Carolina Wielinga (BDR Thermea): ‘Do not compete on sustainability’

In addition to being CFO of BDR Thermea, you are also a Supervisory Board member of Gasunie and chairman of the Supervisory Board of water and beverage filtration company NX Filtration. These positions are all linked to the energy transition. Was that a conscious choice?
‘No, actually not. I chose BDR Thermea six years ago because they needed a transformation. I was approached for that assignment - co-transforming organizations is the common thread in my resume. I like to set things in motion. That was also my motivation for choosing Gasunie. They were thinking about how the gas infrastructure should be used in future in the transition to hydrogen and green gas. The energy transition seemed a long way off at the time, but things are moving fast now. The focus is on creating new markets for green gas and hydrogen and how Gasunie can shape CO2 storage as an interim solution. As a nature enthusiast, it is great to be able to make an impact and contribute to the energy transition.
As Chairman of the Supervisory Board of NX Filtration, a rapidly growing publicly traded company in membrane filtration, I can contribute to clean water. Clean water is a challenge possibly even greater than the energy transition. As a water sportsman, rowing, I feel naturally connected to that goal.’

How do you combine your board position at BDR Thermea with your supervisory role at Gasunie?
‘BDR Thermea is a manufacturer of heating and hot water solutions for homes and businesses. We focus on the end user in the heat chain. At Gasunie, we are right at the beginning: in the transport and delivery of gas. It is my experience that the two roles are mutually reinforcing. The energy transition will only succeed if all parties in the sector work together. At Gasunie I can share what the end-user is up against. Conversely, the development of the infrastructure is important for the innovations at BDR Thermea. For example, in addition to the hybrid heat pump, we have applications for heat networks, heat interface units, and boilers that can run on hydrogen. The broad deployment of these boilers is still expected to take 10 to 20 years, but there are already pilots. In Lochem, for example, an entire street is already being heated with hydrogen-powered boilers.’

What transformation has BDR Thermea gone through under your wings?
‘BDR Thermea has a special history. It originated from the Apeldoorn family business Remeha, producer of the central heating boiler of the same name. Through several major takeovers, the company grew from a local player to one of the largest players in the world in the field of smart climate solutions. In 2004, French industry peer De Dietrich Thermique was acquired. Five years later, the British company Baxi followed and so BDR Thermea came into being: BDR stands for Baxi, De Dietrich and Remeha. After the acquisitions, the company wanted to grow further. To do so, it had to invest more in innovation and organization, such as expanding the service business and standardizing processes and IT systems.
We still have several brands. For example, we sell Baxi in the UK, De Dietrich in France, Remeha in the Netherlands, Brötje in Germany, but on the back end we operate much more as one organization. We now realize around 2.5 billion euros in sales, employ 7,000 people, sell in more than 100 countries, and have 15 production sites.’

The new plant in Apeldoorn will produce 140,000 hybrid heat pumps a year. Are they also intended for other markets?
‘The production of hybrid heat pumps will be concentrated in the Netherlands. That is the main market, but we will export the devices all over the world, as far as there is a heat demand. The hybrid heat pump is also already sold in Germany and Belgium. Furthermore, we see opportunities in England and elsewhere in Europe.
Our strategy is closely linked to local laws and regulations. Despite European regulations, each market is different. In the Netherlands, conventional gas boilers may no longer be installed as of 2026. Consumers will have to switch to a heat pump or buy a boiler in combination with a hybrid heat pump. Partly for this reason, we will continue to produce central heating boilers, but at the same time we are stepping up production of hybrid heat pumps.’

The shortage of installers remains a bottleneck. How is your company responding to this?
‘Unlike last year, the long delivery times have been eliminated. There were problems in the supply chain then - some suppliers could not keep up with the rapidly growing demand for parts. We increased the number of suppliers and were able to scale up considerably. Indeed, the shortage of installers is acute. We have been trying to reduce it for several years by training people ourselves. Every year, for example, we train 5,000 installers in the Netherlands, and we want to double that number. We train professionals together with industry associations and vocational schools. We have joined forces with competitors to improve the image of the installer.
In addition, BDR Thermea invests in education in elementary schools. The shareholder, BDR Thermea Foundation, is focused on the long term and taking social responsibility. For example, it focuses on education in the field of installation technology. With the Youth Education Fund, among other things, we want to offer students better opportunities, interest them in the technical profession and at the same time make them more energy conscious. The way this is done is fantastic. We visit schools with a bathroom on wheels to teach children about gas, electricity, and water.
We think about solutions in every possible way. For example, I spoke with Minister Jetten of Climate and Energy about whether we can make the certification of installers more accessible. At the same time, we are looking at our product. Innovation should make it easier to install the hybrid heat pump. A smart app has already been developed that guides the installer. We have also greatly expanded the support department. We have many engineers on standby, who can help installers remotely if they encounter problems.’

Something interesting: all the players in the heat chain compete for customer contact. The installer, the supplier of the (hybrid) heat pump and the energy company: they all want access to data about energy use. How does that work in practice?
‘There are measuring points in the hybrid heat pump that collect various data, for example on consumption. We share that data with end users and could also share it with others, including energy companies. We need each other’s data and must cooperate.
One opportunity is to use smart, dynamic energy contracts to use the network as optimally as possible without loss of comfort for the end user, who can even save on his or her energy bill that way. We are investing heavily in connectivity. It is essential to offer added value to the customer with the help of data and to list that data in an app. Interconnectivity is important: the heat pump must be able to talk to the smart meter or the energy management system in the home.
I find it extraordinary how the heat system has changed from a low-interest to a high-interest product. Before, hardly anyone knew what boiler was in the house, now consumers are much more aware of energy consumption and interested in the right solutions.’

What will it take for the hybrid heat pump market to continue to grow?
‘It is incredibly important that companies within the industry do not start competing among themselves on sustainability. We need to jointly set the norm and a standard and bring solutions to the market that help the energy transition, as in the Netherlands with the hybrid heat pump standard. In addition, it is important that the government continues to subsidize heat pumps. Without subsidies the market will fail to develop much