
resources.
Biodegradability7 is dependent on the chemical structure rather than the origin of the raw
materials. As a result, there are synthetic polymers, which are certified biodegradable. This
distinguishes them from conventional standard plastics, which are neither biodegradable nor
compostable. A2.1 shows the level of biodegradability of the main products.
Biobased products are commercial or industrial products composed, in whole or in significant part, of biological products or
renewable domestic agricultural materials (including plant, animal, and marine materials) or forestry material.
7
The terms biobased and biodegradability may be related, but they are not synonymous nor are they interchangeable. If a
material is biobased it comes from plants or animals, but it does not necessarily follow that it is biodegradable. A material is
biodegradable only if microbes in the environment can break it down and use it as a food source.
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Figure A2.1: Current and emerging biobased plastics and their biodegradability
Source: PROBIBP, Product overview and market projections of emerging biobased plastics, University of Utrecht,
June 2009.
The EU currently accounts for about 30% of the global 58 billion biobased products market
which is expected to more than treble by 20208. In 2010, biobased products9 accounted for
10% of sales within the global chemical industry, accounting for $125 billion (90 billion) in
value. This share could rise to as much as 20% depending on the development of
technologies, feedstock prices and an appropriate policy framework.
Germany is the third-largest producer of plastics worldwide (7.5% market share) and has a 24%
market share in the EU. Accordingly, plastics producers - as well as converters interested in biobased
materials - find ideal framework conditions for their businesses in Germany which holds a leading
position in the bioplastics industry worldwide.
Several biobased products are already sold in the European market. For example, the
chemical industry currently uses 8-10% renewable raw materials to produce various
plastics. These plastics are used for food packaging, bags, hygiene products, packaging for
biological waste, plant pots, etc.
The current market is characterized by high growth and strong diversification. Not only is
there a growing number of materials, applications and products, but the number of
manufacturers, converters and end-users has also increased considerably from a base that
a few years ago was dominated by US food major, Cargill. Significant financial investments
have been made into production and marketing10.
In 2010 the global market for bioplastics achieved estimated sales of 2 billion. The market
is expected to grow by 32.4% a year from 2011 to 2015, reaching an estimated value of
8.2 billion in 201511.
The worldwide capacity of biobased plastics is expected to increase from 0.36Mt to 2.3Mt in
2013 and to 3.5Mt in 2020. This is equivalent to average annual growth rates of 36%
between 2007 and 2013 and 6% between 2013 and 2020.
Biochem, Putting SMEs at the core of bio innovation, 2007
Definition of bio-based products refers to industrial products made from biological feedstock and/or biotechnological products.
10
http://www.european-bioplastics.org/index.php?id=139.
11
EL Insights, Critical Insights into Energy and Environmental Technology - Bioplastics, Issue # 17, 2011.
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A2.3
Innovation drivers
A2.3.1

technology
The key policy drivers for the biobased market and bioplastics in particular include the:
A2.3.2
Renewed EU Sustainable Development Strategy (2006)12;
Environmental policies and legislation - with respect to packaging, waste, landfill,

pollution control, etc.;
Lead Market Initiative for biobased products13 - this aims to stimulate EU demand for
promising new innovative technologies or business models, resulting in early
adoption of new business solutions. It is intended to create a virtuous circle of
growing demand that will in turn reduce costs through economies of scale, rapid
product and production improvements and a new cycle of innovation. This will fuel
further demand and spinouts into the global market14. The action plan covers issues
relating to standardisation, labelling and certification to ensure the quality and
consumer information on the new products.

The key non-regulatory drivers of innovation include:
Price rises for fossil fuels;
Reduced availability of fossil fuels in the future;
Opportunities to substitute other solid resources with biobased products;
Changes in consumer behaviour.
There is a presumption that in the long-term, due to fossil fuel scarcity and resulting price
increases together with climate change pressures, there will be a shift from petroleum and
gas based raw materials towards biobased products. However, knowing at what point this
switch will occur is difficult to determine and creates market uncertainty.
Biobased materials can substitute metals and mineral-based materials in certain
applications, thus helping to free up potentially valuable resources for other uses. In some
cases, these can also offer new functionalities and higher product qualities, opening up new
business opportunities.
Advanced biomass production and new bio-chemical conversion technologies can also
lower resource use (e.g. energy, water and other inputs) in the production of existing and
new industrial (biobased) products, thereby contributing to more sustainable industrial
production and greener industries.
The recyclability, reduced greenhouse gas emissions, high biodegradability and full
compostability is also appealing to the European consumer, whose behaviour is
increasingly affected by green product qualities. Recent research also shows consumers
willingness to pay a premium for more sustainable products.
12
European Commission, Renewed EU Sustainable Development Strategy, 2006
13
European Commission, Accelerating the Development of the Market for Bio-based Products in Europe Report of the
taskforce on bio-based products, 2007.
14
European Commission, Accelerating the Development of the Market for Bio-based Products in Europe Report of the
taskforce on bio-based products, 2007.
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A2.4
A2.4.1

A wide range of biobased products exist:
Fibre based materials;
Bio-plastics and other biopolymers;
Surfactants;
Bio-solvents;
Bio-lubricants;
Pharmaceutical products (including vaccines);
Enzymes.
The most important markets in terms of turnover, overall maturity and development
potential are bioplastics and biopharmaceuticals.
A2.4.2

The total maximum technical substitution potential of biobased polymers replacing their
petrochemical counterparts is very large, estimated at 270 Mt or 90% of total polymers
(including fibres) that were consumed in 2007 worldwide. However, it will not be possible to
exploit this technical substitution potential in the short to medium term for the following
reasons:
economic barriers - especially production costs and capital availability;
technical challenges in scale-up;
short-term availability of biobased feedstocks; and,
the need for the plastics conversion sector to adapt to the new plastics.
Currently, some segments of the industry appear to have reached maturity such as
advances in catalyst systems and new versions of polymers in existing polymer families.
Polymer blends and alloys along with advances in polymer matrix composite technology are
also creating new performance capabilities whilst nanotechnology promises to advance the
performance capabilities of plastics.
Overall, the bioplastics market is still in its infancy and is likely to experience high growth.
Even if the technology appears mature with incremental levels of innovation, there exist
possibilities to improve the biobased content of products.
A2.4.3

Current developments in bioplastics are oriented towards the development of new products
as well as reductions in the cost of production. Consumers are increasingly searching for
higher biobased content and perfect biodegradability. The major uncertainty for end users
concerns the biobased content of a product.
A2.5

Company A - is a global supplier of components for vehicle interiors. It offers an integral
service embracing the conception, design, development, manufacture and distribution of
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overhead systems, doors and seats. Its research centre works on new materials including
biobased products.
Company B - produces biodegradable trays, food containers, cutleries, plates and cups.
Since its products remain more expansive than products made from petrochemical plastics,
it puts an emphasis on its products green ingredients (that is to say biobased and
biodegradable feedstocks). Certifications are important for its clients so they are assured
that the products they buy are certified as biodegradable.
Company C - produces safety eyeglasses for people at work and has to communicate the
biodegradability of its products to its customers.
Company D - produces natural food ingredients, green chemicals and biobased monomers
for PLA.
Company E15 - produces hemp-polymer composites.
15
Organisation information
Technology
developer A
Technology
developer B
Technology
developer C
Technology
developer D
Technology
developer E
Member State
Spain
France
France
The
Netherlands
France
Size
Large
Small
Small
Small
Small
Age (years)
+20
6-10
+20
+20
10
Products in development
N/A
Confidential
data
N/A
20-30
Market ready products
N/A
Confidential
data
N/A
N/A
10
Products in market
N/A
30
21
N/A
10
Product description
Biobased
components
for the
automobile
industry
Biobased
trays, food
containers,
cutleries,
plates and
cups
Biobased
safety
eyeglasses
Natural food
ingredients,
green
chemicals
and biobased
monomers
for PLA
Polymerhemp
composites
Company response mainly based on a survey response, not a detailed discussion with the company.
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NEED FOR ETV

A2.6
A2.6.1

Table A2.3 illustrates the high costs of production for companies delivering biobased
products, not only with respect to product validation but also around quality and health,
safety and environmental standard compliance. Companies do not suffer from limited track
records since they either rely on certifications or perform ad hoc test in cooperation with the
clients.
Barriers
Our company is of insufficient scale (e.g. turnover) to provide credible

guarantees to customers
technologies
A2.6.2
Our company must comply with stringent health, safety, and environmental
standards as a condition of sale
We have yet to achieve the right quality standards / accreditations (e.g.

ISO9001/14001) to satisfy customers
Standards and norms
There are several ISO standards concerning plastics. The ISO TC 61 is the standardisation
of nomenclature, methods of test, and specifications applicable to materials and products in
the field of plastics. The objective of TC 61 is the timely development and maintenance of
quality, market relevant, material and semi-finished product test methods and standards for
the global plastics industry.
In Europe, there are no norms only for biobased products. However, most biobased
products are covered by the European Norm (EN) 13432, entitled "Requirements for
packaging recoverable through composting and biodegradation16. The terms
"biodegradation", "biodegradable materials", "compostability" are very common but
frequently misused and a source of misunderstanding.
The definition of compostability is very important because materials not compatible with
composting (i.e. traditional plastics, glass, materials contaminated with heavy metals, etc.)
decrease the final quality of compost and can make it unsuitable for agriculture and,
therefore, commercially not acceptable.
EN 13432 resolves this problem by defining the characteristics a material must have to be
16
For more information, http://greenplastics.com/reference/index.php?title=EN_13432
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claimed as "compostable" and, therefore, recycled through composting of organic solid

waste. It is a reference point for producers, public authorities, composting plant managers
and, ultimately, consumers.
According to the European Bioplastics Association17, bioplastics are:
Plastics based on renewable resources; and
Biodegradable polymers, which meet all criteria of scientifically, recognised norms for
biodegradability and compostability of plastics and plastic product.
Bioplastic products provide proof of their compostability by successfully meeting EN 13432

and EN 14995 and the European Packaging Directive (94/62 EC) also refers to compliance
with EN 13432.
Once a company has achieved EN 13432 certification, it is able to have the US standard,
ASTM D6400 concerning compostable products, because the US tests are easier to pass
than those in Europe.
Amongst EU member states, Germany has introduced a norm concerning bioplastic drink
bottles under the German Packaging Directive18. Bottles "produced from at least 75%
renewable resources" are exempt from the compulsory deposit for single-use drink bottles
until December 31, 2012, but manufacturers must still participate in the DSD recycling
system. Through this regulation, the German government is encouraging the use of
renewable resources in beverages packaging, thereby stimulating substantial innovation
from the plastics industry and growth in the market.
Certification & labelling systems
Several organisations promote the use of biobased products, such as bioplastics, and
deliver labelling for biobased products, based on the biobased content of a product:
A2.6.3
ASTM D686619 was developed in the United States as a standardised analytical

method for determining the biobased content of solid, liquid, and gaseous samples
using radiocarbon dating. Recognised by European certification bodies and is a
widely used method in the bioplastics industry, it quantifies the biobased content
relative to the materials total organic content and does not consider the inorganic
carbon and other non-carbon containing substances present;
DIN CERTCO this certification scheme applies to products which are wholly or
partly produced from biobased raw materials20 and rates the proportion of biobased
raw materials21;
Ok Biobased Certification introduced by Vinotte in 2009, this certification has

arisen to satisfy the increased environmental awareness amongst customers. The
investigation method behind the certification is very simple and the exact value of
biobased content can be precisely and scientifically measured and calculated. On a
basis of the determined percentage of renewable raw materials (% Biobased), the
product can be certified as a 1,2,3 or 4 star-biobased product (as indicated on the
awarding OK Biobased logo) - the more stars, the higher the content from renewable
sources. The certification lasts for three years.
17
See http://www.european-bioplastics.org/index.php?id=129
18
Established in the 5th Amendment of the German Packaging Directive; regulation took effect in January 2009
19
http://www.astm.org/Standards/D6866.htm
20
A parallel DIN certification for Products made of compostable materials certification scheme is also available
21
It does not include an assessment or calculation of the eco-balance of the respective product, nor confirm compliance with
international, national or regional law, nor does it contain a statement about the biodegradability and compostability of a product
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In the field of biobased product, and even more in bioplastics, there are joint developments
between technology developers and buyers. Clients (that are suppliers or vendors to end
users) need specific requirements and for that reason transmit specifications to the
developer. Once the product is ready, the client and technology developer undertake joint
testing to ensure they meet client specifications. Sometimes, product volumes are very
limited so that verification does not seem to be pertinent.
Company A - is a producer of automotive components. It has its own facilities for testing
raw materials and final products. Supply chain pressures from car manufacturers (who rely
on different standards, like ISO or the norms developed by the ASTM or by the German
Association of the Automotive Industry (VDA), dictate the test requirements for its products.
Company B - uses the OK Biobased certification which is considered as sufficient. It cannot
afford a certification process for its whole set of products due to cost. Some tests are made
internally, in accordance with clients requirements, as well in client laboratories.
Company C - has based its business model on the biobased nature of its final products and
uses the OK Biobased certification which it considers is sufficient for its needs.
Company D does not use certifications for its products since it produces raw material for
industry and does not need to build its strategy on its products environmental
characteristics; rather it focuses on their technical characteristics (e.g. shock resistance).
Company E relies only on ISO 9001. Testing and industrial scale production are
performed by a third party.
A2.7
Rationale & value added for technology developers from undertaking an ETV
A2.7.1

Table A2.4 illustrates the main benefits from ETV for the developers interviewed. Only one
of the five developers showed any interest in an ETV scheme.
Benefits of ETV
No benefit from an ETV
Key: Responses relate to a Significant benefit unless in bold which is regarded by the developer as a Highly
Significant benefit
Company A - does not consider an ETV helpful in any way since it has to comply with its
clients testing protocols which differ from one company to another. Its strength is related, on
the one hand, to the low cost of its products and, on the other hand, to the integral approach
it proposes to its client, from the design in cooperation with the client to the production
including if needed R&D.
Company B - produces many products and could not afford to pay for an ETV for each
product nor for the process of production, since the final products only are of interest for the
client. For that reason, it is not interested in an ETV. Further, it already benefits from a
green certification and does not see what ETV would add since the characteristics of its
product that pass a certification process are known by the customers.
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Company C - does not see any interest in benefiting from a scheme that would certify the
performance claim of its products since there are already several appropriate certification
schemes.
Company D - does not believe an ETV would increase its market position since its products
need to comply with specific requirements imposed by clients (e.g. for shock resistance).
ETV would not certify such requirements and therefore would not eliminate the need for the
company to follow the additional requirements imposed by its clients.
Company E - believes ETV would help it to increase its credibility on the market. Its director
is very interested in ETV.
A2.7.2
Conclusions - why developers of this technology would want to undertake an ETV

Markets for biobased products are currently too small and there is high price competition
with traditional products. Producers sometimes suffer from higher costs and hence seek to
communicate to consumers the environmental characteristics of their products to
counterbalance this price disadvantage. This communication is based on well-known and
well-diffused certifications that seem to be sufficient: existing measurement methods and
certification processes limit the added value of the ETV for biobased products. Only
dramatic changes in the customers and final users behaviour could push some companies
towards a demand for an ETV. Consequently, none of the companies we consulted
showed any interest in an applying for an ETV and as markets are now the demand
for an ETV in this market area is highly questionable.
A2.7.3

Stakeholders consider that the need for ETV is not yet proven. ETV would be useful for
companies that sell products that differ from traditional ones not only as regards their
biodegradability and/or their biobased content but also as regards their effect on health for
those involved in their manufacture, supply and installation. For example, a company that
sells biobased insulation might propose products that have the same characteristics as any
other product but with less harming effect for the workers that have to transport and install
them. Existing certifications would be of no interest since these only deal with the
characteristics of the products in terms of biodegradability and/or content characteristics but
not more. Only an ETV would provide this company with a scheme that would certify the
absence of potential health impacts from its products. However, the markets of biobased
products are not yet ready and such a situation has yet to happen.

A2.8
Introduction
This section provides a review of the cost of implementing, operating and using an ETV
scheme. It starts by providing a detailed overview of the likely costs to developers from
undertaking an ETV verification which include:
1. Costs of testing of the technology to enable it to apply to the ETV;
2. Costs of testing the technology in the event that the Verification Body requires
further testing;
3. Official ETV fee - which the developer / vendor will need to pay to the verification
programme);
4. Other internal costs to the firms.
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companies.
A2.9

Company A regards testing costs as product dependent. It is currently developing a
product for 3 million of which 300,000 is budgeted for testing (though this percentage can
change depending on the product). Two thirds of the tests cost correspond to personnel
costs.
Company B - refused to provide specific figures since it considers that such figures are very
strategic.
Company C - considers that 5,000-10,000 is required to pay for a product verification by
Vinotte. It was prepared to pay the same amount to benefit from an ETV.
Company D no cost information was available.
Company E - would devote 15,000 for testing activities if they were performed internally. It
is willing to pay 5,000 for an ETV.
Table A2.5 summarises these various costs to companies. Key conclusions are that:
firms support internal costs for tests and verification which can correspond to an
important share of the costs of development of the final product;
the timescale for verification for these types of product is already long (more than 6
months for biodegradability testing and can be up to 12 months). It is likely then that
companies in this sector would accept a timescale from 6-12 months for ETV.
Table A2.5: Costs to developers of undertaking testing and verification

A
Testing
costs up to
10% of total
cost of
developme
nt
R&D
budget
(correspond
ing to 810% of
turnover):
1,5m
N/A
N/A
Not
relevant
5,00010,000
N/A
N/A
5,000
Administration costs for

verification (b)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Likely unit/product sale price (c)
N/A
N/A
N/A
N/A
N/A
12 months
12 months
12 months
12 months
2 months
Testing costs (or total R&D

22
invested to date)
Maximum amount of time willing to

wait for verification
22
E
Testing
costs: 10k
R&D to
date: 2m
Note that some firms may only be able to provide a total or annual development cost
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A2.10

Existing certifications for bio-based products cost between 5,000 and 20,000 (see Table
A2.6).
Table A2.6: Costs of providing testing and certification services across the Biobased
materials sector
Biodegradability
Resistance of
materials
Belgium
5,000-10,000 (C)
Germany
15,000-20,000 (C)
5,000-6,000 (T)
Spain
Key: T = testing; C = certification

A2.11

The low level of interest for ETV amongst the five companies sampled (i.e. 40% interest)
suggests a weak demand for this type of verification for biobased products.
Furthermore, based on only two responses, the willingness to pay an ETV fee is between
5,000 to 10,000, whereas existing certifications concerning the composition of bio-based
products are between 5,000 and 20,000.
We conclude therefore that in some cases, verifications of this type of product are
likely to be self-financing at the outset; in others there will be a funding shortfall,
perhaps of around 10,000, between what developers are prepared to pay as a fee and
the cost of providing the service to developers.
A critical point regarding the willingness to pay is that biobased products are often
manufactured in small volumes. This means that a company cannot afford to pay several
tens of thousands of Euros to verify a product that is only likely to generate tens of
thousands of Euros of turnover.
Conversely, for some products, the cost of verifying technical characteristics can be an
important part of the total cost of production. If an ETV was to verify the outcomes of such
tests then the cost of undertaking an ETV would no longer be considered as additional
investment and might be more acceptable to companies.
A2.11.2 Key challenges for technology
Biobased products must respond to the same problems that standard plastics face (i.e.
shock resistance, temperature resistance or insulation). The first key challenge for this
technology is to decrease the price of final products to become competitive in face of
standards plastics. For that, researchers can find solutions to diminish the costs of
production such as a new and cheaper production process. However, any drop in fossil fuel
prices will exacerbate this problem.
28
EPEC
Another problem relates to the field of application of the ETV scheme. When producers
make a tailor-made product for a specific client, volumes are low in most cases so that the
verification could not be pertinent in a situation of price competition. Further, even if ETV
applied to the product, the seller as well as the customer would conduct several tests in
order to verify that the products characteristics are in line with the specific requirements of
the customer. That means that ETV would not reduce the costs for testing and verification
but would increase the total cost of testing and verification.
A2.11.3 Value added for firms from undertaking the ETV
The main problem in this area is competition with conventional plastics. For the moment,
conventional plastics remain cheaper than bioplastics. Producers of bioplastics
communicate on the environmental characteristics of their products and count on the
willingness of customers to buy more expansive but greener products. There are several
certifications that help them in this communication. Companies consider that the
certification of the biobased content is the only information that matters; and so far, the
certifications provided by DIN CERTCO, Vinotte, ASMT, etc. provide these companies
with a scheme and an international credibility that is deemed sufficient.
An application for ETV would increase the sale price without necessarily increasing an
applicants market share. Besides, an ETV would have to be done for each specific product,
representing a huge number of verifications and a dramatic increase in price of the final
product, which would not be accepted by the customers.
However, once the market for biobased products is mature and prices have fallen, ETV
could help companies to reinforce their communication on the technical characteristics of
their products as well as the environmental advantages of their products compared to
conventional products.
A2.11.4 Potential number of firms who might be interested in scheme
Around 1,000 firms in Europe deliver biobased products23. Some of them are large
companies, like BASF for instance (which sells commercial products Ecoflex and Ecovio).
The industry also comprises numerous SMEs focused on niche markets.
Large companies would not necessarily be the most interested in ETV since they are
already occupy prominent market positions. In contrast, smaller players might have an
interest in ETV to secure their position in the market or to enter the market and afterwards to
increase their market share. It is reasonable to assume that 1-2% of the existing companies
will be interested in applying for ETV whereas new players will also show an interest.
In all, given the very low interest in ETV (at least currently), we estimate that over a five
year period, between 10 to 50 companies could be interested in applying for an ETV,
or roughly 4 to 20 over the next two years.
Biobased products are emerging but their presence in the markets remains limited and they
are in general manufactured in small volumes24. Currently, the most important barriers are
the cost of production of biobased products and the difficulties in entering the market. For
producers, the key challenge is not related to the production process since it is not too
difficult to produce biobased products, but to reduce production costs. The only way to
counterbalance higher prices is to communicate the negative impacts of conventional
plastics on the environment and the virtues of biobased products. As discussed, several
certifications exist that provide companies with this communication tool. However, a pan23
24
Estimate provided by a technology developer

Advisory Group for Bio-based Products, Taking bio-based from promise to market, 2009
29
EPEC
European verification scheme of performance claims is likely to offer these

advantages as well, with potentially more credibility for the EU27 and beyond.
Furthermore, existing certifications are costly. The challenge for ETV is to provide the same
outcomes of these certifications without increasing dramatically the cost for testing and
verification to firms.
A2.12
A2.12.1 Possible funding mechanisms for ETV users

National and European mechanisms are available for funding projects dealing with biobased
products. At national level, the French Competitiveness Cluster called Industries & AgroResources supports biorefinery projects. In Germany, the BMELV RTD Funding Programme
devotes around 50 million per year for research, development and demonstration projects
for the use of biomass including biorefineries.
At the European level, from 2007 to 2010, the FP7 has funded 11 projects related to
biorefineries25. In 2011, other projects have been funded under a call dealing with Novel
biotechnology approaches for transforming industrial and/or municipal biowaste into
bioproducts. Such projects can include budgets for testing and verification of technical
properties. For instance, the European project EcoPlast26, which deals with the development
of novel biocomposites having biopolymers as base matrix that are reinforced with natural
fibres, has some tests scheduled around the characteristics of the raw biobased materials
and on the final product as well.
A2.12.2 Number and location of verification bodies required to establish verification at the
European level
Technical centres and verification bodies of biobased products are numerous in Europe.
The former carry out analyses on technical characteristics of the products (e.g. resistance)
whereas the latter perform analyses on environmental characteristics of products (e.g.
degradation, disintegration, chemical analysis and ecotoxicity).
However, given the low demand for ETV and the likely levels of applicants, we assume that
only one verification body will be needed to verify all EU biobased products. This has
the advantage of the one VB building its knowledge base and contacts considerably across
the EU and achieving economies through undertaking all verifications.
Company views
For two or three years, biobased products benefit from certifications that help them to
communicate on their positive effects on environment (or at least on the absence of harming
environmental effects). These measurement methods and certification processes limit the
added value of the ETV for the biobased products. Markets for biobased products are too
small nowadays, which limits the interest of companies in ETV. The cost for ETV is too high
in comparison with what companies pay for passing certification that testify the biobased
content of their products (maximum of 20,000).
Stakeholder views
25
http://www.bioref-integ.eu/fileadmin/bioref-integ/user/documents/13._Peters_-_Biorefinery_Policy_Issues_and_Products_130910.pdf
26
https://www.ecoplastproject.com
30
EPEC
ETV would be useful for companies that sell products that differ from the traditional ones not
only as regards their biodegradability and/or their biobased content but also as regards their
effect on health for the persons who manipulate them. At the time being, markets remain too
small and it is unlikely that companies would apply for ETV. Biobased products are
emerging and time is needed before ETV would raise the interest of companies.
A2.13

In the Action Plan for biobased products adopted in 200727, the European Commission
emphasised the need to develop standardisation, labelling and certification. Reporting to the
European Commission in 200928, the ad hoc Advisory Group for Biobased Products
recommended to develop clear and unambiguous European and international standards.
The standards will help to verify claims about biobased products in the future (e.g. biodegradability, biobased carbon content, recyclability, and sustainability).
In the past year or so, such certifications have been proposed to the market and seem to
have filled a need, provided that the companies consider that these certifications meet their
customer needs.
The success of ETV therefore depends on three different factors:
Firstly, the take-off of ETV for biobased products needs further policy impetus from
the European Commission and Member States to increase the development of
biobased products. Measures are needed to increase R&D to enhance the supply
of products and to reduce production costs. Measures are also needed to increase
demand for biobased products, from the public sector, industry and consumers;
Secondly, specific efforts will be required to involve and learn from the experiences
of existing institutions that deliver certifications. Mechanisms should ensure that the
testing protocols are compatible with each other to avoid double testing. For
instance, a product that would apply to ETV might apply at the same time to one or
several of these certifications. This implies that the ETV protocol would encompass
the test procedures of these individual certifications;
Thirdly, communication on ETV should be as precise as possible in particular

regarding the advantages for the companies that would benefit from it as well as on
the costs. Interviews show that the interest of ETV is not straightforward. Specific
efforts will have to be made towards the potential beneficiaries of the scheme as
well as towards the clients and potential clients of the products that have been
verified by ETV.
27
European commission (2007), Action Plan for bio-based products, SEC (2007) 1729
28
Advisory Group for Bio-based Products (2009), Taking bio-based from promise to market
31
EPEC
ANNEX 3 BUSINESS CASE: SITE INVESTIGATION TOOLS

The following business case has been prepared on the basis of thirteen interviews. The
interviews include eight company representatives (including two end users), three testing
bodies and two academic organisations.
A3.1
Introduction
This business case builds on the findings of the main market analysis which showed that,
while soil and groundwater remediation technologies is a mature market, there are a large
number of innovative technology companies seeking to bring new testing and site
characterisation and diagnostic techniques to commercialisation. These have the potential
to significantly decrease the need for laboratory testing29 and hence speed up the process of
site characterisation whilst also improving knowledge about site contaminants. Overall,
such technologies could provide a step change in current practices which in turn could
reduce costs considerably.
The companies featured in this business case have products that cover different types of
site characterisation including: probes, on site samplers, heavy metal detectors and X-ray
fluorescents. New technologies require on site demonstration which is time consuming,
costly and often difficult to conduct due to the lack of appropriate sites for testing. The
industry is dominated by large environmental engineering consulting firms that test new
technologies for quality assurance before use after considering their performance claims.
This is necessary because of the diverse nature of contaminated sites. Testing and
validation are a prerequisite for acceptance of a new product. This business case shows
the benefits that ETV will bring to both technology developers and end users.
A3.1.1

Contaminated land is a prevalent problem in the EU and while many countries such as the
UK, Sweden, the Netherlands, Denmark and France are stable, others such as Spain,
Greece and those in Eastern Europe have large market opportunities. Austria and Germany
in particular have large market potential. The Czech Republic has a growing market for land
remediation with increased confidence in the available applications. Sweden and the
Netherlands have stable markets which would benefit from the increased use of site
characterisation applications to reduce laboratory costs. The UK is one of the largest land
remediation markets in the EU with a legacy of contaminated sites. Turnover for
contaminated land remediation (not including assessment) was 0.83 billion in 200730. In
France, another sizeable market, the turnover for land remediation was 0.8 billion in 2007,
with growth forecast to reach 1.3 billion in 2012. In the Netherlands, a recent industry
consultation by environmental technology trade association VLM found contaminated land
and groundwater sector turnover to be worth 286m in 2008.
Contaminated sites can contain a vast number of contaminants (e.g. organic chemicals,
heavy metals, etc.) that require identification and analysis. Laboratory testing is traditionally
used to test samples of soil and groundwater collected by drilling test wells and taking core
samples. This is an expensive, invasive and time consuming process. Samples are then
tested to identify if contaminants are present and to determine what they are. More site
investigation is then needed to assess where the contaminants are in order to map out the
site. The opportunities that the latest site investigation technologies offer are faster
identification and characterisation methods.
29
Laboratory testing is a critical component of the soil and groundwater remediation market and a prerequisite for any major
remediation project
30
Sweeney, Rob. (2008): In-situ land remediation. Environmental Knowledge Transfer Network.
32
EPEC
Site characterisation technologies in the EU are relatively new compared with remediation
techniques, some of which are over 25 years old. There are now opportunities to introduce
advanced technologies into the market which can reduce the time spent on extracting
samples from sites and sending them to laboratories and hence greatly reduce stage one
site characterisation costs. This in turn allows risk assessments performed in laboratories to
be more focused and efficient. According to technology developers the site characterisation
market has started to take off in the past ten years. However, strict regulations and a lack of
end user confidence in adopting new technologies has stalled innovation31.
The commercial market in soil and groundwater testing in environmental laboratories
currently accounts for the majority of testing techniques for the contaminated land sector.
However, it is estimated that approximately 75% of soil and groundwater testing
could be conducted on-site with compact probes and test kits32. This creates a huge
potential increase in the market for rapid measurement technologies33. However, the
current market for such real time analytical tools is immature for the following reasons:
Significant lack of regulator knowledge and awareness;
End user resistance to new/unproven technologies;
Lack of harmonised standards across different regions;
Restricted access to testing sites.
Companies involved in developing site characterisation and diagnostic tools are small
specialized firms that often focus on the development of specific technologies. They work
with large construction and consultancy companies that have the experience, skills and
equipment needed for comprehensive remediation projects.
A3.2
Innovation drivers
A3.2.1

technology
The most significant EU Directives for contaminated land are:
The Water Framework Directive;
Landfill Directive;
Environmental Liability Directive;
Soil Framework Directive (in the decision-making process).
These Directives have increased the need for land remediation by forcing developers to
consider the impacts of contaminated soil and groundwater on human health, as well as
exposing developers to very large liability risks that would otherwise limit remedial actions.
Restrictions on what can be disposed of in landfill sites (together with the imposition of large
landfill fees and taxes) have also driven innovations in on site land remediation
technologies. The use of site characterisation equipment is not comprehensively regulated.
Local authorities, member state environment agencies and consulting firms dictate which
technologies they deem acceptable based on prior knowledge. Contaminated land is
31
Consultation with Derek Pedley, Environmental Sustainability Knowledge Transfer Network.
32
Tang, Alec (2007): Rapid measurements tools. Environmental Knowledge Transfer Network.
33
Tang, Alec (2007): Rapid measurements tools. Environmental Knowledge Transfer Network.
33
EPEC
regulated by present levels of contamination, not how remediation is achieved. Thus the use
and acceptability of technologies, overall, is determined on a individual, highly subjective
basis. The acceptance of site characterisation technologies is highly dependent on end user
knowledge of the technology and regulator knowledge.
In the area of land remediation, local authority personal who are generally not experts often
have a lack of confidence in new processes. They tend to use techniques that they have
known to be used in the past so as to avoid failure and perceived detrimental impacts on
human health from poor remediation34. This has largely affected the uptake of new site
investigation technologies and has contributed to the resistance of innovation.
A3.2.2

The primary driver of investment in site investigation tools is to reduce costs. The main
objective of the company responsible for designing a site remediation project is to ensure
that it has the most comprehensive analysis and mapping of the nature and extent of a sites
contamination at least possible cost. The potential to reduce the costs to consultants of
using laboratory testing for multiple samples of groundwater and/or soil, whilst also
enhancing the knowledge of where precisely contamination might exist on site, creates a
strong incentive for technology developers to bring innovative site investigation tools to
market. Furthermore, the ability of new techniques to provide real time analysis of
contaminants creates a further selling point which could help to refine a remediation project
and save money.
A3.3
A3.3.1

There are now a large number of real time site characterisation and diagnostic technologies
on the market. Examples include35:
Biosensors to detect dioxins, producing results within ten minutes;
DNA dye detectors;
X-ray fluorescent meters;
Membrane probe detectors with spectrometers to detect contaminant hot spots for
contaminants for site heat mapping.
The application of some new technologies is more accepted in some Member States than
others (e.g. XRD is widely used in Germany compared to the UK).
A3.3.2

Leading edge technologies currently being developed include:
Soil scanners and soil diagnostic tools used to detect the presence of polycyclic
aromatic hydrocarbons (PAHs) in soil36;
34
EURODEMO (2007): European platform for demonstration of efficient soil and groundwater remediation. Sixth Framework
Programme, European Commission.
35
There are variations of these technologies and many of the innovations in site characterisation are focused on improving
these technologies and applying them in new ways.
36
Historically PAHs are detected with chemical testing in laboratories which is time consuming, costly and exposure of samples
can skew contaminant concentration levels
34
EPEC
Cone Penetrometer Technology (CPT) used for rapid site characterisation of

organic matter;
Hand held X-ray Diffraction (XRD) used to detect heavy metals;
Hand held X-ray Spectrometer (XRS) used to measure pH and carbon levels in soil;
Geophysical tracer equipment to detect fuels and dyes;
Geo-probes used for on-site soil sampling which limits drilling and the need for
wells;
Multi-parameter and multi-species sensors;
Combined phases (gases and aerosols) detection in one sensor;
Embedded optical fibre sensors;
Wireless sensors, Radio Frequency Identification (RFID) for the remote collection of
data as well as telemetry;
Biosensors for biotoxicity, bioaerosols and bioluminus bacteria;
Miniaturisation of systems (e.g. laser-ablation mass spectrometry) for Lab on a

chip sensors.
While these products are diverse in their underpinning technologies and the contaminants
they aim to diagnose, new developments and innovation in the field of site investigation are
all focused on reducing costs by decreasing the amount of necessary laboratory testing.
Technology developers interviewed for this business case indicated that they do not face
extensive competition in their particular product areas. This is an indication of the relatively
new development of this sector. It also highlights the market need for a large number of real
time analysers for different contaminants. One technology developer noted that:
the need for innovation surrounds analysis in the field as opposed to in the lab. However, to
date lab testing has always been safer due to the high levels of standardization in labs. Labs
are heavily regulated and therefore testing standards are trusted and well known.
Regarding future market development and efficiency in the sector one developer stated that
Site characterisation is key to the remediation market. What is needed are tools that are
quick to use, coupled with pragmatic approaches that allow contractors to map sites in order
to properly mitigate health risks.
A3.3.3

Given the current relatively immature status of site characterisation technology and the
advanced technical knowledge held by product developers and end users, it is unlikely that
performance standards will be adopted for some time.
A3.4

Company A - has developed a scanner for soil which is a chemical and biological sensor for
the rapid detection of PAHs. It is currently developing biosensors for the rapid detection of
dioxins in soil. Its main sales are in North America and to a lesser extent the EU with the
Middle East offering growth opportunities.
35
EPEC
Company B - has over ten years experience of developing site characterisation and
remediation techniques. It specialises in the development of biosensors to determine
whether or not bioremediation of soil is a plausible option for any given site. It has two
products on sale and two in development. It sells into the EU, Eastern Europe and China.
Company C - is Dutch owned, over fifty years old and specialises in the development of site
characterisation technologies (e.g. a soil core sampler to detect volatile organics and a
sampling probe that can be installed rapidly and under all geological conditions and tests
soil on multiple parameters). It is also a member of the standardisation board for technical
requirements of soil and groundwater sampling technologies in the Netherlands. Selling
products globally, it has ten to twenty technologies under development at any one time.
Company D - has developed a handheld luminator that emits light to detect bacteria and
provides a toxicity tests for soils. This technology is traditionally used for testing in water and
groundwater but the company has adapted it for soils. The company was acquired by a
large water utility in 2008. It is active in the EU and Japan.
Company E - is a multinational company that specialises in site characterisation and is also
a developer of rapid measurement tools. It employs over 13,000 staff across its EU offices
and has a turnover of 2.3 billion in 2010. It is developing hand held XRF screening tools
that detect the presence of heavy metals, as well as rapid screening tools for CPT.
A summary of each developer is shown in Table A3.1. All firms have at least one product in
the market and a pipeline of innovations. As stated in the market analysis, the UK and the
Netherlands are two of the largest markets in the EU, and have numerous innovative
technology developers, which helps explain the concentration of firms from these two
member states.
Organisation
information
Technology
developer A
Technology
developer B
Technology
developer C
Technology
developer D
Technology
developer E
Member State
UK
UK
NL
UK
NL
Size
Micro
Small
Medium
Micro
Large
Age (years)
6-10
11-20
20+
6-10
20+
Products in
development
5+
3-5
Market ready
products
3-5
Products in market
5+
5+
Product description
Soil scanner to
detect PAHs in
soil
Biosensors for
the chemical
analysis of soil
Soil sampler
coring tube to
test for
volatiles
Hand held
luminator for
detection of
bacteria in soil
Hand held
XRD heavy
metal detector
36
EPEC
NEED FOR ETV

A3.5
A3.5.1

Table A3.2 below shows that the three most importance barriers in the site investigation
market are:
the highly risk averse nature of the remediation industry;
a lack of suitable sites for testing products; and,
uncertainty about the suitability of new technologies, given the diverse nature of
contaminated sites.

Barriers
We have limited or no track record of sales

x
x
A3.5.2
Customers are uncertain about our products environmental performance
Customers are uncertain as to how suitable our product is to their operations (i.e.
fitness for use)
We are unable to demonstrate the performance of our technology in real world

operational conditions
technologies

Lack of mutual recognition and harmonised standards prevents market access
Other: Lack of suitable sites for testing
Standardisation provides a set of specific parameters against which technologies can be
tested. Examples of ISO standards in this sector are shown in the Box below.
ISO requirements for the site characterisation sector
ISO 15799:2003 - Soil quality Guidance on the ecotoxicological characterization of soils and soil
materials
ISO 15175:2004 - Soil quality Characterization of soil related to groundwater protection
37
EPEC
ISO/TS 17892-11:2004 - Geotechnical investigation and testing Laboratory testing of soil -- Part
11: Determination of permeability by constant and falling head
ISO 10381-5:2005 - Soil quality -- Sampling Part 5: Guidance on the procedure for the
investigation of urban and industrial sites with regard to soil contamination
ISO 10381-7:2005 - Soil quality -- Sampling Part 7: Guidance on sampling of soil gas
ISO 22475-1:2006 - Geotechnical investigation and testing -- Sampling methods and
groundwater measurements Part 1: Technical principles for execution
ISO/TS 21268-3:2007 - Soil quality -- Leaching procedures for subsequent chemical and
ecotoxicological testing of soil and soil materials Part 3: Up-flow percolation test
ISO/TS 21268-4:2007 - Soil quality -- Leaching procedures for subsequent chemical and
ecotoxicological testing of soil and soil materials Part 4: Influence of pH on leaching with initial
acid/base addition
ISO 17402:2008 - Soil quality Requirements and guidance for the selection and application of
methods for the assessment of bioavailability of contaminants in soil and soil materials
ISO 18772:2008 - Soil quality Guidance on leaching procedures for subsequent chemical and
ecotoxicological testing of soils and soil materials
Note: CEN, EN and ISO standards for Geo-technical investigation are interrelated and
overlapping, only ISO titles are presented.
ASTM International37, through its 141 technical standards writing committees and extensive
industry networks, has developed over 12,000 international voluntary consensus standards
that are globally recognised. Some of those applied to groundwater monitoring are shown in
Table A3.3
Table A3.3: ASTM standards that apply to water monitoring
Standard
Name
What the standard covers
ASTM D7045 04(2010)
Standard
Guide
for
Optimization of Ground
Water
Monitoring
Constituents for Detection
Monitoring Programmes for
RCRA Waste Disposal
Facilities
Identification of effective groundwater monitoring

constituents
for
a
detection-monitoring
programme.
ASTM D5092 04(2010)e1
Standard
Practice
for
Design and Installation of
Ground Water Monitoring
Wells
Design and installation of groundwater monitoring

wells will promote (1) efficient and effective site
hydrogeological characterization; (2) durable and
reliable well construction; and (3) acquisition of
representative groundwater quality samples,
groundwater levels, and hydraulic conductivity
testing data from monitoring wells.
ASTM D5521 05
Standard
Guide
for
Development of GroundWater Monitoring Wells in
Granular Aquifers
representative samples of ground water that can

be analyzed to determine physical properties and
water-quality parameters of the sample or
potentiometric levels that are representative of
the total hydraulic head of that portion of the
aquifer screened by the well, or both
Current standards and regulations in the contaminated land sector have two drawbacks:
37
Formerly known as the American Society for Testing and Materials see www.astm.org
38
EPEC
They do not provide scope for validating more advanced technologies that go
beyond the standard;
They regulate the levels and types of containments present on the site, not the
process of testing for or identifying them. Therefore, if a technology is able to scan
a site and analyse the types of contaminants present, no standards exist to show
the time saved by the avoidance of laboratory testing or the costs savings provided.
One company noted that the merit and strength of ISO standards largely depends on the
working group that has written them. There are therefore large differences in how
sophisticated and detailed standards may be.
A3.5.3

Validation of technologies is always necessary in this sector before products enter the
market. The following illustrates the approaches taken by those companies interviewed:
Company A - currently licenses its product to a US consultancy which has helped to
establish the companys presence in the US. Such relationships have greatly helped to
push market acceptance of the technology internationally, with established sales in Canada,
the USA and the Middle East.
Company B - currently receives letters of approval from UK universities and laboratories to
validate its products performance claims. This is in the absence of formal testing
mechanisms. It also validates performance through demonstration trials at end user sites
which it funds itself. Whilst gaining access to end user sites is sometimes difficult to
achieve, the company is able to test new products on client sites as part of the project.
Company C internally tests its new products. Depending on the level of verification
required, experts may be brought in to write independent reports or statements that the
product meets key requirements. It also collaborates with end users for the development
and testing of new products and stated that the best way to get a product accepted in the
market is to get enthusiastic users who want to start working with it and presenting it to
regulatory advisors. A key barrier is the numerous standards that must be met including
health and safety and technical standards. Applying these standards to local requirements
across multiple territories is particularly onerous.
Company D - was fortunate in both obtaining grant funding and participation in industry
research projects which enabled their toxicity tester to be tested and validated. Without this
support it would not have been able to afford extensive testing and the validation of
performance claims. A key challenge is that regulations do not specify standards for
technologies; they only seek to control levels of contaminants. Thus formal processes and
mechanisms are needed to help reduce uncertainty in the market.
Company E - is both a technology developer and user of site characterisation tools. It
conducts new product testing on site. It then conducts laboratory analysis to obtain in-depth
descriptions of what the technology is capable of. When purchasing equipment from
manufacturers the company always insists on a certificate of performance claims. After
review, all new products are tested independently of their claims for quality assurance
purposes before use in the field. Key issues include significant end user resistance to new
products and insufficient understanding amongst end users and environmental regulators
about the types of data and decision making that takes place.
A3.5.4
Summary of approaches for proving performance
39
EPEC
Table A3.4 shows that a number of approaches are used by companies to prove
performance claims, including previous sales, demonstrations at customer sites38 and the
use of credible testing organisations.
Table A3.4: Summary of methods used by companies to prove performance claims
Approaches to providing performance claims
Previous sales to customer
Company reputation in the market
Test data from a credible testing organisation
Use of an existing ETV scheme (e.g. DAN ETV, US ETV, Canada, etc)
Demonstration at customer site
x
x
ISO certification
Other forms of certification scheme relevant to the technology area
A3.6
Rationale and value added for technology developers from undertaking an

ETV
A3.6.1

Table A3.5 illustrates that besides facilitating and accelerating market entry in domestic, EU
and non-EU markets, the other main benefit is to enable environmental regulators to better
understand and accept new site characterisation technologies.
Benefits of ETV
Facilitates market entry for our product into our home market
Reduces risk for our company when investing in RD&D
Allows our product to compete with market leading/rival products
x
x
Enables our company to secure finance from third parties
Other: Regulator acceptance of new technologies
Significant benefit
38
But not as a joint development process with potential future customers
40
EPEC
Company A - has experienced around 50% loss in profits due to end user resistance to its
new technologies. To try to resolve this problem, in 2008 the company took their soil
scanner through the EUs TRITECH ETV pilot project. This verification helped increase
sales and reduced the effort needed to prove the performance claims of the technology
across many different member states. The Managing Director noted that:
There is significant value in an ETV scheme, as third party verification greatly helps to
reduce the costs and efforts needed in trying to prove that technologies meet standards in
numerous countries. The benefits of ETV are that certification is always a requirement for
the market, and an ETV label will create faith in the technology for customers and it also
confirms the claims of the technology and helps to promote market awareness of
technologies that are available.
Before TRITECH the company spent five years seeking market acceptance of the soil
scanner. However, it estimates that 20% of its profits resulted from having the TRITECH
verification: The technology has now been recognised. Once we went through ETV it was
easier to gain market recognition and acceptance. The TRITECH experience showed that
verification creates faith in the product for customers as well as confirming the claims of the
technology.
The company has a new product in development and feels that it would benefit from ETV
and are eager to have it verified. It currently uses UK universities for testing and has also
developed close working relationships with a UK testing house that is part of the
Environment Agency. In-site demonstrations are also a large part of how the company gains
client trust. However, as there are no formal mechanisms for this process, they believe ETV
would help to standardize the process.
Company B - received government funding39 to demonstrate its product. This helped
accelerate market entry because the verification and test data was provided to end users; it
also created a 15% increase in sales.
For innovative products it is a matter of getting the client to pay for sampling, otherwise it is
too costly for small developers because of the high costs of drilling, digging wells and
testing. This largely relates to issues of accessing sites on which to test new products.
An EU ETV scheme would help to speed up the market acceptance of technologies,
particularly since there is currently no formal mechanism for technologies to be tested and
verified.
Company C - feels that there is an obvious need for an EU ETV due to the resistance
shown by environmental regulators to new products and the lack of harmonised regulations
across the EU. ETV will accelerate the rate at which new developments are accepted into
the market:
The first step is getting that stamp on technologies from regulators to ensure that they will
use it, ETV will provide this.
Having put two technologies (a soil sampler for volatile organics and a sampling probe)
through the PROMOTE ETV pilot programme in 2009, it believes the ETV was a valuable
marketing tool and that clients responded well to the fact that the technologies were verified.
It also feels that an ETV will help to harmonise standards in the industry by establishing
protocols for technology areas, thus ensuring the detail required is fit for purpose
Company D - encountered end user resistance to their new product. They feel that an EU
ETV will help to significantly reduce end user hesitation by providing a platform for new
technologies to be formally tested and reviewed by authorities.
The company became involved in site characterisation because they believe that there is a
significant need for technologies that are able to decrease the resources need for
39
This provided 30% of the costs for testing
41
EPEC
assessment (time and labour). Any formal way of providing verification for such
technologies will prove valuable to both developers and end users:
The benefits of ETV are that it is a way of proving technology. Verification is useful at all
stages of development.
Company E - has faced end user resistance to new products. This is the largest barrier that
they face and specifically relates to the lack of regulator knowledge about the sector.
Regulations are seen as outdated, creating gaps between which technologies are
acceptable and which technologies provide the best results. The company sees ETV as
being able to help decrease these gaps.
ETV will add value by accomplishing much of what we do already for development and
testing in house for new technologies. However, end users will still want to perform their
own tests on new products for quality assurance, so the success of ETV will depend largely
on who receives the cost savings and what tests are carried out to ensure the appropriate
breadth of testing.
A3.6.2

Technology developers have clearly indicated that by verifying performance data ETV will
accelerate the speed at which new technologies are accepted by end users and regulators.
This should also reduce the levels of testing that end users need to carry out because they
will have improved confidence in the new products. One developer noted:
Currently there are no labels that are useful for site characterisation technologies. What we
do is get letters of approval and references from the universities and other testing bodies.
There is no formal mechanism in existence for technologies to be tested and verified. This is
where ETV would offer value to developers. Often the largest barrier is the lack of access to
testing sites, if ETV can improve this it may be worth it.
An ETV label could also help to facilitate access to demonstration sites for developers which
in turn could generate sales. An ETV could therefore be a proxy for a track record and could
enhance a young companys credibility:
The largest problems developers face are limited sales and track records. ETV would
help to correct for this. It will help to prove that their results are equivalent to lab
testing. At the moment, the only way to achieve this is through demonstration.
A3.6.3

Help with overcoming a lack of knowledge and an aversion to new technologies
End user resistance to new technologies appears to be perpetuated by a lack of common
standards amongst member state environmental regulators, coupled with a risk aversion to
new technologies, to the point of stalling innovation.
A Dutch organisation involved with contaminated land demonstration programmes stated
that in the Netherlands the municipalities dont have a lot of knowledge therefore they dont
trust new technologies. The technologies need to be proven but it is a question of
developers and contractors not wanting to invest in certification.
Apparently Dutch remediation contractors support an ETV as they feel it will prove very
useful as a marketing tool. However, it is not evident that contractors will be willing to fund
such a programme.
A UK stakeholder also noted end user resistance: Contaminated land is a very conservative
area due to the risks, the nature of local authorities and the environment agencies, therefore
ETV will depend on convincing these bodies about the claims of the technology. Technical
training is also a setback for people in the industry, people must be made aware of what is
available.
42
EPEC
Providing credibility in the absence of a track record

The same organisation stated that the fundamental issue surrounding end user resistance is
that laboratory measurements are traditionally relied upon for site characterisation whereas
on-site testing causes distrust and uncertainty. Users of site investigation technologies
interviewed for this business case noted that the largest barrier to technology adoption is
that technology developers often have limited or no sales track record. Thus there is
significant uncertainty about the environmental performance of a new product and its
suitability to existing operations.
From an end user perspective there would be value in an ETV as it will increase their
confidence in new products and give them access to testing data, generating more
confidence in the technology.
If ETV is able to help site developers build their databases, then ETV will have significant
value for end users:
The hardest part for developers is to get that first test and that first client, ETV will
help to decrease end user uncertainty and help to overcome the lack of a track
record. End user
Reducing testing times and offering comparability
Whilst end users would still need to carry out their own testing and analysis, an ETV could
cut down on the amount of testing they require. It would also provide testing data on which
they are able to compare their findings with. This offers great value for decision making.
There is end user uncertainty with new technologies and site characterisation technologies.
For these reasons we carry out our own testing on new products and this is typical
throughout the industry. ETV will help to reduce uncertainty and reduce the costs of testing
for end users. End user
However, end users will need to ensure that an ETV is not limited to verifying laboratory test
results. ETV must provide information in a broad sense:
The boundaries of technologies are generally discovered during demonstrations.
Therefore an ETV scheme will need to provide more than the results of lab analysis to
gain an understanding of new technologies. End user

A3.7
Introduction
2. Costs of testing the technology in the event that the Verification Body requires
further testing;
programme);
companies.
A3.8

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EPEC
The fear is that the costs will be a large obstacle. If the costs are too high, smaller
companies will be unable to participate. Technology developer
Company A recalls that the costs of participating in TRITECH were approximately
15,000 to 20,000 for testing procedures, 5,000 for administration costs and 10,000 to
15,000 for the actual verification. The process took eight months to complete in total which
was found to be very reasonable. The company felt that the costs for providing ETV cannot
be too high given the large amounts that are already needed for testing to reach the point
where a product is ready for verification. The company estimates that prior to ETV they
invested 20,000 in testing if costs are more than 10,000 for ETV, SMEs might be unable
to afford it.
Company B - offers remediation services and is also a developer of site investigation
technology. It spends about 50,000 per annum on specific testing and validation of new
technologies, although actual testing will be higher since they test all new products on their
own sites and include this as part of overall project costs. The company is currently able to
sufficiently test its own products through close association with a UK university, through
which it receives the necessary declarations and letters of approval. The company does not
currently have a willingness to pay for ETV. However, if ETV is able to establish a formal
mechanism for testing and validation for new products and improve access to testing sites,
the company has stated they would then be willing to pay for an ETV scheme.
Company C - was unable to recall the cost framework for participating in the PROMOTE
ETV project, primarily because the project covered the costs of testing and verification for
participating firms. However, it recognises that testing and validation costs can range from
5,000 to 100,000 per product and its annual budget for testing new products is more than
100,000.
The costs will depend on the claims you are testing for, on how complicated you make
them. The key is how many claims you are testing for. There are costs for testing, reports
and writing of manuals.
The company would pay 5,000 for ETV although they would be willing to pay more if the
system operated in a way that ensured the claims tested for were not arbitrary and that the
breadth of testing was appropriate. However, until it is known what the technical standards
will be, the company feels ETV will be most useful as a marketing tool and will not replace
the need for validation.
Company D - was a micro-business before being acquired and did not make a profit, having
directed all its resources into the development and testing for the toxicity tester for soil and
groundwater. It has an annual budget of 100,000 covering testing, validation and product
certification. The company would pay 10,000 for ETV since it feels that small companies
are unable to afford more, despite the potential pay backs:
The largest barriers for technology developers are the costs of testing. Developers do not
have large budgets for testing - it is all wrapped up in the costs for R&D. ETV cannot be
overly expensive as many developers can only afford 5,000 to 10,000 after all of the
testing that is needed before you get to that stage.
Company E - has no specific budget for product testing, certification and validation as the
costs are specific to the type of site the product will be used on and the specific role of the
product. However, the firms very large turnover provides an indication of what it is able to
commit to product testing and validation, the majority of which is conducted in-house.
Product testing costs depend on the types of measurements required which differs greatly
for each product. The company would pay 10,000 for an ETV as they spend large amounts
on testing themselves and have laboratories that carry out testing and validation services.
Firms have indicated a willingness to pay for ETV ranging from 5k-20k;
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EPEC
Firms would accept a timescale for verification of approximately one year;
Firms do not have a clear idea of what their testing budgets are given that they
generally include development, testing and validation costs together.
45
EPEC
A
n/k
15% of
turnover
n/k
20% of
turnover
n/k
n/k
n/k
n/k
n/k
n/k
n/k
<50k
<250k
<100k
>100k
<20k
0
(currently)
<5k
10k
<10k
5k
n/k
n/k
n/k
<20k
<50k
5k-10k
30k
20%
15%
1 year
<1 year
1 year
<1 year
>2 years

Total R&D invested to date40
Annualised R&D invested to date (i.e.

based on the age of company)
Likely increase of sales expected from

certification of performance claim (in
value) (c)
for verification
Note Company D was acquired by a large utility when they were in the product testing phase and are unsure of
what verification fees and administration costs would have been at that time. Company B and D have indicated that
administration costs are not distinct from product development, testing and demonstration costs.
A3.9
A3.9.1
Overview of costs
To illustrate the potential variation in costs of verification services across the site
characterisation sector we spoke to a number of test centres including a couple who had
been involved in ETV verifications under the TRITECH and PROMOTE pilot projects.
It is important to note that these costs provide indicative, not actual, costs for the verification
and testing of the specific technologies involved in this business case. However, we are
confident that these provide the right orders of magnitude for the business case.
These results partly reflect the challenges of gaining estimates that adequately cover a
number of technology groups, rather than specific product families.
Table A3.7:
Costs of providing testing and verification services for site
characterisation
Organisation
Germany
40
Length of time to test

site characterisation
products
Testing costing
Verification costs
<1 year
15k-20k
Does not currently

provide verification
Note that some firms have only been able to provide a total annual development cost which often includes test costs
46
EPEC
Sweden
<1 year
18,000
UK
<1 year
<10k
7,200
<10k
41
Costs are greatly increased when there is no EU protocol in existence and the testing body
and developer must establish one. One organisation had to develop protocols for soil testers
based on the US ETV protocol. This added 3,600 to the cost of verification.
A3.9.2
Summary of what would be the cost for developers of this technology when
undertaking an ETV
We are able to draw the following tentative conclusions about the costs of supplying
verification services for ETV for site investigation technologies. A typical verification fee is
likely to be 10,000 depending on the measurements that are required for the
technology. Fee costs will vary according to the:
Number of parameters that firms are seeking to verify;
Complexity of the technology - for example, whether the technology is a simple

scanner that is testing for specific contaminants, or a product that is able to scan for
multiple contaminates in various conditions;
Location of developers, testing houses and verification bodies

communications between parties will increase administration costs and lengthen the
verification procedure. Where test centres are not alongside the main verification
body, the increased need for communications will increase costs.

A3.10

The use of an ETV scheme will have the following benefits for site characterisation
technology developers:
It should help environmental regulators across the EU to be more accepting of new

technologies. This in turn should reduce market uncertainty and accelerate the
adoption of novel techniques;
It will reduce the effort required to prove performance claims;
It will enhance product sales;
It should generate financial savings for end users as a result of less extensive
quality assurance testing on new products.
Overall, both site characterisation technology developers and end users perceive significant
value from an ETV scheme.
Based on the findings from this analysis we believe the funding shortfall will be limited since
the costs of verification at around 10,000 (depending on the technology) are likely to match
the willingness to pay. The scheme therefore has the potential to be self sustaining.
41
The organisation does not currently perform certification but is seeking to become involved in this area and estimates the
costs for certification as <10k based on operations they currently carry out.
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EPEC
Developers are willing to wait up to 12 months for products to be verified under an ETV.
However, among both developers and end users, the length of time required for verification
is less important than the appropriate breadth of testing being carried out.
The key challenges for the technology are:
Ensuring the appropriate breadth of testing is carried out to satisfy end users;
Validating the appropriate suite of performance claims (i.e. not measuring irrelevant
aspects of the product);
Ensuring both laboratory and field testing have been carried out.
Value added for firms from undertaking the ETV

The value added for firms undertaking ETV on new and unproven products are:
Receiving independently verified test data;
Access to testing facilities and testing sites;
Increased confidence in new products by end users;
Increased awareness of new technologies by regulators;
Accelerated market acceptance of technologies;
Increased sales.

Many developers interviewed for this business case did not have a clear idea about the
nature of the EU competition in their respective fields. This is partly due to the localised or
national nature of the remediation markets they operate in; it also partly reflects a very
nascent supply side with a lack of visibility in certain fields. Indeed, we conclude that certain
parts of the site characterisation sector are so highly specialised that there is often limited
competition in some technology areas.
Given this sector dynamic, there is likely to be more appetite from end users for an ETV
than perhaps in other sectors where technologies are perhaps better known and understood
and innovations are often based on incremental improvements in design.
One test centre indicated that there are approximately 100 high technology firms in
the EU involved in developing site characterisation tools; and much of the testing the
centre conducts is for the environmental consultants and remediation companies who would
purchase these technologies. This is an indication of the quality assurance that end users
carry out before adopting a new/unproven technology (as described above).
Overall, with a very high level of interest in an ETV, we estimate that demand for ETV in
this area could be at least 10 applications per year.
As previously discussed, the site characterisation sector covers numerous technologies
some with quite broad applications; others designed to detect very specific sets of
contaminants. This business case has investigated a suite of technologies that are broadly
representative of the wider site characterisation sector. It has also found an appetite and
perceived need for ETV. We believe that the results of the business case are therefore
applicable to the sector overall.
Technologies for site characterisation will affect the contaminated land sector. If there is
widespread use and acceptance of site investigation technologies, it will greatly reduce the
resources needed for the initial stages of land remediation. It will make site assessments
48
EPEC
less time consuming by reducing time spent on identifying contaminants, collecting samples,
and laboratory testing.
A3.11

A key operational challenge in ensuring an ETV can be awarded is to conduct both
laboratory and site-based product testing to ensure that the boundaries of the technology
are fully understood and documented.
Given that testing is costly and time consuming, and that end users carry out quality
assurance testing on new products themselves, ETV must provide enough data and
assurance for end users to decrease the amount of resources spent on testing. This is how
ETV will bring value to end users. This will be difficult given the diverse nature of
contaminated sites.
There may also be reluctance for end users to get involved with helping to fund ETV unless
certain conditions are met by the Scheme:
In order to gain a willingness to pay from the end user and other stakeholders, ETV will
have to prove cost savings to end users by the speed of the testing and the decrease in
laboratory testing. Stakeholder
One company interviewed for this business case feels that there is an obvious need for
common standards in the EU and states that for the EU ETV to be as successful as the US
ETV, it must work hard to brand itself to be recognised on an international scale. The reason
the US ETV is so successful is that it is branded internationally, and once a product is
verified, markets in the Middle East and in Africa simply accept the claims of the technology.
Legal requirements are a large factor in limiting innovation. Large knowledge gaps exist
between the industry and the regulators and while ETV is a step towards opening up the
market, progress cannot happen without legal requirements becoming updated.
Another developer who participated in the PROMOTE ETV programme, commented on their
experience, ETV would have had huge potential benefits if it was recognised by member
state environmental agencies and regulators. Initially, when clients knew about the ETV it
was a solidifying factor in getting them to go ahead with the technology and increased sales
by 10%-20%.

One company suggested that the fee for verification should be proportional to the turnover
of the company. This will ensure that micro and small firms are able to benefit from an ETV
scheme despite not being able to afford large amounts.
End users that currently collaborate with developers to test products indicated that a good
funding scheme would be to have: one third provided by the developer, one third by end
users; and one third by an ETV programme fund. This is seen as feasible given the costs
currently spent on the testing of new products.
One national environmental regulator noted with respect to funding of ETV across several
key environmental sectors that a voluntary ETV scheme will only work if sponsored heavily
by the industry it is attempting to regulate / support. The question for me is "why would a
small business want to achieve ETV certification other than to maximise market appeal?. In
the absence of a regulatory requirement, the incentive would have to come from industry
buyers who adopted the new standard as a badge of a new technologys credibility.
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EPEC
Therefore, for ETV to succeed it will need to be sponsored by the industry these
technologies are looking to serve.
At the member state level there are various options that could be explored. For example,
Company B received discretionary grant funding to support technical and commercial
feasibility studies. Without this support funding the drilling and sampling needed to test their
technology would not have been possible. Notwithstanding potential State Aid restrictions,
there might be scope for such mechanisms to factor in verification costs.
One test centre felt that an EU wide ETV will incur high bureaucratic costs which will make it
unaffordable for developers. It would like to see a simple operation where laboratories are in
control of the process with only a few persons responsible for oversight. This will allow the
need for funding to remain low. It also feels that DG Environment would have to offer
funding jointly with member states for the scheme to become fully operational.
European level
The experiences of ETV pilot projects in the contaminated land area (i.e. TRITECH and
PROMOTE) show that it is more important for site characterisation technologies to have
access to facilities with concentrated knowledge and appropriate testing sites as opposed to
ensuring that verification bodies (VB) are present in every member state. It is also unlikely to
be feasible to have VBs in every member state given the availability of test sites and
appropriate laboratories.
According to the TRITECH ETV programme42 there are eight organisations that have the
requisite credibility and experience to be immediate candidates as verification bodies for an
EU ETV scheme. These are located in Belgium, Denmark, Finland, France, Netherlands,
Germany and Sweden.
Company views
Technology developers raised concerns about the breadth of testing that will be carried out
for ETV:
The biggest issues are that technologies are used individually on different sites with
different contaminants, so the fear is that ETV will not be able to provide the right
information given the differences from site to site. Technology developer
Stakeholder views
A Dutch stakeholder is concerned that in the Netherlands there is not a strong motivation for
contractors to become involved in ETV and as a result it may become a useless process. It
stresses that contractor buy-in is fundamental and that they must be willing to invest in such
a programme for it to be successful:
In order to gain a willingness to pay from the end user and other stakeholders, ETV will
have to prove cost savings to the end user by the speed of the testing and the decrease in
laboratory testing. Stakeholder
A UK stakeholder raised concerns about the type of testing that will be done for ETV. Rapid
measurement tools offer cheaper and faster options for site characterisation. Site
demonstrations increase end user comfort with technology. However, end users will still
42
TRITECH ETV (2009): Final Report. Swedish Environmental Research Institute.
50
EPEC
want to test and prove product claims for themselves. The big question is always under
what conditions did you test it.
Opinions from end users of site characterisation technologies also illustrates the need
ideally for ETV to go beyond laboratory testing as well as regulatory/municipal authority buyin to the Scheme:
As an end user what is important is the need to see how technologies work in labs and also
how they work in field, thus ETV must show not only the laboratory test results, but also how
the technology works in the real world. Testing outputs depend on the conditions and the
boundaries it is able to set out, so there must be some idea and data present on the
boundaries of the technology, i.e. when and where and what it works on. End user
Local authorities must also be involved and willing to take some responsibility in terms of
risks. If the local authorities are not involved and vested, then ETV will not provide any
benefit. End user
One test centre stated that there would be little value in establishing ETV at the moment.
What needs to come first is a change in current regulations to make it necessary for firms to
receive an ETV logo or certificates.
A3.12

There is current uncertainty as to whether or not environmental regulators across the EU will
readily accept the market deployment of products with an EU ETV verification without prior
knowledge of the technology as well as potentially more rigorous testing results from longer
term site demonstration.
The benefits to the end users and customers are in the long term cost savings new
technologies can offer, once the savings are proven market acceptance will follow for the
technologies. What is needed is the quantification of cost savings. Technology developer
To ensure that ETV is able to maximise value the main issues to consider are:
The breadth of testing must involve both laboratory and on site testing for end users
to be satisfied with the performance claims.
ETV must provide enough data to decrease the quality assurance testing end users
perform.
ETV must be recognised by all member states, national regulators, national

environmental agencies and local authorities in order to be valuable to end users.
We think the ETV logo does not convey to the public/customers that this is a
verification scheme and the product has therefore gained independent verification of
its technology. This can be improved quite quickly with minimal impact at present.
The USA ETV use a logo which incorporates a tick mark signifying very quickly that
the product has undergone some sort of verification/ testing of its claims. We
believe eventually the USA/ Canada ETV programme should dove-tail with the EU
one. We also believe other countries would be very interested in cooperating with
the EU for recognition of their own planned ETV schemes (i.e. Brazil).
Technology developer
End users must be involved in the process in order to ensure buy in from the
industry and to have them invest in funding.
To be successful an EU ETV must have significant branding and a recognised logo

so that it is recognised internationally and not only across the EU. This is where the
greater value for developers will be realised.
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EPEC
ETV should aim to reduce the restrictions that developers face in finding appropriate
testing sites.
There is significant value in ETV as third party verification greatly helps to reduce the costs
and efforts in trying to prove that technologies meet standards in numerous countries.
Technology
developer
52
EPEC
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ANNEX 4 BUSINESS CASE: IN-LINE WATER MONITORING

The following business case has been prepared on the basis of eight interviews, including
four company representatives and four testing and certification bodies.
A4.1
Introduction
This business case builds on the findings of the Water Technology Area market analysis
which showed that novel water monitoring technologies43 are expected to benefit from ETV
since:
there is a competitive fringe of small, world class SMEs offering step changes in both
environmental performance and price reductions against large incumbent technology
providers. However, these firms lack the market credibility and sales track record to
win valuable first contracts. Lower sales volumes will also have the effect of reducing
the opportunity to improve product quality which ironically arises from having more
units deployed;
existing standards and certification procedures often exist in this sector, but new
testing and diagnostic technologies are often highly innovative and may well exceed
existing provisions;
the EU represents a leading global market due to the number of regulations affecting
water quality across both the water sector and mainstream industry. This will provide
excellent market opportunities to deploy new technologies.
For the purposes of this business case, we have focused on in-line44 water monitoring
equipment being commercialised for applications in the water industry (e.g. extending point
monitoring into water supply networks) and other sectors including food processing and the
oil and gas sector (e.g. monitoring oil concentrations in produced water from wells).
This subsector of the water monitoring industry consists of methods and probes that can
collect and analyse a number of parameters (e.g. pH, dissolved oxygen content, turbidity,
bacteria, phenolics, etc.) in real-time45. Key reasons for selecting this subsector are that:
three industry responses were received to our initial study survey indicating a clear
acknowledgement by the market of the potential value to be derived from an ETV;
it is a growth market within the EU with water utilities, food and drink processors, and
manufacturers increasingly use in-line water monitoring to enhance quality standards
and to shift the focus away from detecting contaminants in the laboratory to a more
dynamic system of monitoring which can save costs and, particularly for water
companies, help maintain a companys reputation by being better able to respond to
abnormal water quality episodes rapidly, thus helping to avoid pollution incidents46;
the opportunities for further development within the sector are vast with opportunities
to extend the range of parameters monitored, to link products with wireless
technology for dynamic monitoring across different sites, as well for miniaturisation of
the products;
43
For the purposes of the study these cover discrete technologies such as test kits and monitoring devices which includes inline monitoring devices
44
Also widely referred to as on-line or else in-distribution for water distribution networks
45
Such products typically utilise a reference database of environmental data against which the samples are compared
46
For example, by being able to increase the dosage of chemicals in the water treatment process in order to deal with a sudden
increase in particular contaminant levels.
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EPEC
A4.2
The EU possesses a world class R&D capability for water monitoring technologies
amongst its university sector as illustrated by the close association with universities
in two business cases and the presence of a leading university in a third. This
presents an excellent opportunity to focus continued efforts in facilitating the market
introduction of novel in-line sampling technologies;
there will be large opportunities to export these technologies into emerging non-EU
economies including China as well as established markets such as North America.

In 2009 the global water monitoring sector47 was worth around 2.6 billion, of which the EU
is around 1 billion (38% share).
The total value of extra-EU exports of water monitoring technologies in 2009 was 447
million. Germany was the leading exporter at around 170 million of equipment exports
(38% share). France and the UK exported similar levels at around 60 million. A third cluster
of exports included Sweden, the Netherlands, Italy, Austria and Ireland at around the 10m
to 30m level.
In-line monitoring consists of methods and probes that are integrated into the process.
These offer the analysis of any number of properties in real-time. They also offer low cost
systems that require little ongoing maintenance. Much of the early in-line monitoring market
was linked to SCADA48 systems. Water utilities and industrial processes are increasingly
using in-line monitoring to enhance environmental quality standards and improve process
efficiencies and cost savings.
Globally, the in-line water monitoring sector is still relatively young, in comparison with the
laboratory and test kits markets, and worth 95 million. Based on the EU share of the overall
water monitoring sector, we estimate that the EU in-line market in 2009 was worth around
35 million. There is scope for this market to grow considerably to 2020 although there are
innovation and commercialisation challenges to be overcome: In-line sampling is the most
difficult part of the process and a relatively new market.49
The US is the global industry leader in water monitoring with strong in-line monitoring
capabilities from companies such as Hach, YSI and Rosemount Analytical. The EU also has
a significant market presence with companies such as Siemens (Germany) and Tintometer
(Germany).
A4.3
Innovation drivers
technology
Environmental regulation is the main driver of innovation in this sector. EU legislation
currently influencing the development of in-line water monitoring technologies includes:
47
48
49
Water Framework Directive which increases the need for water quality monitoring
at the site and river basin management level;
Environmental Liability Directive - due to the need for prevention and remediation of
environmental damage;
Comprises laboratories, test kits, probes and analysers

Supervisory Control and Data Acquisition
Consultation with Technology Developer
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The Registration, Evaluation, Authorisation and Restriction of Chemical Substances

Directive (REACH) changes industry perceptions of gathering data simply for
compliance to one that generates commercial benefits.
Other drivers of innovation surround the need for technologies to address current needs and
more complex emerging issues such as source determination, ecological health assessment
and new pollutants. Globally, the focus is increasingly moving towards the early detection of
pollution incidents.
EU member states implementing these directives look to their national environmental
regulators to issue permits to the water sector and other industries which will state the
conditions under which they must operate their process and monitor resulting emission
loads. The degree to which regulators will be satisfied with the accuracy of new innovations
will have a large bearing on the willingness of end users to consider and adopt new
technologies.
A4.3.1

The desire by end users to shift away from extensive, time consuming and costly laboratory
testing of water samples, towards more continuous monitoring of water quality is a key
driver of innovation for more sophisticated monitoring devices. This in turn helps end users
to have more dynamic plant operation and hence improve their operational efficiency.
A4.4
A4.4.1

Current in-line monitoring methods include:
A4.4.2
In-line disposable filters that are used in conjunction with sampling pumps and
bailers which are used for on field filtration for dissolved metal analysis.
Flow-through cell technology which enables high quality field and laboratory
measurements where air contact with the sample has to be avoided decreasing the
time and expense of extensive testing.
Sampling valves that collect samples mid-stream and flow through membrane
filtration units into sterile sampling bags or graduated cylinders to test levels of
purification.
Microporous membrane
microbiological sampling.
methods
within
enclosed
chambers
that
provide

New innovations being pursued include:
Faster detection rates;
Increased frequency of testing;
Larger number of parameters to be tested (e.g. not one but multiple types of
bacteria);
More accuracy in measurements (e.g. parts per billion rather than parts per million);
Miniaturisation of equipment;
Enhanced data management and interpretation software;
More sophisticated wireless and network communication technologies.

56
EPEC
A4.4.3

Given the current immature status of the sector it is likely that performance standards for inline monitoring devices will take some time to be adopted. In the meantime, it is likely that
progressive end users seeking potential step changes in environmental performance,
energy savings, quality improvements to product manufacture, and reductions in
environmental compliance costs, will create informal industry standards and benchmarks
through their normal procurement practices.
A4.5

Company A develops wireless monitoring and control systems for commercial, industrial,
agrifood chain, and environmental sectors. It already supplies a number of products,
including a double sensing system and validation database, into EU and non-EU countries.
Company B is a leading provider of patented water technologies. It conducts ongoing
R&D, primarily through successful collaborations with top academic institutions, and sells
globally with operations in the EU, Middle East, South Africa and China.
Company C - is a university chemical technology department with a small track record in
developing innovative water technologies. It has developed an in-line water sampler to
monitor pre-water treatment contaminant loads for water quality purposes (e.g. bacteria,
phenolics, chemical pre-cursors within the pharmaceutical industry, etc.).
Company D - is an applied research firm (spun out from a UK university) focused on the
development of low cost power sensors and wireless networking applied to the water
treatment and monitoring technology markets. One of its products continuously monitors for
chlorine levels in water distribution networks and is globally licensed to Siemens who
manufactures it in Germany; another monitors turbidity50 and is now widely sold into UK
water service providers.
A summary of each of the developers is shown in Table A4.1. All companies have at least
one product in the market and a pipeline of innovations in development. The presence of
organisations from Finland and the UK is indicative of the relative comparative advantage
that these two member states have, alongside others such as Germany, France and
Sweden, in developing water monitoring equipment.
Table A4.1: Technology Developers
50
Organisation
information
Technology
developer A
Technology
developer B
Technology
developer C
Technology
developer D
Member State
Finland
UK
Finland
UK
Size
Micro
Small
Large
Small
Age (years)
11-20
3-5
20+
6-10
Products in
development
3-5
3-5
N/A
Market ready
products
3-5
N/A
Products in market
Product description
In-line self
validating double
sensing system
In-line
broadband
chemical toxicity
monitor
In-line water
sampling system
In-line water
monitors for
chlorine and
turbidity
Turbidity is a measure of the degree to which water loses its transparency due to the presence of suspended particles
57
EPEC
58
EPEC
NEED FOR ETV

A4.6
A4.6.1

Table A4.2 illustrates that the two main common barriers, which are closely related, are:
Uncertainty over environmental performance of new products; and,
The highly risk averse nature of customers who prefer to buy market proven
technologies.
Validation procedures are respectively the most important and third most important factors
for two developers, illustrating the challenges of verifying performance, especially when it
may be difficult to demonstrate the technology in-situ (an issue for one of the same
developers).
Barriers

Our company is of insufficient scale (e.g. turnover) to provide credible guarantees
to customers
x
x
fitness for use)
A4.6.2
x
x

Our customers are highly risk averse and prefer to buy market proven technologies
Other : Legislation to drive uptake is ambiguous in many countries
x
x
Standardisation provides a set of specific parameters against which water quality monitoring
technologies can be tested. While there are now numerous ISO standards available and in
development in this sector (see examples in the Box below), we understand that there is
no standardisation for in-line monitors. One developer also did not feel that there was
a need for extensive standards to be developed as the industry is largely self regulating.
ISO standards for water quality monitoring various contaminants
59
EPEC
ISO 7704:1985 - Evaluation of membrane filters used for microbiological analyses
ISO 6461-2:1986 - Detection and enumeration of the spores of sulfite-reducing anaerobes

(clostridia) Part 2: Method by membrane filtration
ISO 11923:1997 - Determination of suspended solids by filtration through glass-fibre filters
ISO 9308-1:2000 Determination and enumeration of Escherichia coli and coliform bacteria Part 1: Membrane filtration method
ISO 7899-2:2000 - Detection and enumeration of intestinal enterococci - Part 2: Membrane

filtration method
ISO 11731-2:2004 - Detection and enumeration of Legionella -- Part 2: Direct membrane

filtration method for waters with low bacterial counts
ISO 9562:2004 - Determination of adsorbable organically bound halogens (AOX)
ISO 16266:2006 - Detection and enumeration of Pseudomonas aeruginosa - Method by

membrane filtration
ISO standards under development for water quality monitoring
prEN ISO 5667-3; Water quality - Sampling - Part 3: Preservation and handling of water
samples (ISO/DIS 5667-3:2010)
prEN 16164; Water quality - Guidance standard for designing and selecting taxonomic keys
FprEN ISO 10523; Water quality - Determination of pH (ISO 10523:2008)
(91/271/EEC 2000/60/EC); Water quality - Performance requirements and conformity test

procedures for water monitoring equipment - Part 1: Automated waste water samples
prEN ISO 7827; Water quality - Evaluation of the "ready", "ultimate" aerobic biodegradability of
organic compounds in an aqueous medium -- Method by analysis of dissolved organic carbon
(DOC)
ASTM International51, through its 141 technical standards writing committees and extensive
industry networks, has developed over 12,000 international voluntary consensus standards
that are globally recognised. Some of those applied to water monitoring, and particularly inline monitoring are shown in Table A4.3.
Table A4.3: ASTM standards that apply to water monitoring
51
Standard
Name
What the standard covers
ASTM D3864 - 06
Continual On-Line Monitoring

Systems for Water Analysis
The
selection,
establishment,
application,
and
validation
and
verification of monitoring systems for
determining water characteristics by
continual sampling, automatic analysis,
and recording or otherwise signalling of
output data.
ASTM D4190 - 08
Standard Test Method for

Elements in Water by DirectCurrent Argon Plasma Atomic
Emission Spectroscopy
Determination of element concentrations

in many natural waters. It has the
capability
for
the
simultaneous
determination of up to 15 separate
elements
ASTM D5997
96(2009)
Standard Test Method for OnLine Monitoring of Total Carbon,

Inorganic Carbon in Water by
Ultraviolet, Persulfate Oxidation,
and Membrane Conductivity
Detecting and determining organic and

inorganic carbon impurities in water from
a variety of sources including industrial
water, drinking water, and waste water
Formerly known as the American Society for Testing and Materials see www.astm.org
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EPEC
Detection
Other standards adopted in the absence of recognised international or national standards

are those of the US and Canadian ETV programmes. For example, US EPA ETV standards
have been used by the DAN ETV programme where no other standards have been
applicable for the verification of passive samplers for water monitoring.
Because there are no common standards it is up to the discretion of environmental
regulators to accept the data presented by monitors. However, there is a disconnect
between the levels of knowledge in industry and environmental regulators. Regulators are
generally unaware of the most appropriate analytical methods available; they are also often
resistant to accept data and test results from technologies that are not traditionally used,
despite the superior information and analysis that is on offer52. This in turn influences the
technologies adopted by regulated end users. Establishing ETV protocols for new
technologies in water monitoring will go some way towards helping to improve this situation.
Certification schemes like MCERTS53 provide a framework for businesses to fulfil their
responsibilities under EU and UK law as well as to meet the quality requirements of
environmental regulators. This in turn boosts environmental regulator confidence in the
quality of monitoring at any one site which will ultimately reduce compliance costs to the
business. MCERTS covers a number of water monitoring areas including continuous
sampling and chemical testing of water and self-monitoring of effluent flows54. It is the only
scheme in the EU that provides this service for water monitoring devices.
A4.6.3

Company A faces a major challenge in proving real life performance, for example in
testing for microbes in water, since this requires additional in-situ testing. Furthermore,
besides achieving CE mark (EU Machinery Directive) compliance, it faces high costs of
certification to prove its product is able to test for basic physical parameters:
There is a real threat to Europe since many innovations will be sold or lost to China
because it is so time and money consuming to fight in our home market in Europe. One big
problem is costs for certificates. If an SME needs to spend 50,000 to 100,000 for
certificates on a new product, its simply too much.
Company B works on the ground in target market countries as much as possible,
establishing trials and where necessary offices to develop closer end user client relations.
Company C has trialled its sampler at two major Finnish pulp and paper companies.
However, it is keen to sell it into the Finnish water industry and European food and drink
sector. It intends to license the product or form a spin out as a route to market.
Company D relies on the uniqueness of its products and their ability to perform in ways
existing products cannot. Validation of performance claims is achieved by performing trials
with customers on customer sites. However, if products need to be verified this is the
responsibility of the distributor.
A4.6.4

Table A4.4 shows a number of approaches used by companies to prove performance
claims, including previous sales and demonstrations and joint development at customer
sites.
52
Caffoor, Issy. (2008): Environmental Knowledge Transfer Network. United Kingdom.
53
The Environment Agency of England and Wales Monitoring Certification Scheme
54
For more details see www.environment-agency.gov.uk/business/regulation/31829.aspx
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EPEC
Table A4.4: Summary of methods used by companies to prove performance claims

Use of an existing ETV scheme (e.g. DAN ETV, US ETV, Canada, etc)
Joint development with potential future customers
ISO certification
55
Other forms of certification scheme relevant to the technology area
A4.7
A4.7.1

Table A4.5 illustrates the main benefit from ETV is to allow products to compete with market
leading rivals. Other clear perceived advantages from undertaking an ETV are the
facilitation of products into both EU and non-EU markets (for example, China was a key
target market for one developer) and the insight that an ETV will bring to clients regarding a
products environmental impact.
Benefits of ETV
Other : Reduces costs of testing
X
X
Significant benefit
55
Company D was not asked this set of questions
62
EPEC
Company A - believes that customers have more market confidence in larger companies:
Small companies have to work in small niches because larger companies take the bigger
markets, so there are relatively larger costs for more specialist products. For example,
having to produce a 100 page manual.
An ETV could provide evidence of superior performance over and above an existing
standard as well as providing an independent validation label that the market would trust some sort of labelling is needed to establish a technologys credibility so that it can gain a
foothold in the market.
An ETV could accelerate sales in EU markets - Finnish companies are now having a hard
time to gain EU market share before non-EU countries access the same market with similar
products with lower costs. ETV provides an additional sales tool to the company but would
not give de facto access.
Company B sees an ETV as being of use primarily outside the EU and hence it will be
crucial for mutual recognition of the EU ETV by third countries to be in place for similar
developers to apply.
Company C sees an ETV as being helpful given the lack of standardisation for in-line
monitors and to facilitate sales outside of Finland.
Company D - does not feel that there is a need for ETV in the water monitoring industry,
primarily due its niche product offer:
When you have an individual and unique product there is no competition in the market so
there is no need for an ETV because it doesnt have to be proven against anything. The
customer is taken with the uniqueness of the product. The need for ETV might change if
competitors come into the market or it could be driven by the big companies asking for
ETV.
It sees ETV as being of use as an instrument if it is able to verify all of the claims of the
technology and not only specific aspects of it. However, this will not replace the need for
customers to perform their own on site testing and trials for new technologies.
Due to the companys success in licensing its product to Siemens, it may have a diminished
need for a scheme that might otherwise accelerate the market acceptance of its products.
A4.7.2

Developers recognise that an ETV will help to create a level playing field with rival
technology providers as well as improve market access in both EU and non-EU countries.
A4.7.3

There is a need for ETV, but firms do the minimum possible because of the costs. If the
driver for them to have ETV is regulated and mandatory, then they have the credence to do
it. As of now there is no driver for firms to pay for verification, they need funding and support
and incentives. National environmental regulator
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EPEC

A4.8
Introduction
2. Costs of testing the technology in the event that the Verification Body requires further
testing;
programme);
companies.
A4.9

firms are willing to pay an ETV fee of 5-10,000 for in-line monitoring equipment;
this verification fee is generally 10-50% of the testing costs;
the maximum required time for an ETV varies considerably56
One developer noted that willingness to pay will always depend on the nature of the product
Technology Developers
A
<50k
<250
(20k
testing cost)
<100k
(>10k
testing cost)
5-10k
<10k
5-10k

verification (b)
10-20k
N/A
N/A
15-30k
N/A
N/A
5-30k
Likely increase of sales expected

from certification of performance
claim (in value) (c)
N/A
N/A
N/A
<6 months
<1 year
<2 years

N/A
Not willing to
pay
-
56
Company C was happy for the timescale to be less than 2 years because further testing was required to see whether groups
of new chemicals, drugs, bacteria, etc. will be acceptable. This indicates a lack of knowledge about the actual ETV process, i.e.
that the product needs to be the market ready device, not a prototype that might be further refined.
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EPEC
A4.10

To illustrate the potential variation in costs of verification services across the water sector
we spoke to a number of test centres across Europe including several that have been
involved in ETVs. Table A4.7 illustrates the estimated range of costs from five centres.
These provide indicative, not actual, costs for the verification and testing of the specific
technologies involved in this business case. However, given that the test centres between
them have conducted product testing and certification on numerous monitoring devices, we
are confident that these provide the right orders of magnitude for the business case focus.
Test centres that have been or are currently involved with ETV type verifications, note that it
is difficult to specify precisely what costs will end up being without knowing exactly
the performance claim parameters that are to be verified.
Table A4.7:
devices
Costs of providing testing and verification services for monitoring

Testing
Poland*
Denmark*
Verification or
Certification
Testing & Verification /

Certification
9.5-40k (V)
22-94k (T&V)
<10k (IPT)
-
(average 28k57)
Sweden*
25-50k in-line devices
10k (V)
<25k - test kits

UK*
<10k (IPT)58
UK
<10k (IPT)
35-50k in-line devices

<35k - test kits
59
<15k (T&V)
60
<20k (T&C)
<5k (V)
<10k (C )
Key: * = original respondent to ETV survey conducted under EPEC study. T = testing; IPT = initial product testing;
V = verification; C = certification
Furthermore, based on ETV experiences from current European practitioners in this sector
there is often a need to undertake further testing as part of the verification. This is due to the
difficulties of relying upon submitted test data from developers as well as the data often
found to not correspond directly to the verification application.
Estimates of verification range from around 10,000 or less depending on the technology.
There does not appear to be a great deal of variation between technologies. One test centre
57
Cost estimates of verification are based on over 20 verifications across a number of environmental sectors where verification
totalled 43% of total costs.
58
The costs and time scale of testing is dependent on the parameters the product is being tested on and the suite of tests that
must be performed. In general, it takes less than 6 months to test products and total testing costs are less than 10,000. It
estimates that in the past 5 years 100 water monitoring devices have been tested.
59
This test centre does not currently perform certification but has estimated the costs of verification based on current practices.
It believes it could take less than 3 months.
60
This is the price for MCERTS. There are two parts to the MCERTS certification. Testing includes theory of laboratory testing
(<5,000) and field trials (<5,000), making total testing costs less than 10,000, depending on the amount of previous testing
and data the company is able to present. Certification includes writing of final reports and publication of certification with total
costs less than 10,000 depending on the scope of the technology and the parameters being tested.
65
EPEC
has documented a range of approximately 9.5k-40k for verification from actual verifications
across a number of sectors, with an average of verification cost of 28k.
undertaking an ETV
Given a fairly good alignment of fees across several Member States, we conclude that the
costs of supplying an ETV verification across the water monitoring sector is likely to
cost less than 10,000. This is not likely to significantly increase for in-line monitoring
devices.
Initial product testing is likely to cost less than 10,000 for simple test kits and monitoring
devices. Test costs could rise considerably to 25,000 for more sophisticated in-line
monitoring devices.

A4.11

The high level of interest for ETV amongst the four developers sampled (i.e. 75% interest)
suggests strong demand for this type of verification for in-line monitoring equipment.
Developers are willing to pay an ETV fee of 5,000-10,000 for in-line monitoring equipment.
The costs of supplying an ETV verification for this subsector is likely to cost in the order of
10,000 or less. We conclude therefore that verifications of this type of technology are
likely to be self-financing at the outset.
Despite the fact that all developers who were asked used previous sales to help prove
performance claims, in this sector there remains great uncertainty over the environmental
performance of new products and the highly risk averse nature of customers (who prefer to
buy market proven technologies) are obstacles for developers of in-line monitoring
technology. Validation procedures are also regarded as onerous for this type of technology.
The main benefits for SMEs are to:
allow products to compete with market leading rivals; and,
facilitate market entry into both EU and non-EU markets.

Whilst there is a high level of interest for ETV in this niche technology area, we do not
believe that there are a very large number of young companies across the EU27 who are
currently struggling to commercialise in-line monitoring devices.
Demand for ETV as illustrated by this business case is more likely to come from revenue
generating companies already selling existing monitoring technologies and who may see an
ETV as being a helpful market entry mechanism.
This conclusion partly reflects the relative maturity of the water monitoring sector, which has
many large companies and multinationals dominating large parts of the market including inline monitoring, against a relatively small number of highly innovative SMEs.
66
EPEC
Based on the market strengths of a number of EU member states in the water monitoring
sector, we believe that the strongest demand will come from Northern European countries.
Having sampled four companies, from Finland and the UK, out of a potential pool of 50-75
developers, we estimate that there are likely to be in the region of 15-30 companies in
this subsector who might be interested in taking part in the scheme over the next two
years.
For water technology developers it is generally easier to package laboratory scale
technologies (e.g. for 20,000 apiece) due to a faster sales cycle than performance based
technologies (for several million Euro) which are much more difficult to obtain a sale from.
Using an ETV for pan-EU sales could therefore potentially help unlock a lot more sales than
for larger process technologies.
The overall EU sector in which in-line monitoring falls is worth around 1 billion or around
ten times the size of the in-line market - and comprises portable monitoring devices, probes,
analysers and test kits. However, the ability to prove performance in other areas may be a
lot easier, not least to the relative maturity of these other technology families. We therefore
estimate that despite the larger market size, the demand for ETV in the water monitoring
sector overall could be in the region of around twice that of in-line monitoring
hence some 30-60 potential applications over a two year period.
A4.12

Although the evidence suggests that an ETV in this subsector may be self-financing, one
national environmental regulator suggested that a plausible funding scheme may be for
testing bodies to provide testing services at a very low cost for developers and to seek cost
recovery as part of the profits the firm gains on the certified product.
Both Finnish developers suggested potential support from TEKES, the state innovation
agency. However, it was noted that TEKES will not give money for instrumentation, only
basic R&D.
European level
Given the size of the EU water market and the potentially large number of developers
interested in an EU ETV scheme, we conclude the following about the number of VBs that
would be required to run an effective ETV scheme for water monitoring technologies:
The need to satisfy geographical and language issues suggests that at least 3 VBs
are required, potentially catering to Northern/Eastern Europe, Central Europe and
Southern Europe.
There might be scope for increasing the number of VBs to two in some regions, but
only where it can be sufficiently proved that there are enough verifications to be
carried out.
One caveat is that SMEs tend to find it easier to collaborate with national bodies. Language
issues will be problematic in some cases.
67
EPEC
A4.12.5 Company views

An important issue arises when examining the application of Company Cs sampler, since it
would require component modification for each end user market (e.g. water companies,
pharmaceuticals and food (which requires very clean water due to human contact), metals,
pulp and paper, etc.). This might require more than one ETV verification because different
parameters would be tested.
Stakeholder views
The market demand for verification will follow behind a regulatory scheme. National
environmental regulator
A4.13

Experiences of verification from DAN ETV
Within DAN ETV, around 20-30 verifications have now been carried out. However, between
40 to 60 additional firms (or 2-3 times the level of verifications) have been turned down
because it was not possible for them to go through the verification process. A quick scan of
the product at the outset is sufficient to judge whether the product is suitable to be verified.
We feel that very often SMEs do not have market ready technologies. Furthermore, its very
difficult for SMEs to explain when precisely they have completed their product development.
So its very good to have a preliminary test phase with SMEs to sort out problems and to
help the company to further develop its technology.
Verification requires following a lot of quality procedures and manuals which entails costs.
If performed very quickly then the length of time from first contact to completion would be
between four to six months. However, this timescale is highly dependent on the SME
understanding the verification process and there being no disruption to the SMEs activities
from the verification. Some verifications take a very long time, especially if joint verifications
with USA or Canada which can then take over one year.
68
EPEC
69
EPEC
ANNEX 5 BUSINESS CASE: MICRO COMBINED HEAT AND POWER

The following business case has been prepared on the basis of ten interviews. The
interviews include six company representatives (one of whom responded to the original ETV
survey), one trade association, two testing centres and one end user. A total of seven
companies and five centres were contacted.
A5.1
Introduction
This business case builds on the findings of the market analysis of the Energy Efficiency
technology group (see main report). This showed that there are a significant number of
highly innovative SMEs operating only at a national and regional scale many of whom are
backed with EU venture capital. For these developers, an ETV scheme could help access
untapped markets internationally and help compensate for their lack of reputation these vis
vis large multinationals, (this tends to create scepticism among potential buyers regarding
product quality and performance).
We consider the micro-Combined Heat and Power (mCHP) market to be of interest since:
A5.2
It is an emerging technology in the EU, with limited commercial sales to date and
hence a strong need to accelerate deployment by early adopters to achieve
significant cost curve reductions through mass production. This would turn mCHP
into a commodity product like solar PV;
It is a technology area in which the EU has a world class capability;
A number of SMEs compete to develop and commercialise innovative products with

different underpinning technology types alongside a number of established EU
manufacturers;
The products being developed are able to run off natural gas, biomass, biogas and
hydrogen, which in turn will enable distributed heat and power generation to be made
possible in both on-grid and off-grid applications;
It is an example of a technology that is seeking, in many cases, to replace the

existing and large gas boiler market. This alone offers a potential global mass market
but one in which incumbent companies are also developing mCHP systems to fend
off competition from new entrants;
An additional benefit of analysing the market potential for ETV in mCHP is the clear
cross-over between this Technology Group and the Energy Generation Technology
Area where energy efficiency was also featured as a discrete Technology Group.

Micro CHP systems have the ability to radically change heat generation in households and
commercial buildings while also allowing the generation of electrical power from a single
domestic appliance. Heat-led mCHP systems offer an alternative to centralised power
generation since they generate when heat demand is at its greatest. This coincides with
when electricity grid demand is also at its peak and generally met by fossil fuel based power
stations. Micro CHP could therefore be a fundamental aspect of decentralised generation
and a future smart grid which would improve generation efficiencies, reduce distribution
losses and reduce carbon emissions (in the range of 1-2 tonnes of CO2 per annum61). They
also offer the opportunity to exploit a more diverse range of feedstocks which in turn can
help with more off-grid applications (e.g. use of farm based biogas in rural communities). As
61
Source: COGEN Europe, December 2010
70
EPEC
a result, deployment of mCHP represents a true low carbon technology replacement for the
gas boiler which is less disruptive compared to other renewable and low carbon
technologies. It also offers economic savings opportunities to the end user where Feed in
Tariffs (FITs) enable surplus electricity to be sold into the grid at a premium.
The EU mCHP market is described by one technology developer as cannibalism of the
existing gas boiler market which is both very mature and dominated by incumbent
companies seeking to protect their market share as new innovations enter the market.
Switching to mCHP systems will also rely greatly on the existing installation and service
infrastructure and skills base for heating which makes it easier to adopt than some other low
carbon technologies.
BSRIA estimated the global domestic boiler market to be worth around 7.9 (US$9.7) billion
in 2006, covering close to 12 million units, and still growing62. Globally, Europe is the
biggest market for domestic boilers with France, Germany, Italy, the Netherlands and the
UK dominating EU sales. We estimate that the total EU market size is therefore worth at
2.5 billion or more.
Figure A5.1 shows how the condensing (or high efficiency) boiler market expanded at the
expense of traditional boilers, from 3 million units in 2007 to 3.9 million in 2010, while
renewable boilers (e.g. small-scale biomass boilers) rose from 1 million to 1.4 million units
over the same period. Micro CHP only achieved around 100,000 installed units in 2010
mostly across the main gas using countries such as Germany, Italy, the Netherlands and the
UK bringing total installed capacity to around 230,000 units63. Despite this nascent market
for mCHP, according to BAXI - a leading European producer of boilers - the strongest future
growth in the boiler sector will be for the mCHP64, an area the company has invested heavily
including through its subsidiary BAXI-SenerTec UK65.
Figure A5.1: Western European market evolution of high efficiency boilers by
technology
Source: www.hydroheat.com.au/downloads/Baxi%20presentation.pdf
62
Boiler Market & Energy Efficiency, BSRIA, January 2008 [Available at http://www.bsria.co.uk/news/1984/]
63
DELTA Energy & Environment, mCHP in Europe: The Opportunities and Options, Presentation by Sytze Dijkstra, April 2009
64
BAXI Sener Tec UK. www.hydroheat.com.au/downloads/Baxi%20presentation.pdf.
65
BAXI Sener Tec UK (2011): http://www.baxi-senertec.co.uk/.
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EPEC
Future estimates of the mCHP market predict annual installations of around 550,000 units
by 2015 (creating a cumulative installed base of around 2 million units), rising to around
950,000 annual units by 2020 (total installed base of 5.6 million units)66.
At the European level, boiler production is strongly consolidated around a handful of firms.
Based on consultations the following illustrates the current ranking of these major suppliers,
most of which are understood to have mCHP products close to production:
1. Bosch;
2. Vaillant (e.g. selling Hondas ECOWILL mCHP unit into the EU market combined
with its proprietary control and connection technologies67);
3. BDR Thermea (BDR stands for BAXI, De Detrich and Remeha) - BAXI and Remeha
are both developing mCHP units;
4. Viessmann (marketing a Stirling based mCHP system).
Japan was the first country to introduce mCHP systems and essentially remains the only
country globally where the technology is fully commercial. Hondas 1kW electric ECOWILL
(based around internal combustion engine (ICE) technology) was introduced in 2003 and
had sold more than 90,000 units by 200968. Yanmar also introduced a larger capacity mCHP
unit based on ICE. However, Japan has also been extensively researching fuel cell mCHP
technologies for some time, with a collaborative Polymer Electrolyte Fuel Cell (PEFC)
research programme between manufacturers Panasonic, Toshiba, Sanyos ENEOS Cell
Tech and Ebara Ballard, as well as Kyocera developing a Solid Oxide Fuel Cell (SOFC)
mCHP. Since 2005 a residential fuel cell mCHP deployment programme has installed over
3,300 system and an associated government development programme has focused on
auxillary equipment with the intention of achieving cost reductions for several
manufacturers69.
However, European firms are also global leaders in both the mCHP engine technology and
the overall product, with Germany, the Netherlands and the UK having market leading
innovation and manufacturing centres70.
The market entry strategy for mCHP adopted by one major EU boiler manufacturer BAXI
(part of BDR Thermea) illustrates a diversified strategy to maximise the channels to market
using different types of mCHP system (see Box).
BAXI has developed three product variants as follows:
-
Ecogen suited to the boiler replacement market uses the Microgen Engine Corporation (MEC)
Stirling Engine;
DACHS mini CHP based around internal combustion engine suited to commercial applications
or larger homes with high heat demand;
Fuel Cell Heating BAXI Innotech PEM fuel cell mCHP which is suited to high efficiency
residential dwellings.
One stakeholder noted that in general, mCHP is at very early stages of commercialisation
and there are still significant obstacles that need to be overcome including size, weight,
operability, and fit with existing systems, but the mass market potential is high and Id be
66
DELTA Energy & Environment, mCHP in Europe: The Opportunities and Options, Presentation by Sytze Dijkstra to COGEN
Europe, April 2009
67
Honda and Vaillant to launch cogeneration system in Europe, Energy Efficiency News, March 2009 [available at
www.energyefficiencynews.com/co-generation/i/1928/]
68
Takahiro Kasuh, Development strategies toward promotion and expansion of residential fuel cells micro-CHP system in
Japan, 2009
69
Takahiro Kasuh, Development strategies toward promotion and expansion of residential fuel cells micro-CHP system in
Japan, 2009
70
COGEN Europe, Micro CHP: Empowering people today for a smarter future tomorrow, December 2010
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surprised if there was not a significant increase in uptake over the next 5 years, particularly
as there is a lot of interest from gas and electricity distribution companies.
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A5.3
Innovation drivers
A5.3.1

technology
Numerous EU Directives exist in this subsector. These are principally aimed at ensuring that
products will be safe to use for customers. Besides the need to fulfil CE mark requirements
(under the Gas Appliances Directive for gas fired products or else the Machinery Directive
2006/42/EC where there are moving parts), other EC Directives which may need to be taken
into account in commercialising new mCHP technologies include the:
Pressure equipment Directive;
Electromagnetic compatibility Directive;
Low voltage Directive;
Explosive atmospheres Directive;
European Boiler Efficiency Directive (efficiency requirements for new hot-water

boilers);
Ecodesign Directive (Framework Directive 2009/125/EC) which lays out ecodesign

requirements for energy-using products;
Combined Heat and Power Directive.
A test centre stated that the ethos of CE marking is to reduce testing in each member
state. For example, a developer of a gas fuelled mCHP system could have its product
tested for safety under the Gas Appliances Directive. An approval for all the EU could then
be issued by the third party notified body.
The Ecodesign Directive which the European Commission is currently consulting
stakeholders on comprises a number of Lots which in turn cover a series of technologies.
The objective is to end up with EU energy labels that allow consumers to compare and
choose between different products. Lot 1 of the Ecodesign Directive is valid for condensing
boilers, mCHP systems and heat pumps. Under the current format the Lot requires four
steady state test points. Each test point lasts one hour and so the total test should take
between 6-8 hours. For mCHP systems, this is regarded as a much more comparative test
with gas boilers. According to one developer the ideal would be to align Lot 1 in the
Ecodesign Directive to avoid multiple tests in multiple Member States.
At a national level, building regulations tend to specify minimum levels of performance for
energy using products. These include Part L of the Building Regulations (UK) where
condensing boilers are now prescribed by law; DIN V 1 covering energy-efficiency in
building regulation in Wallonia (Belgium); and 8599 in Germany71. Unlike the UK, Germany
has never needed a law to prescribe condensing boilers. However, lower carbon products
like mCHP are now being stimulated by regulations that insist on upgrading boilers to
beyond current practice.
The replacement boiler market is not yet a regulated market. However, this will change
once the Ecodesign Directive comes into effect at the end of 2011. However, this will still
only mandate condensing boilers. According to one technology developer, there is
potential for ETV to show the green credentials of new technologies.
Feed-In Tariffs (FITs) are a very important incentive being implemented at the national level
to aid the uptake of new low carbon technologies - though sometimes they support only
71
Unlike the UK, Germany has never needed a law for condensing boilers
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mainstream technologies, not stimulate new technologies like mCHP72. The economic
viability of mCHP currently depends on prevailing subsidies within each Member State. In
the Netherlands, for example, there is a 4-6,000 subsidy for HRe boilers (i.e. mCHP units)
and field trials involving utilities (e.g. Eneco recently installing 100 Stirling engine-based
mCHP units supplied by Ariston73). The FIT is also attractive with the export rate the same
as import (i.e. net metering) and so can be optimised. By comparison, the FIT in the UK is
not regarded as economically attractive, whereas Italy pays double the import rate for
exports to the grid. Overall, as one developer noted without a FIT structure, it will take 10
years not 2 years to achieve market scale-up. Verification of performance is a prerequisite
to achieve certification to enable FITs to be granted for a mCHP system. An ETV might be
able to speed up the granting of such certifications.
As another developer noted, however, FITs are not ideal if the subsidy is used up or is cut
back (as has been seen in several EU member states recently). Hence, any focus by
developers on producing more electricity than a household requires is to take a gamble on
the long term certainty of FIT rates. Those companies that optimise the electricity and heat
outputs to match household demand may well minimise longer term political risks.
A5.3.2

Energy utilities play an important role in validating new energy generation technologies at all
scales, including mCHP, due to their captive customer base (see Box). The opportunity to
use utilities to trial new technologies can provide crucial feedback to developers concerning
operational requirements, usability and a products longevity in the field. These in turn will
lead to product refinements including around desired performance levels.
A major European energy utility noted that it had been involved with mCHP for several years and had
established close relations with three developers, all with different underpinning engine technologies
(e.g. Stirling engine, ORC, fuel cell) and all at different stages in their commercialisation.
The companys motivation to work with new technologies is based around a new customer relationship
one in which embracing new technologies can help to strengthen the relationship by offering best of
breed technologies that can bring benefits to customers, as well as providing a mechanism that can
optimise the overall system of power generation (in this case through decentralised power) and
profitability.
The utility conducts its own testing of a few units to determine technology limits and to get under the
skin of the technology. If successful, it will then trial a particular technology (e.g. 50 unit trial). This
enables it to learn about and assess the technologys performance and, importantly, to determine likely
customer requirements.
Its approach to partnering is an effective way of doing things in the mCHP market. A forward
commitment to purchase technologies provides exclusivity to the utility and provides the technology
manufacturer with a captive customer base to provide scale to build.
Some fuel cell mCHP developers aim to create decentralised power stations by having a
very large number of installed systems across the grid. This could result in mCHP acting as
a virtual grid balancing mechanism by reducing overall demand on centralised power
stations. However, it seems too early to tell how such a mechanism might work in the EU:
Demand side management and demand response is still a very nascent debate across the
EU. All utilities are trying to understand how to play in this future landscape.
major EU energy utility
72
Comment from Technology Developer
73
See for more details www.duurzaamameland.nl (in Dutch only)
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A5.4
A5.4.1

A number of mCHP variants are currently being commercialised with system architecture
dependent on the engine or fuel cell design (see Figure A5.2). Smaller, domestic units tend
to be wall mounted while larger, free standing units are generally suited to larger buildings.
The challenge is to match heat and electricity outputs to end user needs. Single dwellings
in the EU might typically work well off a 1kW electric (kWe) load, whereas for multipleoccupancy dwellings the mCHP size will need to rise to over 5 kWe.
Figure A5.2: The type of underpinning mCHP technology leads to a different
combination of thermal and electrical efficiency
Source: Delta Energy & Environment, 2009

Initial market adoption in Japan and the EU was based on internal combustion engines
running off natural gas. Stirling engine-based mCHP systems are now being sold (e.g.
Baxis Ecogen) and Organic Rankine Cycle (ORC) engines are also close to market (e.g.
Energetix Genlec Ltds Kingston mCHP boiler). Fuel cell based mCHP systems using
different are still at a pre-commercial stage in the EU.
A5.4.2

The drawback of both Stirling and Rankine engines are they are heating load driven
systems. This means they have much lower electrical efficiency than fuel cell based mCHPs
which have the potential to generate significant excess electricity which can then be used for
selling into the electricity grid, ideally at a premium through a FIT if one exists.
Trade association, COGEN Europe, believes that over the next two years, fuel cell mCHP
(of which this business case covers three leading developers) will become commercial.
Companies consulted for this business case note that the level of improvement in
environmental performance for their next generation of products could be anything from a
10% to 100% improvement. This is likely to mean that for those products which provide
a step-change in performance, technology developers may be more inclined to use an
ETV scheme to showcase the superior claims of their systems.
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A5.4.3

It is likely to be at least another five years before sufficiently large numbers of mCHP units
have been deployed in EU for there to be further refinements to existing designs. The key
objective for the moment is bringing the costs down for components. Over time there is likely
to be a degree of convergence around mCHP designs. The emergence of the Smart Grid is
also likely to lead to a number of standards being introduced to help bring a degree of
conformity and interoperability of energy efficiency products in buildings (e.g. smart controls
that can be remotely adjusted during peak energy demand periods as well as report back
centrally on overall power outputs).
A5.5

Company A - has developed a SOFC mCHP product74 designed to run off natural gas for
the residential market. With a manufacturing site in the UK, the company aims to sell in the
UK and Ireland, as well as across Europe, North America and Asia.
Company B is Australian owned with a manufacturing plant in Germany (capable of
manufacturing 17,000 units per year) and research centre in the UK. It launched a SOFC
mCHP product in April 2010 with a very high electrical efficiency. This will require a different
market adoption approach compared to the heat-led boiler market, but it can be installed
anywhere where there is a gas connection in a building with some heat demand. The
companys long term aim is to replace centralised power stations. Markets being targeted
include Germany, the Netherlands, Italy and the UK.
Company C is a R&D focused company with 40 employees that is involved in bringing to
market both a PEM and SOFC fuel cell mCHP systems. Its parent is a leading North
American fuel cell developer working on global mCHP systems.
Company D - has to date sold over 300 units of its gas-fired mCHP system in Germany. It is
undertaking a beta prototype deployment of a novel biomass pellet powered mCHP system
which incorporates a patented pellet burner with a unique and compact design75.
Company E is part of a large multinational boiler group already selling a Stirling engine
mCHP unit that generates 1kWe and 5kWth. Whilst the product uses all the heat generated,
there is marginal electricity production which can be exported to the grid. Currently the
economics of the unit do not yet make it completely viable without a substantial FIT.
However, the company is aiming for a 5-6 year payback in the Netherlands based on
volume production. The firm is well positioned to calculate the environmental impacts of their
products.
Company F is a 15 year old manufacturing company employing 13 people that has spent
around 200 million on product development of its market leading Stirling engine. The
engine is now mass manufactured and sold under licence to a number of European mCHP
manufacturers (OEMs) who integrate it into their final products.
Table A5.3, which profiles each developer, shows that most companies in the mCHP market
are small to medium sized and many take a long time to commercialise their
innovations. Additionally, it is important to note that most firms are well capitalised (either
through venture backing or else because of existing product sales). This reflects the
considerable investment required to bring novel mCHP technologies to market.
74
A range of four product sizes (i.e. 15kW, 24kW, 28kW and 30kW) is now available along with three sizes of heat storage tank
(i.e. 160, 180 and 200 litres)
75
This allows high temperature combustion generating steam using a very small pressure vessel which falls below specific
regulations for high pressure machinery. Heat led, the system produces 3-16kWth and 0-2kWe.
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Table A5.3: Technology Developers

Organisation
information
Member
State
UK
Germany
Denmark
Austria
NL
UK
Size
Medium
Medium
Small
Small
Large
Small
Age (years)
6-10
11-20
3-5
6-10
20+
11-20
Products in
development
3-5
NA
NA
Market ready
products
NA
NA
Products in
market
5+
Fuel cell
mCHP unit
Integrated
fuel cell
microgenerator
running off
biogas to
produce
electricity &
hot water
Fuel cell
mCHP unit
for
household
use
mCHP
system
using both
proprietary
burner (for
biomass)
and engine
Stirling
engine
mCHP unit
Stirling
engine
supplier
Product
description
NEED FOR ETV

A5.6
A5.6.1

Table A5.4 shows that the two key barriers are that the:
new product price is higher than incumbent boiler technologies which alone could
prevent market penetration despite well proven environmental performance claims;
validation procedures for fuel cell mCHP products are particularly onerous.
In general, the main market barrier for mCHP is the extremely high cost of the product
compared to HE boilers, coupled with a general reluctance of consumers to spend more
money on more energy efficient products. The cost of buying a Stirling engine in Germany
from a manufacturer for example has been estimated by one company at 20,000. The
margins applied through the value chain mean that such a Stirling engine mCHP unit will
cost 30-40,000 once installed - compared to a HE boiler costing less than 5,000 with
installation of less than 1,000. There is clearly a large differential at the moment. Once the
payback time is down to a reasonable level, the end user will benefit, particularly if excess
electricity can be sold to the grid for a premium.
The responses also illustrate the difficulties of new companies in bringing products to market
such as limited track record (one developer stated that if youre in the Club then fine;
another commented on the ability of incumbents to offset high commercialisation cost with
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existing product revenues), insufficient scale of business and achieving quality standards
like ISO9001 (usually based around certifying a manufacturing production line which is hard
when products are still at late prototype stage, etc).
Technology
Developer76
Barriers

Customers are uncertain as to how suitable our product is to their

operations (i.e. fitness for use)
A5.6.2

Other : UK PAS 67 was written around Stirling engine based products,

not fuel cells.
The European Norm for fuel cell mCHP is prEN50465 (for Fuel Cell Gas Heating Appliances
of nominal heat input inferior or equal to 70 kW) which sets out how to do steady state test
points. For the main gas using countries in the EU, there are already established
microgeneration steady state tests (e.g. through Blue Angel in Germany, Gas Kur in the
Netherlands and PAS67 in the UK). According to one developer it is essentially the same
test across Europe. Technology developers who would like their products to benefit
from feed in tariffs (FITs) in any particular EU country must perform these steady
state tests to receive an appropriate certificate.
According to one developer, there are common EU standards to a certain level but then
slight adaptations are added by individual Member States.
In Germany, DIN 4701-10 is the official method of calculating primary energy savings of
buildings according to EnEV 2007 (Energieausweis). Coverage of demand is determined by
thermal power output, however electrical power output is not considered, neither are primary
energy savings as a result of power from the mCHP unit.
In the UK, the Publically Available Standard (PAS 67: 2008) is a laboratory test principally
written for Stirling engines, but with sufficient flexibility to allow for fuel cells mCHP to also
be tested77. A leading test centre in the UK said that comparable mCHP products should
undergo the same testing. PAS 67 determines the heating and electrical performance of
heat-led micro-cogeneration packages primarily intended for heating dwellings. It is
equivalent to EN50465 and requires 24 hour testing of mCHP at various thermal outputs at
various regimes such as 30%, 100%.
As a replacement for boilers, mCHP product testing is expected to follow a typical boiler
cycle such as continuously operating; operating once a day or operating twice a day, etc.
Where products are being range rated (i.e. to see results at different power settings) then
76
Company E and F did not answer this question
77
At the time of writing, PAS 67 was being rewritten
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the complete testing procedure is likely to be extended. Likewise, if a product is particularly

innovative then the testing time might be extended from two weeks to two months.
Indeed, a test centre noted that some products need redesign and redevelopment which can
extend the period to over a year.
PAS 67 (2008) is referenced in a number of UK codes such as for buildings, SAP200978,
and the Microgeneration Certification Scheme (MCS). The MCS provides access to the UKs
feed in tariff for renewable energy as well as providing consumer protection. The Box below
illustrates the leading requirements to ensure compliance with the MCS.
UK Microgeneration Certification Scheme
Key normative references required to be considered as part of the MCS79 include:
-
PAS 67: 2008;
BS EN 15036-1: 2006 Heating boilers Test regulations for airborne noise emissions from heat
generators Part1: Airborne noise emissions from heat generators;
G83/1: September 2003, Recommendations for the connection of small-scale embedded

generators (up to 16A per phase) in parallel with Public Low-Voltage Distribution Networks;
Method to evaluate the annual energy performance of micro-cogeneration heating systems in

dwellings, October 2008, Prepared for Defra by BRE80;
Boiler Efficiency Database ;
CEN/TR 1749: 2005, European scheme for the classification of gas appliances according to the
method of evacuation of the combustion products (types).
81
To be certified under the MCS, applicants must:

-
undertake independent third party testing by an accredited test laboratory;
submit an independently verified, energy performance report produced from the comprehensive
set of test conditions detailed in PAS 67;
have a full set of data produced from the annual energy performance evaluation method for microcogeneration packages recorded in the Boiler Efficiency Database;
have a table in their installation instructions of the Heating Plant Emission Rate (HPER) value for
plant size ratios between 0.5 and 4.0 in steps of 0.1.
One fuel cell mCHP developer believes the UK standards are onerous, expensive and out of
date. The product accreditation standard was based around Stirling engine heat led mCHP
systems. A working group had to write a new standard for electricity led mCHP. This
enabled their fuel cell mCHP to comply with the MCS, but it turned into a long drawn out
process, taking the company 18 months to achieve MCS, compared to less than one month
for the equivalent KVK certification system in Germany. They noted that where
accreditation arises, time to market is critical because of the extra monthly cash burn and
overheads which might otherwise go into product cost reductions.
Verification of environmental performance is always required for mCHP systems as a
requirement of market access. It is quite normal for mCHP developers to have long term
trials to prove performance as well as enter into agreements with utility companies to trial
their prototype systems. Table A5.5 provides insights into the long time to market for BAXIs
PEM mCHP product.
78
SAP 2009, The UK governments standard assessment procedure for energy rating of dwellings
79
Source: Product Certification Scheme Requirements: Heat-led micro-cogeneration packages in dwellings, Issue 1.1, MCS:
014, February 2011
80
Available from: http://projects.bre.co.uk/SAP2005/supporting-technical-documents.html
81
see www.sedbuk.com
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Table A5.5: Example of the 9 year product design evolution and trialling period to
prove performance for BAXIs PEM mCHP product
Beta development
Beta 1.5/1.5 plus
GAMMA unit
Series
2002 2005
2005 2008
2010 2012
Design of a field test

unit
Field trial with gas and

power utilities.
Pre-series unit for

demonstration
Market entry
programme 2013
45 units deployed
Source: BAXI, presentation to COGEN Europe, April 2009
82
To date, field trials for mCHP (in the range of 50 to 200 units) have occurred in several EU
member states, backed by companies who often commit to purchasing systems that meet
their design specification. This process has been greatly helped by a National Innovation
Programme (NIP) established in Germany, running from 2008 to 2012, to aid mCHP
developers. NIP works in in collaboration with German utilities to help with market
preparation and development across the EU.
Examples of the approaches taken by companies in this business case include:
Company A has received 20 million of investment from a major EU energy utility and
has also entered into an agreement with a national EU gas supplier to supply 16,000
residential mCHP products operating on natural gas over a four year period starting in
around 2012 upon successful completion of a trial phase;
Company B has trials with several utilities across the EU with the promise of a forward
order commitment from one for 100,000 units from 2012 should it achieve its technical
milestones. It notes that a lack of verification has restricted international market access to
date into both EU and non-EU countries;
Company C is already in a development partnership with fuel cell component suppliers
and energy utilities which is trialling the products in private homes. Key commercialisation
challenges include the safety of using hydrogen gas as a feedstock (which might make it
hard to gain CE approval for their SOFC mCHP unit) and variable levels of nitrogen in
natural gas which can affect the PEM reformer.
Company D - is beta prototyping over 25 units of its novel biomass mCHP system in
Austria, Germany, France and Czech Republic. The technical status of the technology is
deemed sufficient but efficiency needs proving in the field. The company intends to focus on
Austria for the immediate future so as to be close to its main test sites. This will ensure that
problems are solved rapidly and customer confidence built up. As a result modest
production growth is expected over the next 1-2 years. Since there is no European Norm for
their product due to its unique design, and given the world class reputation of Austrian
biomass manufacturers, Austrian approval is sufficient to get a foot in the door of potential
customers in France, Italy, Spain and Slovenia.
A5.6.3

Table A5.6 summarises the overall methods used by company to prove performance in the
current absence of an ETV scheme. Test data from credible test houses is a preferred
method of proving performance. However, the need to fulfil a raft of certification schemes,
including Gas Appliances Directive and Machinery Directives, are also cited as
mechanisms for aiding sales (i.e. being able to prove safety).
82
Mike Small, Baxi, Marketing micro CHP in Europe today when can we expect what?, April 2009
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Table A5.6: Summary of methods used by companies for proving performance

claims to potential customers
Approaches to proving performance claims
Other forms of certification scheme relevant to the technology

area
X
e.g. Gas Appliance Directive, Microgeneration Certification

Scheme, Austrian government testing scheme to qualify for a
FIT, Self certification under Machinery Directive
A5.7
A5.7.1

Table A5.7 illustrates the main benefit from ETV is to assist developers to enter other EU
markets and to increase market acceptance of products by customers. Several developers
also see value in ETV helping both domestic market access and non-EU access. Other
clear perceived advantages from undertaking an ETV are to enable products to compete
with market leading rivals and, importantly, to provide insights to clients on the products
potential environmental impacts.
Benefits of ETV
Facilitates market entry for our product into our home

market
Facilitates market entry for our product into other EU

markets
Facilitates market entry for our product into non-EU

markets
Increases the speed at which our product reaches

market
Increases market acceptance of our product by

customers
Allows our product to compete with market leading/rival

products
Clients gain insights on environmental impacts from our

product
Note: Responses relate to a Significant benefit unless in bold which is regarded by the developer as a Highly
Significant benefit
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Company A - would like an ETV to prove product performance and be recognised like a CE
mark.
Company B - would like an ETV to prove performance once for Europe (and ideally
globally) rather than 100 times over. This would accelerate market entry lead times a
critical issue for young companies - and save considerable costs, particularly if utility
commitments to purchase products fell through. It sees an ETV as a pre-requisite for FIT
territory in the EU. An additional benefit of ETV is to help achieve market entry for innovative
companies who are unable to loss lead through an existing business: ETV would improve
credibility and increase compliance.
Other responses indicate a subdued interest in an ETV scheme, at least at the moment:
Company C has a small willingness to have and to pay for an ETV scheme since it feels
there are no real disadvantages to NOT having it this is primarily because its current
commercialisation strategy involves the entire value chain including a leading testing centre
that will help it gain CE approval.
Company D is only focused at the moment on its home market so is only potentially
interested in an ETV scheme in the future when it is ready to sell directly into other member
states. However, it notes that distributors are likely to be used in other member states since
they would also install the machines. Consequently, the company only requires CE approval
and self certification to the EU Machinery Directive.
Company E - their product has borrowed around 90% of a standard boiler, so it fulfils the
Gas Appliances Directive and fits perfectly into Lot 1 of the Ecodesign Directive. It therefore
does not believe there to be much merit from an ETV scheme although it might make it
faster to achieve the Ecodesign Directive requirements.
Company F - had already spent around 300,000 on taking the engine towards CE mark
approval (under the Gas Appliances Directive), but then decided against it: if pushed we
would have gone down the CE route at great expense but discovered it was not necessary.
The companys product is now self-certified to the EU Machinery Directive because they
realised this was the only certification required to sell to their clients, such as BAXI,
Remeha, Vaillant, Viessmann, etc. These customers also happen to be the companys
main shareholders and have injected money into the business to keep it in operation. This
close and successful supply chain relationship eliminates the companys need to
demonstrate the performance of their engine through an ETV scheme. Besides satisfied
with its own current sales position, it did note that the idea of having one centralised
validation scheme has some merit in this market.
A5.7.2

An ETV scheme, particularly for developers of fuel cell mCHP units, could:
Assist developers in entering other EU markets;
Help to overcome multiple verifications in Germany (through Blue Angel), the

Netherlands (through Gas Kur), the UK (through PAS67), etc. This might be of real
value to companies bringing new innovations to market;
Enable products to be fast tracked through the process of gaining an EU Energy

label (under the Energy Using Products Directive).
Both benefits would reduce overall costs to firms.

A5.7.3

The major European energy utility we consulted felt that currently there was not a level
playing field in the mCHP space, partly due to the applicability of certain standards (i.e. for
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gas boilers) to more novel technologies. It sees an EU ETV scheme as a good thing as it
might help to level the playing field. At the corporate level, an ETV might help raise the
profile of certain developers, helping them to get their foot in the door, but potentially
nothing more given the necessity to offer more than just a potentially superior product:
an ETV label would help us to engage with a technology developer. But other factors would
ultimately have to be taken into account, such as financial health, make up of the Board of
Directors, investors, etc. However, anything that helps galvanise a good fit with a potential
partner is valuable.
The EU Micropower Council felt that an EU wide verification scheme made a lot of sense: if
it could give accredited carbon or renewable energy performance, it would give additional
weight with challenging the planning authorities as well as showing off performance to end
users. In addition, the Micropower Council felt that an ETV could help to overcome some of
the challenges of companies selling across Member States and qualifying for FITs83.
A test centre felt that an ETV was well timed with the market status of mCHP as it could help
to accelerate sales into this new market. It felt that an ETV could also illustrate some of the
key environmental validations that might become commonly demand in the future including:
Carbon emissions;
Carbon savings;
Whole life costs;
Embodied carbon.

A5.8
Introduction
1.
Cost of testing the technology to enable it to apply to the ETV;
2.
Costs of testing the technology in the event that the verification Body requires further
testing;
3.
Official ETV fee which the developer / vendor will need to pay to the verification
programme;
4.
Other internal costs to the firms.

companies.
A5.9

Company A - has yet to go through the UK (PAS) testing procedure because not only is it
inappropriate to their product, but the potential permutations of their products (i.e. electric
rating plus heat storage capacity) would make the testing and resulting costs extremely
83
For example, it was aware of an Austrian heat pump manufacturer who found it challenging to go through the UKs MCS
scheme because MCS does not recognise if a company already manufactures over 100,000 units or has ISO9001 a
company would still have to pay for a MCS representative to visit their factory.
84
EPEC
onerous. Total testing costs are 12,000 to 18,000 for each power output84 so costs
could easily reach eight times that level or 96,000 to 144,000. The company is willing to
pay around 10k for ETV. One full time employee at 40,000 per annum would probably be
required to oversee the process.
Company B - is focused 100% on R&D and has spent around 200 million to date on
product development. It is willing to pay up between 10,000 and 20,000 for an ETV if it
achieves EU wide approval. This sum is based on existing certification schemes costs
around 5,000 in Germany and around 7,000 (plus an annual maintenance fee of around
1,200) in the UK. Internal administration costs are perceived to be fairly substantial and
potentially between 20,000 to 30,000. The maximum time for an ETV is six months and
ideally three: if it takes longer than this then ETV is no better than existing schemes.
Company C - has been involved in a 17m R&D project, half of which is funded by industry
and utilities, and runs between 2006 and 2012.
Table A5.8 summarises these various costs to companies. Key conclusions are almost
universal agreement amongst the three fuel cell based mCHP developers that:
Willingness to pay is around 10,000;
Maximum allowable time for verification is less than 6 months;
Likely sales attributable to an ETV are too difficult to establish.
Technology Developers
A
>1m single test

of entire product
configuration could
cost 90k to 130k
Not specified
47,000 (actual
test costs)
Not specified
200m
18m
~11m
~3m
10k
10k-20k
10k

verification (b)
40k
20k-30k
Unknown
Total costs for verification (a +

b)
50k
30k-50k
Not specified
Not specified
Not specified
Unknown
Too hypothetical an
issue but substantial
potential savings
from reduced
multiple
verifications
Unknown
<6 months
<6 months and

ideally 3 months
<6 months
Total R&D invested to date
85
Annualised R&D invested to date

(i.e. based on the age of company)
Likely unit/product sale price

(c)
Likely increase of sales
expected from certification of
performance claim (in value)
(c)
Maximum amount of time

willing to wait for verification
84
The cost alone of the G20 reference gas used for testing is 3-4k (3.6k-4.8k) as it requires a weeks worth of gas.
85
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A5.10

We attempted to speak to a number of test centres across Denmark, Germany,
Netherlands, and the UK in order to establish likely supply side costs of providing both
testing and verification. It was only possible to speak to two test centres, both in the UK.
One of these is a major player in the European mCHP testing market (it has tested 15-20
product iterations over the past five years, with this number accelerating in recent years);
the other has been closely involved with mCHP development and testing over the past ten
years but currently does not offer specific testing services, although is very familiar with the
cost structure.
Table A5.9 illustrates the estimated cost range for performance testing in the UK together
with an estimate of the cost of undertaking the UK Microgeneration Certification Scheme.
These costs provide indicative costs for the verification and testing of the technologies
involved in this business case. Test centres have commented that there is generally no
standard price list it all depends on the nature of the product. We are confident that they
provide the right order of magnitude for the business case.
Table A5.9: Costs of providing testing and verification services across the mCHP
sector
UK
Performance testing
Certification / Verification
8.4k - 12k (to PAS 67)
11k
Microgeneration Certification
Scheme (UK)
undertaking an ETV
We are able to draw the following tentative conclusions about the costs of supplying
verification services for ETV in the mCHP sector. A typical verification fee is likely to be
in the order of 10,000 to 15,000 depending on the technology type, its complexity
and innovativeness.

A5.11

The high level of interest for ETV amongst the three fuel cell mCHP developers sampled
(two out of three were keen to undertake; a third was lukewarm) suggests strong demand
for this type of verification for this type of technology.
Developers are willing to pay an ETV fee of at around 10,000 (and up to 20,000 in one
case). The costs of supplying an ETV verification for this subsector is likely to cost in the
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EPEC
order of 10,000-15,000. We conclude therefore that verifications of this type of

technology are likely to be self-financing at the outset.
A key finding is that all mCHP systems must be tested against and fulfil a raft of mandatory
health and safety requirements in order to be placed on the market. This includes the need
to mandatorily assess performance under the CHP Directive. Whether this latter
requirement is sufficient to illustrate the innovativeness and uniqueness of any one product
is debateable. An ETV could therefore enable SMEs an opportunity to showcase
their products green credentials such as carbon savings.
A5.11.2 Key challenges for technology

There are a small number of independent mCHP developers, many of which are located in
Northern European countries. They exist alongside established boiler manufacturers who
are also slowly bringing new mCHP products to market. Incumbent boiler manufacturers can
afford to offset development and verification costs with revenues from boiler sales and can
bide their time in transitioning towards mCHP.
The market focus for mCHP (i.e. generally replacing gas boilers) means that scale up
challenges and channels to market being taken by developers are very similar.
There is a lot of energy utility interest in the market, especially in assisting developers in
product validation (which in turn provides a degree of exclusivity for the utility) and providing
forward order commitments for bulk purchases of mCHP - especially given potential for
decentralised power, opportunity to develop new utility business models, as well as finding
novel technologies that can fulfil carbon reduction obligations.
The very high cost of current mCHP systems compared to gas boilers means that both
substantial and long term feed in tariffs86, ideally combined with bulk purchase (most likely
through energy utilities), are the only ways that this expensive technology will rapidly drop
down the cost curve.
Some developers voice concerns about their ability to obtain fast and modestly priced
certification when prevailing standards were primarily written with novel innovations such as
fuel cells in mind. Others believe that existing testing and certification systems are sufficient
(at least in the short term), especially for those companies that may be selling directly to
OEMs or are operating in a highly niche market area where an ETV is of little perceived
value.
However, in the event that utilities decide against purchasing mCHP, some developers see
value in an ETV.
A5.11.3 Value added for firms from undertaking the ETV
An ETV scheme could:
Assist developers in entering other EU markets;
Help to overcome multiple verifications across Member States;
Enable products to be fast tracked through the process of gaining an EU Energy

label (under the Energy Using Products Directive).
Stakeholders feel that an ETV could help to prove the environmental performance
credentials of products (e.g. carbon emissions, whole life costs and embodied carbon) that
86
There is an inherent risk that FITs could be reduced unexpectedly as has happened in several EU member states. This
would substantially reduce the premium for exported electricity and thus could jeopardise the sector.
87
EPEC
are separate issues and currently not covered by either safety compliance or performance
testing.
It is clear that an ETV has to offer something distinctly different from existing testing
and certifications.
A5.11.4 Potential number of firms who might be interested in scheme
The potential number of mCHP developers likely to be interested is assumed to be modest.
This business case consulted many of the leading players in the sector: two companies
were keen to undertake an ETV; the other four had mixed opinions. This equates at least a
33% take up level and potentially up to a 50% to 65% level.
We assume that most incumbent boiler manufacturers have generally no interest in ETV,
given that they can happily wait 5-10 years for the market to take off whilst selling their
current products or have already decided to buy in technology from overseas (e.g. Vaillant
have sourced Hondas ECOWILL mCHP system to which it has added its control system).
This leaves the independent developers. The EU supply side has seen a number of recent
company failures including Enertech and Disenco. This is not an easy market in which to
become established and to be successful requires a lot of investment and trials over several
years to gain market confidence.
In total, across the EU, we estimate that there are likely to be around 20-30 developers of
mCHP systems, half of which are probably boiler manufacturers or companies in that supply
chain. Total interest in an ETV to 2020 is therefore likely to be at least 5-10 companies
and potentially up to 15-20. We estimate that over the next 2 years around 3-5 companies
might choose to apply for an ETV.
The energy efficiency in industry and buildings market is characterised by high levels of
consolidation, with only a few key players establishing the major trends within the markets.
These players are also the major innovators in these fields. However, the EU is also one of
the largest global markets for energy efficiency products - estimated to represent 35% of the
global energy efficiency market (157bn) rising to between 300bn and 350bn by 202087
(growth that will be largely driven by the shift to a low-carbon energy system which in turn
has brought about a renewed interest in technologies aimed at improving energy efficiency
in industry and buildings88). This provides excellent opportunities for the hundreds of
innovative R&D companies in this EU sector to bring new products to market.
We believe there will be strong demand for ETV across a number of energy efficiency
subsectors. Key benefits from an ETV could be to show the superior performance levels of
new technologies against incumbent technology providers who dominate the channels to
market as well as whole life cycle costs.
However, agreement on the benefits of an ETV is not universal across the energy efficiency
technology group. One company that has developed a proprietary air cooling system for
buildings noted that their filter membrane does not fit standard norms and customer will
typically only procure based around robust on-line test data and a year's trial at any
particular site not whether the product has a performance verification from an ETV
scheme.
A5.12
87
Roland Berger strategy consultants (2007): Innovative environmental growth markets from a company Perspective. Federal
Environment Agency Germany.
88
World Economic Forum (2009): Green Investing: Towards a Clean Energy Infrastructure.
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In some cases it is likely that some developers will grudgingly bear the full costs of the ETV
if they perceive a key benefit to accelerate market adoption:
New technology areas are never that urgent an issue for incumbent suppliers, but for
independent smaller companies, its life or death. We would have no option but to
spend out on an ETV scheme. technology developer

At the EU level, COGEN Europe believes support for mCHP and fuel cell development
should be more widely covered within the EU SET Plan and FP7/889. FP7 has also been
mentioned by developers.
At member state level, a typical route for R&D funding is through national innovation
agencies and programmes (e.g. Technology Strategy Board competitions in the UK)
European level
The highly specialist nature of the mCHP sector, coupled with its geographical focus in
Northern European countries, suggests that just one verification body is likely to be required
for the entire EU.
No potential barriers were identified.
A5.13

Verification bodies would need to communicate all requisite tests alongside names of testing
bodies, relevant standards and regulations.
A dedicated and obvious website for ETV is vital not something buried away on the
Commissions site.
89
COGEN Europe, December 2010
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ANNEX 6 BUSINESS CASE: SOLAR HYBRID TECHNOLOGIES

The following business case has been prepared on the basis of seven interviews, and one
completed technology developer questionnaire. The interviews include three company
representatives, one trade association and three certification bodies. A total of four
companies and ten certification bodies and testing centres were contacted.
A6.1
Introduction
This business case builds on the market analysis findings of the Energy Technology Area
(see main report). This analysis found that solar energy is a highly innovative sector, with
many new innovations on the market, in many cases supplied by SMEs. It also suggested
that new generations of products ready to enter the market, often go beyond existing
standards, increasing the likeliness of users demanding verification. However, there are
already a number of mechanisms and paths to market for technology developers which
include established test houses (e.g. TUV and world renowned institutes such as the
Fraunhofer Solar Institute) market reputation (especially for larger companies) and testing
and verification on behalf of universities90.
The market analysis also identified solar hybrids as one of the most innovative niche markets
within the solar sector, with a global potential. Firms in this sector face considerable
challenges testing their products against existing standards, and can thus often be impeded
from benefiting from Government support programmes.
Some of the major uncertainties in the market regarding solar hybrid technologies are related
to their levels of performance in comparison to mainstream renewable and non-renewable
technologies. The two main criteria of performance in this case refer to the thermal and
electric energy output of the device, and the coefficient of performance (COP). According to
technology producers, potential buyers are still very sceptical when it comes to recognising
the added value that these technologies.
As will be explained in the following sections, hybrid technologies may combine the different
components that they include in many different ways. Giving additional importance to one of
the components is usually done at the expense of another. Thus combining these
components in order to optimise overall performance is a difficult process which technology
developers are not always able to control.
The other major concern, which is mostly cost-oriented, relates to the performance stability
of the devices over time (dynamic performance), in order to ensure payback. Being able to
prove this would reassure consumers that despite a higher first-cost in comparison to
traditional alternatives, these technologies offer the possibility of making long-term savings
or benefits91 in energy consumption and production.
A6.2

Solar technologies cover both thermal (T) and photovoltaic (PV) energy producing devices.
These technologies have undergone impressive growth over recent decades and now
represent one of the leading technologies for heat and electricity generation.
In 2010 the global solar photovoltaic market (PV) reached a total turnover of 34 billion92.
The European share of this market is estimated to represent roughly 60%93, with Germany
90
Dave Raval, Head of Entrepreneurs Fast Track, Carbon Trust
91
In case feed-in tariffs apply to the product.
92
European Photovoltaic Industry Association (EPIA), Solar Generation 6, October 2010
93
PV Status Report 2009, Joint Research Council, Renewable Energy Unit
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EPEC
being at the forefront of European production and innovation. At the global level, the EPIA
Global Market Outlook report shows that the annual PV market has developed from less
than 1 GW in 2003 to more than 7.2 GW in 2009.
The volume of investment in the solar power sector investment has also been one of the
highest among all clean energy sector alternatives. In 2009, the solar power sector
accounted for around 17.8 billion ($24.3 billion) or 21% of all financial investments in
sustainable energy94. That same year, total VC investment in solar power in Europe was
about 1.22 billion, accounting for 24% of worldwide VC investment in all clean energy
sectors95.
In addition the significant market dynamism displayed by solar technologies, there is also
considerable innovation taking place within this sector. For the most part however,
innovation taking place in solar technologies is incremental, and mostly dominated by large
non-European firms such as Sharp, Canon and Sanyo.
One particular sub-sector within the solar technologies family in which more radical
innovation is taking place relates to hybrid solar technologies. European firms, and
particularly SMEs, are at the cutting-edge of innovation for this particular type of technology.
In the context of this business case, the term hybrid refers to two types of innovating
products in the solar technologies sector:
Technologies mixing photovoltaic and thermal panels (PV-T) within one single
device. These are hybrid solar panels consisting of photovoltaic (electrical PV);
and thermal (heating - T) functionalities usually separate which will contribute
towards a houses electricity demands while heating hot water;
In the second case, hybrid technologies refer to devices that do not necessarily
combine photovoltaic and thermal, but rather mix two or three energy solutions at
once in order to optimise outputs. This includes for example devices using solar
collectors (thermal or photovoltaic) connected to heat-pumps from which heat is
generated.
PV-T are photovoltaic collectors that generally produce heat as a byproduct. Panels collect
electro-magnetic radiation from the sun (direct current) which is changed by an inverter into
an alternating current (AC), suitable for use in the home. The process naturally generates
heat, which is transferred via an aluminium heat exchanger to a closed circuit through which
runs an antifreeze heat transfer fluid; the fluid takes the heat to the hot water cylinder. When
set up correctly, this process actually aids the functionality of the PV module, as it causes
the heat in the cells to dissipate and PV cells are more efficient when they are cooler96.
Individually, solar thermal and photovoltaics are relatively mature technologies. However, the
idea of bringing electricity and hot water together in a single panel has only recently occurred
and represents a step changing innovation.
A6.3
Innovation drivers
A6.3.1

technology
Two regulatory mechanisms influence the levels of innovation taking place in this sector:
restrictions and incentives. The former include European Directives such as the EU energy
performance of buildings. On the incentive side, one example of the many mechanisms
94
Global Trends in Sustainable Energy Investment, UNEP, SEFI, New Energy Finance (2010).
95
Global Trends in Sustainable Energy Investment, UNEP, SEFI, New Energy Finance (2010).
96
http://www.homebuilding.co.uk/feature/solar-panels-next-generation
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being implemented at the national level are the UKs Renewable Heat Incentive (RHI) and
Feed-In Tariff (FIT). Both these Government-backed measures enable homeowners to sell
or be financially rewarded for the renewable heat and electricity they produce. Both types of
measures have strongly accelerated the installation of renewable energy capacity in
Europe97.
A6.3.2

Rising energy prices are also leading consumers to seek alternatives to traditional heating
and electricity production. Although hybrid solar technologies remain more expensive than
the majority of incumbent technologies, they have now become competitive with gas for
example. As a result, one of the main innovation objectives is to be more cost-competitive
both on an initial cost basis and over the life of the product.
Solar hybrid technologies are also an appealing solution to heat and electricity generation
because of their reduced carbon footprint. Consumers are increasingly sensitive to this
dimension of product quality and performance, making it one of the leading drivers of
innovation. As indicated by one technology developer, environmental awareness is playing
a key role in driving innovation in this sector.
A6.4
A6.4.1

Competition in the hybrid solar market is extremely limited due to the low number of existing
technology developers. Currently, there are only a handful of companies in the world who
produce hybrid solar technologies. In Europe, there are approximately ten companies
operating mainly out of Sweden and the UK. Most of these companies are microbusinesses98. As a result, total annual turnover at the European level is currently estimated
at just 20-25 million.
Despite the small size of the sector at present, it is expected to undergo significant
expansion as technologies become cost-competitive and performance of new products is
validated. According to one technology producer representative, as this technology reaches
increasing levels of maturity, the potential for growth and demand will continue to increase.
In the words of another technology producer there is lot of research going on in this field,
and a lot of projects taking place, so competition is springing.
A6.4.2

By combining two types of technologies into one, solar hybrids are generally able to produce
higher outputs than incumbent individual technologies. For example, a household using a
PV-T technology produces more heat and electricity than a household using the same
installed capacity of separate PV and T technologies.
Existing PV-T devices have been designed to maximise the electrical return of PV panels,
while producing as much heat as possible. As an example, the peak output for one PV-T
technology recently placed on the market is 190/460 watts electrical/thermal respectively.
The producer of this technology claims that under optimal conditions the hybrid collector
produces 20% more electricity than conventional PV. When the connected heat pump is
running the electrical output may increase by a further 25% under certain weather
conditions.
97
http://www.rhincentive.co.uk/
98
Under 2 million in turnover and less than 10 employees
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Contrary to these claims however, a testing body representative indicated that most existing
hybrid solutions only offer 5% in efficiency gains in comparison to incumbent technologies.
Hybrid technologies also offer the possibility of making gains in terms of the surface used by
solar collectors. According to the hybrid collector producer mentioned above, 28m2 of their
PV-T panels produce the equivalent annual electrical output from 38m2 of conventional
monocrystalline PV and the same amount of thermal energy as 8m2 of conventional solar
thermal collectors (without any contribution from the heat pump). Using hybrid panels allows
to make a 18m2 gain in occupied surface.
A6.4.3

Due to their recent emergence, hybrid solar technologies are likely to undergo significant
improvements in the near future. One can expect to see products with improved output
capacity, higher coefficients of performance (COP) and reduced vulnerability to cyclical
weather changes.
Technology developers are also likely to come up with solutions that make better use of the
complementarities of different technologies (PV-T panels, heat pumps) in order to optimise
the overall output by single integrated devices. With this, we can also expect to see the
emergence of improved energy storage technologies. One Swedish company has produced
a solar chiller which is a salt-based technology allowing to charge, heat and cool using
stored energy collected by thermal panels, and making use of a heat pump. Further
improvements such as the introduction of electricity frequency regulators will also improve
the efficiency of these devices.
A6.5

Company A - specialises in the development and production of hybrid PV-T, solar PV and
solar thermal products. It is one of the few producers of hybrid PV-T in the world, which
combines three different energy solutions (PV, thermal and heat pump) into a single system
that is able to meet the heating and hot water requirements of well insulated homes. It has
developed a unique hybrid PV-T panel that allows thermal and electric energy to be
produced simultaneously, with increased output levels compared to traditional single
photovoltaic or thermal solutions.
Company B - produces indoor climate solutions (heating and cooling) powered by
renewable energy sources, notably solar energy. This is mainly done by integrating large
solar thermal panels and a chemical heat pump into a single device. Its products are based
on a patented triple-state absorption technology using salt to store thermal energy, which is
then used to cover the heating needs of buildings and homes. The product is aimed at single
family homes and housing projects, as well as larger commercial and industrial buildings
such as shopping centres, hotels, offices and hospitals.
Company C - specialises in the production of solar heating systems for commercial,
residential, industrial use. Its heating system is composed of glass roof tiles or wall panels, a
special absorption felt and additional beams allowing the air to circulate when heated. This
system can be connected to additional heating devices such as heat pumps in order to
optimise the levels of outputs.
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Organisation
information
Technology developer A
Technology developer B
Technology developer C
Member State
UK
Sweden
Sweden
Size
Micro
Small
Small
Age (years)
1-2
10
Products in
development
NA
Market ready
products
NA
Products in market
3-5
NA
Product description
Hybrid PV-T heating

system
Solar cooling
Solar roof tiles
NEED FOR ETV

A6.6
A6.6.1

Based on the interviews carried out with technology developers, it appears the main barriers
to market acceptance for new products in this subsector relate to four main issues:
Customers are highly risk averse and prefer to buy market proven technologies;
Customers are uncertain as to how suitable products are to their operations (fitness
for use);
Prices are higher than those of incumbent technologies;
Customers are uncertain about the products environmental performance.
Most of these barriers relate to the need to reassure potential consumers of the performance
levels of new products.
Barriers
A6.6.2

fitness for use)
technologies
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EPEC
There are a number of existing mechanisms to measure and test the quality and
performance of PV and thermal products, facilitating their market access and diffusion. Most
of these are carried out on the basis of existing international or European standards.
However, due to the novelty of solar hybrid technologies, this existing family of standards
does not directly apply to them. Although European Norm EN 12975A does not exclude
hybrid solar devices from its scope, its applicability in this particular case is extremely low
due to its lack of details regarding this type of technology. As mentioned by a testing body
representative EN 12975 does apply to PV-T, but when you go into the details of testing
there are a lot of undefined situations that are not satisfactory it is a grey zone, it is not
excluded by a standard, but when you do apply it, it is very difficult to do so.
This Catch-22 situation is created by the fact that standardisation is a relatively slow
process. As expressed by a representative of a certification body standardisation is always
slower than the market standards come after the products are placed on the market, in
order to create them, you need a certain level of development of the product.
As a result, there is no specific set of parameters against which the performance of solar
hybrid technologies can be measured against. This limits the capacity of solar hybrid
technology producers to make use of existing quality and performance testing mechanisms
such as national, European or international certifications.
This raises three challenges for the development of these technologies:
The absence of standards makes it difficult for solar hybrid technologies to be

certified and benefit from government support programmes such as feed-in tariffs
and other types of subsidies and incentives. As a result, solar hybrids are less
competitive than incumbent certified technologies;
Measuring performance becomes very time and resource-consuming. Developing

new standards is a long, expensive and complex procedure which cannot be
undertaken by a single company wishing to commercialise a new technology. Due to
the hybrid nature of these technologies, producers are often forced to obtain two or
three certifications for a single product, considerably increasing costs;
Potential buyers express higher levels of scepticism with regards to the potential
performance levels of the new technology, decreasing the likelihood of market
adoption of the technology.
In the absence of specific standards for solar hybrid technologies, producers and certifying
bodies have, in a number of cases, used existing standards to individually test each of the
components of solar hybrid devices. Due to the combination of technologies that usually go
into hybrid solar devices (thermal, PV, heat pumps, energy storage devices, etc) different
norms and standards may apply to individual components of the integrated solution. Table
A6.3 presents published European standards that apply to solar thermal products.
Table A6.3: Standards applying to solar thermal products
Published standards for Solar Thermal
Products
Standards under development
EN 12975-1:2006. Document title Thermal

solar systems and components - Solar
collectors - Part 1 (General Requirements)
and Part 2 (Test methods).
EN 12976-1:2006. Document title Thermal

solar systems and components - Factory
made systems - Part 1: (General
prCEN/TS 12977-1 Thermal solar

systems and components - Custom built
systems - Part 1 (General requirements
for solar water heaters and
combisystems)

systems - Test methods for solar water
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heaters and combisystems
requirements) and part 2 (Test methods).
ENV 12977-1:2001. Document title: Thermal

solar systems and components - Custom built
systems - Part 1 (General requirements), part
2 (Test methods) and part 3 (Performance
characterisation of stores for solar heating
systems)
prEN 12977-3 Thermal solar systems and

components - Custom built systems - Part
3: Performance test methods for solar
water heater stores

systems - Part 4: Performance test
methods for solar combistores

systems - Part 5: Performance test
methods for control equipment
EN ISO 9488:1999. Document title: Solar

energy - Vocabulary (ISO 9488:1999).
Source: www.estif.org
Additional standards that may apply to solar hybrid products include: EN12977 (storage
boilers), EN13203-3, EN61215, and EN61646 (solar PV).
All thermal technology testing standards are European standards. For PV technologies, most
of the standards being used are international standards produced by the International
Electrotechnical Commission (IEC).
Certification is required In order for solar products to be eligible for most government support
programmes and subsidies. As a result, certification is implicitly mandatory for any product
wishing to be competitive on the market. There are mainly two types of certification
schemes: national and European schemes.
National certifications
There are numerous national marks that certify conformity to individual Member State
standards and requirements. One of these is the UKs Microgeneration Certification Scheme
(MCS). MCS is a quality assurance scheme which demonstrates the quality and reliability of
approved products by satisfying tested standards. It certifies microgeneration technologies
used to produce electricity and heat from renewable sources. The MCS allows technologies
to benefit from financial incentives including FITs and RHI99.
A UK technology developer who recently obtained MCS certification for two of its hybrid solar
solutions explained the difficulties they encountered due to the novelty of their product and
the lack of standards for this particular type of technology. It took approximately two and a
half years before the products were certified, representing approximately 50% of the time it
took the company to make the product commercially viable. The MCS working group in
charge of certifying the product certified it using two separate sets of standards: photovoltaic
and thermal. As a result, this particular integrated technology is still officially recognised as
two separate components operating within a single device.
European certifications
Technology producers can also seek to obtain European certifications such as the Solar
Keymark certification. As opposed to national certifications which certify conformity with
requirements of national markets, Keymark certifies conformity with European standards.
Keymark also differs form the obligatory CE marking which shows conformity with European
directives, primarily around proving safety of a product.
The Solar Keymark certification was developed by the European Solar Thermal Industry
Federation (ESTIF) and the European Committee or Standardisation (CEN) with the support
99
www.microgenerationcertification.org
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EPEC
of the European Commission100. It is a voluntary third-party certification mark which currently

applies only to solar thermal products. It is awarded on the basis of three parts:
initial type testing to EN 12975 or 12976 European standards;
an implemented manufacturing quality management system; and,
an annual review of QMS and bi-annual product inspection.
This means the certification is awarded based on the quality of the manufacturing process of
the product, not only on the performance of the product itself. As a result, by obtaining the
Solar Keymark, producers aim to demonstrate the consistent factory made quality of their
products and to qualify for regulatory and financial incentive schemes in European national
markets.
Products that obtain the Keymark certification are generally eligible for national public
support schemes, and do not need to obtain additional national certification. However, in
what some consider to be a form of market protectionism, some support schemes (national,
regional or local) do require products to be certified by national bodies.
According to a Portuguese certification body offering both national certifications and the
European Keymark certification, there are no major significant differences between the two.
There are even some situations in which technically, national certifications follow the
guidelines of Keymark. Pricewise however, national certification is less expensive to obtain.
As a result, companies operating only at the national level usually only seek to obtain the
national certification.
From our discussions with technology producers and certification bodies, it became apparent
that Solar Keymark has now become the reference for certification in the field of solar
thermal technologies at the European level. Despite the fact that solar hybrid technologies
fall outside of the original scope of Solar Keymark, the certification scheme is likely to grow
to include solar hybrids in the near future.
In addition to existing European certification schemes (Solar Keymark, CE, etc), it is likely
that solar hybrid technologies, or some of their components, will be subject to the Ecodesign
Directive (Framework Directive 2009/125/EC) which lays out ecodesign requirements for
energy-using products (EUP). As a framework Directive, it does not include binding
requirements on products or product families by itself. Instead, this is done through the
further adoption of implementing measures adopted on a case by case basis for each
product group101. For the time being, no implementing measures have been adopted for
technologies in the solar hybrid sector. The Working Plan adopted under the Directive does
however foresee the adoption of implementing measures for the air-conditioning and
ventilation systems technology family. If and when this happened, solar hybrid
manufacturers would be required to:
Assess the environmental aspects and impacts of the products;
Design and construct the products in compliance with eco-design requirements;
Possibly use harmonised standards and eco-labels for presumption of conformity;
Carry out an appropriate conformity assessment (generally this is self-assessment);
Affix the CE marking102.
100
http://www.cen.eu/
101
http://ec.europa.eu/enterprise/policies/sustainable-business/ecodesign/index_en.htm
102
http://www.conformance.co.uk/directives/ce_eup.php
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Other internationally recognised quality and performance testing organisations

The solar sector is characterised by the existence of a number of test houses, the work of
which is recognised internationally. Producers in the sector have a strong tendency to refer
to these houses in order to obtain third party testing of the quality and performance of their
products. These include the TV Rheinland Photovoltaic Testing Laboratory LLC (US) and
the Fraunhofer Institute for Solar Energy (DE). Fraunhofer is a service provider for
technology developers wishing to carry out testing of their product before being able to apply
for certification, and thus does not issue certifications directly.
A6.6.3

Company A has done trailing and demonstration through testing to obtain the CE mark,
national certification, as well as demonstration sites allowing to test the performance of
products under real operating conditions and serve as a reference for future purchasers.
Company B - has carried out a number of certifications that apply to the product, which have
in turn allowed it to carry out third party testing, including CE marking. It has also set up a
number of pilot and demonstration sites, notably in Spain, customer field trials and carries
out continuous internal testing.
Company C uses the European solar Keymark certification as its main source of trailing
and demonstration of its products, which it uses for the thermal components of its products.
In addition to their internal testing, solar Keymark represents their main third party
verification mechanism. They also try to get as many installations as possible on the market,
through a thorough commercialisation process. These real life installations serve as
references for future sales.
A6.7
A6.7.1

The following table illustrates the main potential benefits of an ETV identified by the three
technology producers interviewed for this study. Company C identified no added value for
itself. Instead, the answers provided relate to what it saw as being the potential benefits for
smaller and younger technology developers in the sector. The perceived benefits of an ETV
by technology developers cover a wide array of issues. Some of the most frequently cited
include: facilitating market entry into EU markets, increasing the speed at which products
reach markets, and reducing the risk of the company when investing in R&D.
Benefits of ETV
C
X
X
X
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X
X
Significant benefit
Company A considers that anything which is going to give the market confidence (on the
quality and performance of their product) would be of benefit for us. It has experienced
significant difficulties getting the message across to the market regarding the performance of
its product, and the potential gains users can make in terms of cost and energy savings. It
has already used a national certification scheme to verify their product, but this process
ended up being long and expensive. According to them however, this certification is not
enough, and they need to go further in order to prove the quality and performance of the
product in order to open up markets giving potential buyers the confidence that the product
they are offering is technically accurate would be very helpful indeed.
Company B - sees the fact that solar technologies are not very well known to potential
consumers as the most limiting factor to the market take-up of their product. This lack of
knowledge with respect to what these technologies are able to do creates resistance in the
market. It believes the introduction of an ETV would make the technology more mature,
while helping to overcome some of these barriers.
Company C - expressed limited interest in using an ETV scheme, mainly because their
trialling and demonstration needs are covered by existing certifications. Instead, it believed
the advantages of such a scheme would be greater for smaller and younger companies, with
limited cash flow. An ETV scheme could represent a cost and time-friendly alternative to
traditional existing certifications which are currently too expensive and lengthy for companies
which have not generated sales or a positive cash flow.
A6.7.2

Due to the highly innovative nature of solar hybrid technologies, developers are seeking
ways to reassure potential buyers of the performance levels, both static and dynamic, of their
products. Existing performance testing and certification mechanisms, both internal and
external are not entirely adapted to their technologies for the time being. In addition, most
technology developers in this subsector are micro or small companies, with limited capacities
to carry out large scale demonstration projects, and communicate results across across
Europe. An ETV scheme could offer a means for these companies to climb out of these two
pitfalls. There is a clear correlation between the perceived added value of an ETV scheme
and the size, age, and sales record of the technology developer.
A6.7.3

Additional stakeholder views on the need for an ETV were mainly extracted from interviews
with testing and certification bodies. The overall feeling expressed is that in the field of solar
hybrid technologies, there is currently a gap that limits the eligibility of this type of product to
undergo existing certifications and testing. There is thus a strong need to develop standards
that apply to these technologies, in order to ensure satisfactory performance and quality
control on a large scale.
These stakeholders agreed however that it will take at least three years before these
standards are developed. Differences in opinion begin to appear with regards to what is to
be done in the mean time.
One European certification organisation stated that it does not see the added value
from an ETV scheme. Using existing standards correctly will enable the certification of
solar hybrid products, before adequate standards are created;
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According to one major European testing organisation representative, an ETV scheme

would be useful to bridge the gap for innovative products such as PV-T, solar air
heaters, or polymer solar cells, for which standards do not yet exist. However, the end
goal should still be the development of a European standard;
Finally, one certification body representatives clearly identified the need for an ETV
scheme, even if standards for hybrid solar products were to be developed. According
to him, certification does not always allow products with an average performance to
be distinguished from those with above average performance. There is thus a need
for a mechanism creating stronger differentiation among products. According to him
currently many average-quality solar products are able to meet the standards and
are thus certified and are thus set on the same level as high performing
productsthere might be some room for improvement in this sense.
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A6.8
Introduction
testing;
programme);
The section continues by looking at the costs of supplying verification services to companies.
A6.9

Company A - spends approximately 100,000 on testing and certification of its new
products yearly. It is only willing to invest up to 5,000 on verification, due to the already
heavy financial burden created by CE marking (70,000) and national certification (30,000).
Based on the companys previous experience in obtaining certification, and its limited size
and availability of resources, the internal administrative costs of applying for ETV would
represent approximately 10,000. The company declared not being willing to wait more than
six months in order to obtain verification. Longer waiting periods would strongly limit its
usefulness to them.
Company B - invests approximately 30,000 annually in product testing, and has invested
over 8 million in R&D to develop one market ready product. Internally, costs for testing
activities are estimated to represent 50,000. The interviewed company representative was
not able to provide an estimate on the cost they would be willing to pay to carry out an ETV.
According to him this depends on how long time it would take and what level of guarantees
it would provide to financial institutions, policy makers and customers.
Company C - did not provide a specific amount for the price it would be willing to pay to
obtain an ETV verification. According to its representative it is very difficult to estimate how
much this type of verification would be worth to us, there are too many criteria that need to
be taken into account when calculating the price of verification for a specific type of
technology. However, given the limited added value the company representative identified,
it can be inferred that the maximum price they would be willing to pay would not be over
5,000. At the same time, the company highlighted that in order for an ETV to be effective, it
would have to provide results in less than six months.
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A
100k
30k
NA
NA
8m
NA
<5k
NA
<5k
10k
50k
5k
15k
+50k
10k
NA
NA
NA
Return on investment in
verification/admin fee, based on sale of
one unit (c/(a+b))
NA
NA
NA

for verification
<6 months
<2 months
<6 months
A6.10
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Based on the data provided by technology testing and certification bodies, it is possible to
establish an estimate for the cost of verifying solar hybrid technologies and additional testing
in case this is required. The costs of technology certification, and notably for solar thermal
technologies, are used as proxy for verification. However, most of the interviewees were
extremely cautious when providing estimates of costs (for both testing and certification)
indicating that these may fluctuate considerably from on product to another. According to
them, the more complex the product, the more complex it is to test and certify it, and thus the
more expensive the process becomes. In addition to this, the costs presented in the
following section mostly apply to testing and certification of mature thermal technologies.
Certification of photovoltaic is estimated to be 25 to 50% more expensive, as is that of
innovative products usually requiring supplementary work.
TableA6.6: Costs of providing testing and verification services in the solar sector
Certification / testing body
Approximate cost
Testing for Keymark (Germany)
10k (T)
German test centre
15k (T)
Testing for Keymark (Portugal)
6k (T)
Keymark Certification (EU average)
15k (C)
Microgeneration Certification Scheme (MCS) (UK)
23k (C)
CE marking (UK)
56k (T & C)
Notes: The cost of MCS is calculated on the basis of certification of two types of components that make up a single
hybrid device. The cost of certifying one component is approximately 11 000. The cost of an initial Keymark
certification is approximately 3,000. However, certification holders must carry out annual follow-ups at roughly the
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same cost. The estimate provided is based on a five-year period of certification, which is the period of validity of one
certification. Key: T = testing; C = certification
undertaking an ETV
Based on collated information, we conclude that the cost for technology verification of
solar hybrid products would be between 20,000 and 30,000. Furthermore, it is likely
that the procedure would require additional testing, which would represent an additional cost
of up to 15,000. Overall, therefore, verification costs for developers could rise to between
35,000 and 45,000.
The cost of verification will vary considerably on the basis of the technology being certified,
the availability of testing centres and labour costs in the testing and verifying country, and
even the existence of adequate weather conditions.
When compared to the cost developers are willing to pay for verification, there is an
average shortfall of approximately 30,000.
Testing and certification bodies indicated that if things go as planned it usually takes
between three to six months to verify solar technologies104. However, an ETV could take
much longer - as reflected in the 2.5 year delay one developer experienced in obtaining MCS
certification in the UK for its hybrid PV-T product.

A6.11

Existing mechanisms designed to test quality and performance of solar technologies are
clearly not suited currently to the solar hybrid technology family. The lack of standards and
norms against which these can be measured make it virtually impossible for technology
producers to make use of existing certification schemes, as well as for testing bodies to carry
out reliable, short and standardised testing procedures. In addition, certifications are usually
better applied to more mature products that have existed on the market for longer periods of
time, and for which there is already a knowledge base of performance indicators. Finally,
certification is a relatively long and expensive process which may be of limited access for
new firms not yet generating sales.
However, work is currently being undertaken to develop standards for solar hybrid
technology verification. European actors such as the Fraunhofer Institute for Solar Energy
and the Solar Keymark are actively involved in this process and are at the forefront of efforts
to develop performance-testing methods and criteria for this type of technology. An ETV
scheme would therefore clearly directly compete against these existing well-established
players.
Based on the willingness to pay for an ETV of the firms interviewed in the framework of the
present case study, and the cost of current testing and certification schemes for solar
technologies, there would be a shortfall of between 15,000 and 25,000 for the
verification process. This number could increase to 30,000 to 40,000 in the event that
additional testing was required.
104
Based on estimates to obtain a solar Keymark certification
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The time needed for verification would represent less of a constraint than the cost, as it
seems likely verification could be done within a six-month period. This corresponds to the
time producers expressed to be willing to wait in order to obtain verification.

The key challenges to market uptake and diffusion for products within this technology family
stem mainly from two issues:
The size and age of the companies operating in the sector companies are
mostly young and micro/small businesses. As a result, they lack the necessary scale
to provide credible guarantees to potential buyers of their products. They generally
do not have a solid sales record and the necessary means to carry out a large scale
marketing campaign for their new products.
The need to reassure the market of the performance levels of innovative solar
hybrid alternatives - customers display very high levels of scepticism regarding the
fitness for use of these products and are generally very risk averse, preferring to buy
technologies that have been proven in the market.

The creation of an ETV scheme could offer added value in two ways:
By mitigating the constraints created by the lack of dedicated standards against

which these products can be tested and certified;
By providing a service that goes beyond certification, offering producers the

possibility of verifying performance that goes beyond the scope of existing
standards. Doing so would allow greater possibilities for differentiation among new
high-performing products, and existing alternatives.
An ETV scheme could also offer technology producers a means of reassuring potential
consumers of the static and dynamic performance levels of their products. In this sense, an
ETV could serve as a powerful marketing tool for technology producers.
Finally, verification could also potentially contribute to make solar hybrid products eligible for
certain public support schemes. This however would depend on national legislation in each
Member State and their willingness to recognise ETV as a reliable source of product testing.
The current EU market for hybrid solar technologies is extremely small and there are at the
most ten companies in Europe who have developed or are currently developing solar hybrid
products. As a result, despite the high level of interest in undertaking an ETV, the absolute
number of potential users of an ETV scheme is estimated at between 5-10 over a 2 year
period.
The sector is expected to undergo considerable growth however in the oncoming years, and
the number of companies potentially interested in the scheme might increase to 50 to 100 in
the next ten years.
The conclusions drawn from this business case could serve as the basis for the analysis of
the need for an ETV in two closely related technology sub-groups: solar thermal and solar
photovoltaics. However, our conclusions cannot be systematically applied to other products
in the larger production of heat and power from renewable sources of energy technology
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group. The main reason for this is that within the same technology group, there can be
considerable differences among different types of products, which may strongly influence the
level of relevance of an ETV scheme. These differences mainly relate to the:
level of maturity of the technology group/family;
existence of methods of performance certification and testing, notably at the

European level;
existence of standards, and standardised testing methods;
size and reputation of the main innovators;
rate of innovation;
differences among Member State regulatory frameworks, and the willingness to

recognise a European verification scheme.
On the basis of these criteria, it is possible to draw conclusions and compare the solar
hybrid technology family, to the solar photovoltaic and solar thermal technology groups.
This comparison makes it easier to understand to what extent ETV would be relevant at a
larger scale, according to the analysis presented in the previous sections of this business
case (see Table A6.7).
Table A6.7: Comparison of solar technology sectors
Criteria
Solar hybrid
Solar photovoltaic
Solar thermal
Low
Medium/High
Medium/High
Limited
Yes: Mainly national

certifications, none at
the European level
Yes: National and

European (Solar
Keymark)
Existence of standards, and

standardised testing methods
No
Yes
Yes
Size and reputation of the

main innovators
Small and micro

companies, with
limited visibility.
SMEs and large

companies
SMEs and large

companies
Step changing
Incremental
Incremental
High
High
High
Maturity
of
group/family
technology
Existence of methods
performance certification
of
Rate of innovation
Willingness to recognise a
European verification scheme.
Additional differences and commonalities between the technology groups include:
The solar hybrid sector is for the time being a niche sector. This justifies to a large
extent the need for an ETV scheme. This does not necessarily apply to other better
know and more mature actors and technologies in solar thermal and PV;
Drivers for innovation and barriers to market entry are similar across all three
technology groups;
All technology groups are characterised by the existence a group of highly

innovative small and micro firms, in need of proving the performance of their
products in order to gain market access and visibility of their products;
In all cases, the standardisation process is always slower than market and
innovation rates. As a result, there is a permanent gap created by the arrival of
highly innovative products to which existing standards to not apply;
In all cases, existing certification schemes do not allow to distinguish performance

levels of different products certified. Existing schemes only verify fulfilment of
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EPEC
standards, and do not necessarily highlight the differences in performance levels

among all products being certified.
All in all, based on the analysis of the solar hybrid technology group, it can be inferred that
there is potential for the introduction of an ETV scheme in the solar thermal and PV.
This is justified by the fact that:
current certification mechanisms do not allow for differentiation between certified

products;
there is no existing certification scheme at the European level for solar PV;
regulatory framework differences among Members States are low, and thus their
willingness to accept a common European verification is potentially high.
However, the potential for an ETV scheme in solar thermal and PV could be significantly
limited, in comparison to solar hybrid for a number of reasons. These include: the existence
of a European-wide and highly recognised certification for solar thermal (Keymark), the lower
rate of innovation in solar thermal and PV, and a number of existing standards that apply to
innovative solar thermal and PV products.
As a result, over the next five years between 100 and 200 developers could potentially be
interested in submitting their products to an ETV scheme.
A6.12

Funding opportunities at the national level to cover ETV fees for future users seem to be
limited for the time being. As one certification body representative noted, we do not have a
national public financial mechanism to support companies which have certified their products
or have applied for the certification of their products.
A detailed analysis of this issue would require looking into the hundreds of innovation
support mechanisms in all Member States. In France for example, it is likely that businesses
may receive funding eligible to cover certification/verification, in the framework of
competitiveness cluster-funded projects. Additional support may be obtained by the National
Environmental Agency (ADEME) through its Heat Fund. In the UK, one certification body
was not aware of any specific funding related to certification other than support offered by
the Manufacturing Advisory Service which focuses on SMEs. In some cases, private
arrangements are reached between foreign manufacturers and importers to cover the cost of
certification fees.
At the European level, funding may be available through the EUs Framework Programme.
The EU has long supported RTD activities, including demonstration in the solar sector.
Examples of this include the PV technology platform and PV-ERA-NET, both started under
FP6. FP7 has also funded a number of projects in the solar sector, such as the APOLLON
project, HETSI or ULTIMATE. The 2008 call also included a predominantly demonstrationfocused component105.
In addition to this, Certification bodies are financially autonomous and generally do not
receive any assistance from public agencies.
European level
105
Menna P, et al, European Photovoltaic RTD and demonstration programme, European Commission. Available at:
http://ec.europa.eu/energy/renewables/studies/solar_electricity_en.htm
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Due to the limited size of the solar hybrid sector for the time being, there would only be a
need for one verification body in Europe. This centre could work in collaboration with existing
testing facilities. Since this single body would cater to the needs of all companies in the
sector, it would need to be centrally located.
The two main challenges for the implementation of an ETV scheme dedicated to this
technology group are:
The existence of a well developed and recognised set of testing and certification
organisations, which operate at the European level;
The fact that most companies must go through a long and expensive testing and
certification process, limiting their capacity to undergo additional verification. This
barrier is worsened by the fact that most producers in the field are micro and small
companies, for which the financial burden is higher. To illustrate this, a British firm
specialised in the production of PV-T had to pay 24,000 (20,000) for national
certification in addition to 67,200 (56,000) for CE marking. As expressed by a
company representative, this a big deal for SMEs. For companies that are in the
initial phases of product development and still not making sales, financing this can
be a very big challenge.
In addition to this, technology producers and certification bodies expressed difficulties

identifying the exact role, objectives and added value of an ETV scheme. As a result, their
willingness to participate, and by extension their willingness to pay, is strongly reduced.
Technology producers also express reluctance to adopt an additional performance
verification mechanism due to the additional administrative burden it could create. As
expressed by one technology producer such an exercise just adds red-tape to those trying
to innovate.
A6.13

The success of an ETV will depend on a number of underpinning issues including:
Marketing the ETV brand: As most other labels and certifications, the ETV brand
will have to be strongly marketed in order to increase its visibility. Technical
excellence will not suffice to ensure ETVs success. Instead ETV operators must
ensure that ETV is branded correctly, to technology developers and consumers;
Making the need visible and understood: Based on the experience preparing this
business case, it soon became clear that technology developers and certification
bodies were unable to identify the need an ETV scheme would answer to. Despite
their understanding of the general logic behind ETV (improve market entry for
market-ready innovative environmental technologies), it was unclear to these
stakeholders where the added value of an ETV lies in comparison to existing routes
to the market. It will therefore be necessary to effectively communication on the
rationale of an ETV, the potential benefits for users, and its position in the landscape
to existing certification, testing and labelling schemes;
Building on complementarities: Due to the existence of multiple testing and

certification alternatives already on the market both at the national and European
level, an ETV scheme should seek to develop complementarities with these
mechanisms. For example, an ETV scheme could fast-track the certification under
the Solar Keymark, or other multiple national certifications schemes, such as the
British MCS. The links between these types of mechanism and ETV would have to
be made clear and explicit, and would have to be institutionalised;
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Making it cost-competitive and reasonably simple: ETV will have to be cost

competitive in comparison to existing performance certification, testing and labelling
mechanisms. In addition to this, the procedure to obtain the verification should be as
simple and transparent as possible.
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ANNEX 7 BUSINESS CASE: ANAEROBIC DIGESTION

The following business case has been prepared on the basis of nine interviews and two
questionnaires. Interviews included four company representatives (three of whom responded
to the original ETV survey), two test centres and three stakeholders (including a former end
user). Questionnaires were received from a developer and test centre.
A7.1
Introduction
This business case builds on the findings of the market analysis of the water treatment
technology area (see main report). This found that:
water companies are generally highly risk averse in a number of EU member states
the process of adopting new technologies can be lengthy and costly;
whilst some water companies are more progressive in their approach to new
innovations and will be willing to test out new innovations, others will await the results
of tests before considering any investment.
water companies may be unwilling to trust the results from tests at other water
companies even though effluent streams will often be more or less exactly the same;
for industrial end users, there are often large variations in effluent streams and hence
the nature of the resulting sludges. This will often require site testing before the
company commits to a purchase.
This business case looks in more detail at a number of anaerobic digestion (AD) and sludge
treatment technologies being commercialised in the water, industrial and agricultural
sectors106. It seeks to show the benefits that ETV will bring to both technology developers
and end users.
A7.2

Across the EU, AD remains an immature market using quite mature technology. Only a few
member states such as Germany, the Netherlands and Denmark have very established
operations and clear investment horizons. The UK has enormous potential, particularly given
that 85% of households currently use natural gas. The opportunity to supply biogas to
households, as is currently done in Sweden, provides big opportunities, for both water and
energy companies.
Water companies offer large prospects for AD and sludge treatment. Other industries offer
promising market opportunities including oil and gas, pharmaceuticals, food and beverage
manufacturers and industries which have high concentrations of effluent that requires on-site
wastewater treatment, as well as companies generating large sludge volumes. Farms also
offer good prospects for treating animal sludges and generating revenue from distributed
power generation. Energy companies are also now starting to exploit the technology to help
fulfil renewable energy generation obligations.
For industry, the requirement for any new wastewater and/or sludge treatment technology
will often be dependent on local need for example an environmental regulator may impose
tight restrictions on an end user which will make them look at several technology options.
Sludge treatment in the EU is a relatively new industry, only emerging since 1998. However,
sludge generation is a large problem across the EU with numerous sectors requiring sludge
106
This area was selected because of the initial interest from three technology developers in the original ETV survey. A further
two new developers were identified to complement these three and provide a robust evidence base for the business case.
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treatment and disposal. Overall, the market opportunity is large and globally very attractive,
particularly when considering the opportunity to generate energy from the waste.
A7.3
Innovation drivers
A7.3.1

technology
Wastewater treatment works have to comply with a raft of EU legislation including:
The Water Framework Directive;
Drinking Water Directive;
Bathing Water Directive;
Priority Hazardous Substances Directive;
Urban Wastewater Treatment Directive.
These Directives have created the need for more efficient and higher quality processes.
There has also been a shift away from the use of chemicals in water treatment due to the
adverse environmental impacts they produce. This has stimulated growth in membrane
filtration and UV technologies as alternatives to chlorine and other chemicals.
The digestion and treatment of sewage sludges is not as regulated as other processes in the
water treatment sector, primarily because it does not impact directly on the quality of water
delivered to the consumer or discharged to the environment: any effluent arising from
treatments is likely to be redirected back into the wastewater plant. Thermal treatment of
sewage sludges requires compliance with the Waste Incineration Directive and is a critical
component of market acceptance for technologies such as fluidised bed incineration,
pyrolysis and gasification.
Several EU countries have strict regulations for spreading sludge on the ground. For
example, the Netherlands and Sweden have outlawed sludge spreading on land,
necessitating sludge treatment and disposal. In the UK, sewage sludge spreading on
farmland is dependent on the end use of the products being grown as well as whether the
area is a nitrate vulnerable zone. In the EU there are 12 million dry tonnes of sludge per
year; in the USA there are 7 million dry tonnes of sludge.
A7.3.2

The primary driver for investment in new technologies in the sludge digestion market is
regarded as the economics of the process. The potential and ability to reduce energy costs,
and to utilise the energy from sludges, is becoming ever more important, especially with
rapidly rising fossil fuel prices.
AD operators do not make a lot of money in running AD plants profitability is low and
subsidies (e.g. feed in tariffs) are often required to make plant economics viable. However
there is clearly money to be made in plant construction.
A7.4
A7.4.1

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There a large number of competing technologies in sludge pre-digestion, AD and sludge

treatment. There are over 100 turnkey providers of AD plants across the EU107. Companies
licence technologies and systems from a large number of technology providers across the
EU and globally.
At least three established European companies specialise in pre-digestion systems Cambi
(Norway), Monsal (UK) and Veolia (France). Besides these, a number of smaller developers
supply new innovations into the market, including several featured in this business case.
Sludge dewatering equipment (belt presses, centrifuges) and thermal dryers are used to
reduce sludge volumes down to levels that can then be either destroyed through thermal
treatments or spread on land or landfilled. Fluidised bed incineration, pyrolysis and
gasification all compete for the final destruction of sludge (assuming it has not been possible
to apply it to land). The rate of innovation is extremely slow in the sludge treatment sector
with the industry locked into combustion processes.
A7.4.2

A lot of anaerobic digestion operators are firefighting, keeping their systems operational
with limited investment in capital or maintenance programmes. Operators are focused on
reducing sludge volumes and not optimising the production of methane gas from the process
which is an emerging and growth market - technology developer
There is a clear opportunity to introduce advanced technologies into the AD market.
Extracting more energy from sludge digestion is possible through improving the efficiency of
the AD process. A number of proprietary methods have been developed to achieve this.
Most are focused on increasing the surface area of the cellulose in the sludge (e.g. by
increasing pressure in the vessel, or through the use of ultrasound, etc) so that it is more
effectively digested. New techniques to more accurately monitor and control the digestion
process are also now coming to market.
Once digested, dewatering the resulting sludge and then either thermally treating it or
disposing of it is another costly operation for water companies and industry. Extracting
energy from wastewater sludges represents an opportunity due to the huge amount of water
that must be evaporated in drying it. Avoiding evaporation will save very large amounts of
energy and hence be more energy positive and generate carbon savings.
A7.4.3

Given the current immature status of the industry it is likely that performance standards will
take some time to be adopted. In the meantime, demand for progressive end users who are
seeking potential step changes in environmental performance and energy savings will drive
increased standards through procurement channels across the sector.
A7.5

Company A - is the developer and owner of a proprietary AD technology which uses
pressure to break up the sludge cell structure to increase surface area. The technique
increases the volume of biogas generated which significantly reduces costs and creates
more opportunities for revenue (e.g. from feed in tariffs). A full scale (20 tonnes/hour)
commercial unit is currently being trialled at a purpose built digestion site at a UK water
utility. Other commercial products, including a sludge treatment process that uses lime to
stabilise the sludge, are also being sold.
107
Consultation with technology developer
113
EPEC
Company B - has developed a pipeline of both lab-based and in-situ technologies to sense,
monitor, control and evaluate methane levels from AD plants as well as to improve the
energy generation from plants by around 20%. The value proposition is not only to have
more control over the AD process but also to make analysis more efficient and dynamic,
both of which will yield cost savings.
Company C - is an established supplier of sludge dewatering systems and has very good
relationships across the EU water industry built up over 20 years of trading. It has two main
product lines and is gradually increasing its market share in these product areas into several
EU markets including Finland, Germany and Poland. The company spent over 5 years
commercialising a novel system to enhance wastewater sludge digestion.
Company D - is the developer and owner of a market ready, supercritical water oxidation,
sludge treatment process that is designed to destroy all organics in the waste and generate
significant surplus energy as part of the process. The process involves no combustion or
harmful emissions and hence is a strong alternative to thermal treatment of sludges.
Company E108 - developed its own biogas production technology which is fed into an onsite
gas engine to generate electricity. It currently uses its own reference plant for agricultural
wastes and is keen to sell its first product into the rapidly growing biogas market.
A summary of each developer is shown in Table A7.1. Three companies are microbusinesses; most have at least one product in the market and a pipeline of innovations in
development.
Organisation
information
Technology
developer A
Technology
developer B
Technology
developer C
Technology
developer D
Technology
developer E
Member State
UK
Sweden
Finland
Ireland
Poland
Size
Micro
Micro
Small
Micro
Medium
Age (years)
6-10
6-10
+20
3-5
3-5
Products in
development
3-5
3-5
Market ready
products
3-5
Products in market
3-5
+5
Product description
Enhanced
sludge
digestion
using pressure
differential
Optimisation
of anaerobic
digestion
using sensors
& controls
Ultrasonic
cavitation of
sludge
digestion
process
Supercritical
oxidation of
wastewater &
sludges
Proprietary
sludge
digestion
process
NEED FOR ETV

A7.6
A7.6.1
108
Company response mainly based on a survey response, not a detailed discussion with the company.
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EPEC
Table A7.2 illustrates the overwhelming problem of demonstrating performance in real world
operating conditions and clearly links to the resulting uncertainty that end users therefore
have in the product. A lack of mutual recognition and harmonised standards is regarded as
important for several as it a higher product price than incumbent technologies.
Barriers

fitness for use)
Our company must comply with stringent health, safety, and environmental
standards as a condition of sale


technologies

Other : references required in home country and each member state; lack of
clear accreditation of products; lack of state support; uncertainty of legislation
A7.6.2
X
X
Standardisation provides a set of specific parameters against which technologies can be
tested. A limited number of standards have been found for AD (see Box below). This does
not provide scope for allowing technologies to show more sophisticated levels of treatment.
For example, if a technology is able to achieve the same water treatment level as another
technology but using 20% less energy then there is a market to show this off. For example,
an ETV could verify that a technology does the same as current technology but also saves
money, recycles water and also reduces the number of components at the same time.
ISO requirements in the anaerobic digestion sector
ISO 13641-1:2003 - Water quality determination of inhibition of gas production of anaerobic

bacteria Part 1: General test;
ISO 15985:2004 - Determination of the ultimate anaerobic biodegradation and disintegration

under high-solids anaerobic-digestion conditions -- Method by analysis of released biogas;
ASTM International
ASTM E1535 - 93(2006) Standard Test Method for Performance Evaluation of Anaerobic
Digestion System.
115
EPEC
A7.6.3

Company A - previously designed an 8-10m3/hour unit which was demonstrated at a UK
water utility site and showed a trend of increased biogas production. The firm asked Imperial
College to independently verify product performance. However, the utility ended the trial
prematurely as it was pleased with the success. Current trials require 45 days of testing
which involves three complete digestion cycles. The water company will commit to payment
once they are satisfied with the test results and are interested in a further six units. The unit
has a 3 year payback. Five other UK water companies have expressed interest in the
technology including one multinational utility which has a 10m budget for sludge pretreatment technologies which can demonstrate revenue potential. The firm also has a
benchscale unit being tested with a Scandinavian utility who could apply the technology at
five sites in Sweden as well as one in South Korea.
Company B launched its first commercial, lab-based product in 2010 which is now sold
through an extensive distributor network providing 90% global coverage in over 25 countries
across the EU, USA and Asia Pacific. Further products are now reaching market-ready
status including a methane optimisation process to enrich the gas, increasing it from a
concentration of 65% to 85%. The key challenge is to find suitable reference plants at water
companies and industry site where the technologies can be tested. Only then can the data
confirm the forecast efficiency gains. It has spent a lot of time trying to create demand for
their products, including marketing itself as bigger than it was to build market credibility.
Company C - previously tested its ultrasonic cavitation sludge digestion technology at a
municipal wastewater treatment works in Finland in 2007. Throughput was around 46m3/hour. Refinements were made to the system but commercialisation plans were put on
hold due to the economic downturn. It is now funding a second demonstration/reference unit
(of a similar throughput to the first) at a municipal wastewater treatment works in Poland
which is expected to start operating in May 2011. Performance data from this site are crucial
and will determine resources to be spent on marketing the new system to water companies,
followed by small farms and food and beverage manufacturers once sales have been
established. The biggest challenge is getting the reference plants built. Furthermore, this is a
highly competitive market with several alternative systems available, mostly supplied by
small EU technology developers. In the absence of an ETV, the company would use a
technical university to verify the performance.
Company D has done its own testing on an initial 250kg / hour pilot plant which is
reviewed by outside consultants. The plant is used to demonstrate the technology to
potential end users. A complete testing period can take up to two years. Three different
systems have been designed depending on sludge throughput, from 2.5t/hr, 10t/hr up to a
maximum of 20t/hr. Once performance is proven, the modular system requires minimal
adaptation per client depending on the pre-feed (i.e. whether the sludge needs
grinding/macerating etc). When the various components of their system are combined, it is a
unique product and has nothing to certify against. The challenge is to convince people that
new technologies are good. The company is trying to overcome this challenge through a
commercial scale demonstration plant at an industrial site, where sludge is currently dried in
a biomass boiler with the waste product shipped to Germany for incineration.
A7.6.4

Table A7.3 summarises the overall methods to prove performance in the current absence of
the ETV. Several approaches are used including existing sales and reputation (i.e. where an
established company is introducing a new product to its portfolio). Overall, test data is a
common method, backed by demonstration at a customer site, either funded independently
or through joint development with the end user.
116
EPEC
Table A7.3: Summary of methods used by companies for proving performance claims
to potential customers

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EPEC
A7.7
A7.7.1

Table A7.4 illustrates the main benefit from ETV is to assist developers to enter other
EU markets. Several developers also see value in ETV helping both domestic market
access and non-EU access. Other strong perceived advantages are to enable products to
compete with market leading rivals and to provide insights to clients on the products
potential environmental impacts.
Benefits of ETV
Significant benefit
Company A - receives market verification by demonstrating at a utility site, inviting potential

clients to look at the plant. It does not intend to build another similar plant so an ETV could
really help companies in a similar situation to them, particularly if it can open up markets
across the EU.
Company B - sees certification as of use as a differentiating component in an established
and/or competitive market and of use in gaining market access in new markets (where it
should be used as a third party validation for technologies). Overall, it regards ETV as having
potential as a market accelerator:
I can definitely see the need for verification. A company could use it as a way to get a
demonstration/reference site set up, especially if it is 1-3 years old when it is most difficult to
get such sites. There is a need to create a sense of achievement and credibility in the eyes
of the customer for young firms without a sales track record. ETV then becomes a validation
instrument.
If the EU ETV had existed it would have helped because the market was not extremely
competitive to start with, so it would have built up trust with potential clients.
Company C regards the Polish market as having large potential since biogas is still an
immature market and there are emerging economic drivers to reduce plant operating costs
and enhance revenues. Being next to Germany means that potential clients also easily
inspect the reference plant. An ETV would be significant in opening up these markets as
well as in Sweden, Norway and Denmark. China is also being considered.
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EPEC
Company D - feels that an ETV would help to open up the EU market by showing here is a
product that works in a certain operational environment etc. It sees an ETV label as an
additional tool in the toolbox for helping facilitate market access, not a panacea, and
believes it will add legitimacy to its product claims and help build for the future by going
larger. It is targeting UK and Italian water companies as well as industrial operators in
Ireland and elsewhere. Longer term prospects are in the USA, the biggest non-EU market.
A7.7.2

Where an environmental technology has been tested successfully at a reference trial site,
this will generally lead to a sale. The reference site will also allow potential customers to
view the performance. However, technology developers have made clear that an ETV could
complement reference site results by providing the independent validation that would help
persuade other customers of the merits of the technology. In summary, we find that ETV has
the following benefits to SMEs:
A7.7.3
Validating test data from reference site to clients across the EU and beyond;
Gaining credibility and a licence to operate;
Providing verification against other rival companies in a highly competitive market;
Demonstrating environmental performance.

Some member states recognise the difficulties of finding demonstration sites for new water
treatment technologies and believe test centres should be established to support innovators
in real life conditions. This issue was raised by a Swedish trade body, where water
municipalities are understood to be reluctant to buy technologies from innovators. One
leading water test centre has taken over a pilot plant facility at a municipal water treatment
works. This facility allows new technologies to be tested using the same effluent as a
standard water treatment works. However, it is zero risk because, if something goes wrong
with the technology, the effluent can be pumped directly back into the main water treatment
works. This means innovative companies do not require access to large plants. The test
centre noted that: there should be pilot plants for water treatment alongside an ETV
scheme.
The issue has also been recognised in Ireland where water delivery is owned by local
authorities. Enterprise Ireland, a public support agency, is aiming to pay for test centres and
demonstration sites for innovative water technology developers109.
In the UK, the water industry is generally only able to invest in pilot scale projects, rarely
larger scale demonstrations. While there is plenty of money to invest in R&D the biggest risk
to everyone is demonstrator funding: a mechanism for verifying full scale technologies
would help enormously110. There is currently a plan to establish a Water Technology
Platform in Yorkshire which would test and verify the performance of new technologies. An
EU ETV scheme would sit well above this support facility to companies. The aim would be
for water companies across the EU to accept the process results and hence ease the
transition of a new product into the market.
However, in the UK verification is seen as being only of use to water companies if there was
either a regulatory or an economic need111. A general rule is that in the UK water industry an
innovation needs to pay back within 3 years to make the investment worthwhile. However,
109
Consultation with stakeholder
110
Consultation with stakeholder and former end user
111
Consultation with stakeholder and former end user
119
EPEC
Framework Agreements act against this because they filter out companies without a track
record in delivery or financial viability. So if the innovation provided market leading
performance or there was no comparable technology used by the water company then
confidence - at least in the technology performance would be achieved by having an ETV.
In other Member States the market situation is often different because much water treatment
is municipally operated and hence fragmented. There is an incentive to improve water supply
and treatment quality to serve the voting public. The openness to innovation could be higher
and hence potentially it is less critical to have an ETV label.
Test centres provided some different perspectives also on the need for ETV:
At the moment, technology developers use reference plants so there is value in producing a
verification because the results will be applicable in a certain range of conditions and that will
give the confidence to end users despite the fact that parameters might have to change
slightly. Test centre
If the product is near market and proven, the developer will still have to adapt the
operational parameters between end users as there will always be differences between
wastewater streams. However, this does not mean having to replace parts of the technology
to suit client needs. Test centre
Often there are no particular standards available because industrial processes and closed
loop processes are so different and unique and hence an ETV could illustrate benefits. One
test centre looked at condensate recovery and the reuse of water. In one example, the water
temperature was 40-50 degrees and so energy could be recovered from it. This additional
benefit of energy recovery would be proved by the ETV, on top of the technologys
recognised ability to recycle the process water.

A7.8
Introduction
testing;
programme);
The section continues by looking at the costs of supplying verification services to companies.
A7.9

Company A - has spent over 2.4m in developing and testing the technology. The
verification fee range has to be less than 5,000, based on two factors:
Verification of performance and an independent report by a leading technical

university (from UK, Finnish, Italian institutions) would cost around 2,500 (3,000);
ETV verifiers will have access to robust data presented by the company and the
water utility that is testing it, so it should not be a hugely complex process.
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EPEC
A sliding scale of fees was seen as fair depending on the complexity of the system and
performance claims made. Other costs involved with staffing and expenses relating to the
verification are estimated at less than 10,000.
Company B - has invested around 750,000 to date in developing and testing their set of
technologies. It considers the verification fee range has to initially be less than 5,000.
However, in due course the fee could be based on potential turnover, like an ecolabel which
also uses third party verification. For example, a fee might be a maximum of 5% of sales
(based on average revenue and sales volume) which is suited to the size of product and
company. It is difficult for the company to estimate other costs.
Company C - has spent around 300,000 to date in developing and testing the technology.
The verification fee range has to be less than 5,000 however. This is because it is hard to
price depends on what you get for the money as well as the financial situation has been
tough for the past two years. It would clearly aim to market the results from their trial and a
verification would fit in well with these marketing materials. It is too difficult for the company
to assess other costs involved in the verification process but they are expected to be of a
similar scale to the verification fee.
Company D - estimates the costs of development to date are in the order of 6m. The
verification fee range has to be 5-10,000, based on several factors:
Verification of performance and an independent report by a consulting engineer

would cost the firm around 10-15,000;
Most of the work and tests are done by the company anyway;
Any higher and it will be too expensive for smaller firms.
Other costs involved would be 10-15,000 for staffing and other expenses with the
verification. The firm commented that achieving market access from ETV would be
priceless, but assigning an actual value to it is hard. One sale would make doing ETV
worthwhile but it may be chicken and egg - the sales value might be 3.5m but that is not of
relevance to the cost of verification before you have made any sales.
Table A7.5 summarises these various costs to companies. Key conclusions are that
firms are generally willing to pay no more than 5,000 for a verification;
there appears to be no correlation between a firms willingness to pay for the

verification fee and the potential return on investment in the fee;
firms would accept a timescale for verification between less than 6 months and a
year.
112
E(a)
No
specific
budget
50100k
1-25k
250500k
No
specified
2.4m
750k
300k
6m
N/A
112
121
EPEC
Annualised R&D invested to date (i.e.

based on the age of company)
300k
<5k
<5k
<5k
10k-15k
<5k

verification (b)
<10k
n/k
<5k
10k-15k
N/A
<15k
5k-10k
<10k
20k-30k
5k
0.5m
20k
100k
3.5m
N/A
Likely increase of sales expected

from certification of performance
claim (in value) (c)
Unknown
Unknown
Unknown
Unknown
N/A
<6
months
<6
months
<1 year
<6
months
<1 year

Note: (a) company only provided survey data
A7.10

To illustrate the potential variation in costs of verification services across the water sector we
spoke to several EU test centres, two of which had been involved in ETV verification
schemes. Table A7.6 illustrates the estimated range of costs from three centres.
These costs provide indicative, not actual, costs for the verification and testing of the specific
technologies involved in this business case. They also reflect the challenges of gaining
estimates that adequately cover a number of technologies, rather than specific product
families. However, we are confident that these provide the right orders of magnitude for the
business case. The responses show a fairly similar cost structure across different test
centres (and hence member states).
Test centres that have been or are currently involved with ETV type verifications, note that it
is difficult to specify precisely what costs will end up being without knowing exactly
the performance claim parameters that are to be verified.
These costs are generally higher than those for water monitoring, reflecting the general
complexity and scale of water treatment technologies.
Table A7.6: Costs of providing testing and verification services for water treatment
Denmark*
Testing
Verification or
Certification
Testing & Verification

/ Certification
9.5-40k (V)
22-94k (T&V)
(average 28k
113
Poland*
25-50k
25-50k (C)
50-100k
Sweden*
25-50k
10k (V)
35-60k
Key: * = original respondent to ETV survey conducted under EPEC study. T = testing; IPT = initial product testing;
V = verification; C = certification
113
Cost estimates of verification are based on over 20 verifications across a number of sectors where verification on average
totalled 43% of total costs. Testing/verification costs of 50-100k for water treatment technologies were estimated.
122
EPEC
Furthermore, based on ETV experiences from current European practitioners in this sector
there is often a need to undertake further testing as part of the verification. This is due to the
difficulties of relying upon submitted test data from developers as well as the data often
found to not correspond directly to the verification application.
Estimates of verification range from around 10,000 or less depending on the technology up
to 40,000. Certification at one test centre cost up to 50,000; at another test centre cost
estimates suggests several more steps involved in the verification compared to standard
testing requirements (which already factor in reporting back to the developer).
undertaking an ETV
We are able to draw the following conclusions about the costs of supplying verification
services for ETV in the water sector. A typical verification fee is likely to range from
around 10,000 to 40,000 depending on the technology. Based on forecast costs from
two leading test centres in Northern Europe, fee costs will vary according to:
The number of parameters that firms are seeking to verify;
Location of the verification and testing - for example, Sweden has double the
hourly rates for staff compared to test centres in Portugal and Greece;
Complexity of the technology - for example, whether the technology is a discrete

piece of equipment or an integrated, closed loop systems versus;
Access to test facilities for example, potential sites for testing technologies often
have to be found although dedicated demonstration facilities that sit alongside an
operational wastewater treatment works are one mechanisms for providing easy
access and risk free testing for developers.
Location of developers, testing houses and verification bodies

communications between parties will increase administration costs and lengthen the
verification procedure. Where test centres are not alongside the main verification
body, the increased need for communications will increase costs.

A7.11

The very high level of interest for ETV amongst the five developers sampled (i.e. 100%
interest) shows very strong demand for verification in the AD and sludge treatment
subsector.
For sludge digestion and treatment we believe there will be a funding shortfall of at least
5,000, and potentially up to 35,000, between what developers are prepared to pay as a
fee and the cost of providing the service to developers.
The scheme also needs to be running efficiently for firms to sign up to a verification, since
there is a clear message from companies that the shorter the timescale the more likely
they will participate (i.e. ideally less than 6 months, and not longer than a year).
Based on the low willingness to pay, however, the perceived value of ETV is currently not
large; and there appears to be no correlation between a firms willingness to pay for the
123
EPEC
verification fee and the perceived benefits from investing in the ETV. This illustrates the
uncertainty of quantifying benefits in the mind of the developer114.
Willingness to pay only 5,000 might indicate that developers in this technology group
generally have to go through an extensive and expensive R&D and demonstration phase.
This already generates high quality performance data and a reference site for clients which
in many cases will be sufficient to attract future sales. ETV is therefore a nice to have, but
not a necessity for such developers.
An ETV will have the following benefits for SMEs in this particular technology group:
Validating test data from reference site to clients across the EU and beyond;
Gaining credibility and a licence to operate;
Providing verification against other rival companies in a highly competitive market;
Demonstrating environmental performance.
Fast tracking of ETV holders through national certification (and similar) schemes would be
advantageous.
Many developers interviewed for this business case do not have a clear idea about the
nature of the EU competition in their respective fields. This is partly due to the
localised/national nature of the markets they operate in; it also partly reflects a nascent
supply side with a lack of visibility.
Having sampled five companies, all from different EU member states, we estimate that
there are around 20-25 companies in the EU (likely to be SMEs and developing market
ready products) who would be interested in an ETV over the next 1-2 years. We believe
the total number of EU firms offering products in this market to be in the range of 50-75.
Our market survey of technology developers obtained three questionnaires from well
established developers of water/wastewater treatment technologies see Table A7.7 for a
summary. Despite the varying size of the firms (i.e. micro to large), and from different
member states, each stated exactly the same significant or highly significant benefits from an
ETV, including:
facilitating access to both the home and EU market;
increasing the speed to market;
increasing market acceptance of products by customers;
allowing their product to compete against market leading rival products;
gaining insights on the environmental impacts of products.
Table A7.7: Developer responses covering a variety of water and wastewater

treatment technologies
Organisation
information
114
Technology developer A
Technology developer B
Technology developer C
A certain amount of clarification was also required with firms in talking through the benefits.
124
EPEC
Member State
Germany
Spain
Ireland
Size
Micro
Medium
Large
Age (years)
11-20
20+
20+
Products in
development
3-5
5+
Market ready
products
Products in market
3-5
5+
Product description
Water & Wastewater

treatment technologies
Adsorption technique to
treat industrial wastewater
Not specified
WTP ETV fee
5-10k
50-100k
5-10k
Max time period
<1 year
<2 years
<6 months
Despite the small sample size, we conclude from this random cross-section of the
market that there is indeed demand for ETV across the wider Water Technology Area.
Furthermore, in two of the three cases, there are parallels with the AD/sludge responses
regarding willingness to pay (i.e. 5-10,000) and timescales (less than 6 months to a year).
Given the very large size of the EU municipal and industrial water market and the number of
water and wastewater treatment technologies that constitute the supply side115, we estimate
that demand for ETV in this area could be in the order of five to ten applications per
technology family per year.
If we assume that there are at least five main technology families that cover primary,
secondary, tertiary water treatments plus sludge digestion and treatment, then we estimate
that total demand for an ETV could be in the region of 25-50 applications per year or
125-250 over a five year period.
A7.12

The fee for ETV might be deferred until a company is selling its product. ETV costs could
then be recovered, so that it was not front end loaded for the developer.
If ETV can demonstrate sales are accelerated then it will improve a developers willingness
to pay. Once you move into the area that ETV provides a licence to operate, you could start
to charge more for the service. This could be based on a self-declaration model.
Technology developer
ETV clearly dovetails with core EU policy objectives, particularly if focused on technologies
that help reduce pollution, energy and carbon emissions and improve resource efficiency
and security of supply. The extent to which EU funding programmes can offer support is one
obvious way of overcoming apparent funding gaps.
LIFE+ for new technology demonstrations would be a good method of supporting the ETV
process for larger innovations. A LIFE+ demonstration project would need to be done in an
ETV compatible manner so that additional measurements were not required. This would
115
Filtration and disinfection were analysed in detail for the main market study
125
EPEC
unlock a critical barrier since testing is where the cost lies and it would streamline the
verification process. Something similar for smaller projects would be helpful.
At the Member State level, support is highly variable:
In Sweden, if there is a public interest then product development funding can be

obtained from either the Swedish Energy Agency or Swedish Innovation Agency
(VINOVA). Whilst this support supports product testing, it excludes verification.
In Finland, one company developed its technology in collaboration with another

Finnish company and received support from the Finnish Innovation Agency (TEKES)
to undertake R&D and preliminary testing of their system, the performance of which
was verified by VTT, the Finnish Technical Research Centre.
European level
Given the size of the EU water market and the potentially large number of developers
interested in an EU ETV scheme, we conclude the following about the number of VBs that
would be required to run an effective ETV scheme for water treatment technologies:
The need to satisfy geographical and language issues suggests that at least 3 VBs
are required, potentially catering to Northern/Eastern Europe, Central Europe and
Southern Europe.
There might be scope for increasing the number of VBs to two in some regions, but
only where it can be sufficiently proved that there are enough verifications to be
carried out.
Broadening the number of VBs beyond three means that ETV will have to be well
promoted, both by the VBs themselves as well as Member States and the EU
Commission, in order to show the benefits of participation.
Test requirements from one test centre should be transferable to others for the Scheme to
work effectively. Each EU member state would require a testing house to facilitate multiple
visits as the machinery would be expensive to ship around.
Company views
There are uncertainties for developers around the fees required for ETV, including:
whether there be any annual maintenance costs (e.g. a nominal fee for holding the
ETV which is based on declared sales for example). This could help with overall
system operating costs.
the point at which a new verification be required (e.g. second generation product).
Stakeholder views
Without sufficient awareness of the ETV scheme amongst end users it risks achieving limited
successes. One stakeholder criticised the Commission for not doing more to raise
awareness of the benefits of undertaking an ETV:
The EU has not pushed ETV enough. Even with pilot ETV projects carried out awareness
remains poor. Many people simply do not understand what it is all about. - Test centre
There is a big risk for the pre-programme practitioners because it is a new system and will
require a marketing budget (which isnt included in the grant from Commission).
126
EPEC
A7.13

KPIs and evaluation
It will be critical to put in place key performance indicators (KPIs) to see what value is
created from each verification.
Evaluation of verifications must be core to the strategy for developing ETV.
Marketing of ETV is important because it can be used to increase the credibility of the
test results, especially from demonstration plants.
Part of the verification fee would need to be allocated to marketing the ETV because
this would help to drive awareness and acceptance of the Scheme amongst the key
target market for the ETV product. Without this industry are unlikely to recognise the
value of the ETV badge:
It is important to stress the additional benefit of verification for both suppliers
and purchasers as well as having branding activities to increase the
acceptance of ETV. - Test centre
One test centre noted that it is very difficult to explain to SMEs what is the difference
between certification and verification.
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EPEC

ETV Final Report Business Case Annexes

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ETV Final Report Business Case Annexes

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DETAILED ASSESSMENT OF THE MARKET POTENTIAL,

AND DEMAND FOR, AN EU ETV SCHEME

Under Framework Contract No.

Contact name and address for this study:

European Policy Evaluation Consortium (EPEC)

Fax: +32 2 275 0109

E-mail: [email protected] URL: www.epec.info

BUSINESS CASE: INSULATION ......................................................... 1

ANNEX 1 BUSINESS CASE: INSULATION

Current status of the market and technology

Nature of the market opportunity

Main EU and Member states regulations influencing the development of the

Non-regulatory end user requirements on innovation and performance

Current and future performance of technologies

Current technology provision

Indication of State-of-the-art for current technologies

Likely developments of technology performance standards

Technology developers being examined in this business case

NEED FOR ETV

Routes to market for companies

Summary of the key barriers to market acceptance

Our new product price is higher than incumbent technologies

We lack legitimacy for our environmental performance claims

DIN EN 13163:2001-10 "Thermal insulation products for buildings - Factory made

DIN EN 13164:2001:10 "Thermal insulation products for buildings - Factory made

DIN EN 13166:2001-10 "Thermal insulation products for buildings - Factory made

DIN EN 13169:2001-10 "Thermal insulation products for buildings - Factory made

DIN EN 13170:2001-10 "Thermal insulation products for buildings - Factory made

burdensome, type of certification which which is more adapted for market-ready

Trialling and demonstration of technologies

Rationale and value added for technology developers from undertaking

Pass Innovation in France

Overview of companies issues

Table A1.3: Benefits from having an ETV for technology developers

Facilitates market entry for our product into other EU markets

Facilitates market entry for our product into non-EU markets

Increases the speed at which our product reaches market

Increases market acceptance of our product by customers

Clients gain insights on environmental impacts from our product

No benefit from an ETV

Conclusions - why developers of this technology would want to undertake an

allow them to gain credibility among end consumers;

increase the speed at which products enter the market.

Stakeholder views on the need for ETV in this technology area

COSTS AND WILLINGNESS TO PAY FOR ETV

Cost of testing the technology to enable it to apply to the ETV;

Other internal costs to the firms.

The section continues by looking at the costs of supplying verification services to

The costs of potential verification for technology developers

not willing to pay more than 5,000 for a verification;

generally only willing to wait approximately 2 months for verification;

Willingness to pay ETV fee (a)

Administration costs for verification (b)

Total costs for verification (a + b)

Maximum amount of time willing to wait

Annual testing budget

Total R&D invested to date5

The costs of supplying verification services to technology developers

A1.10.1 Overview of costs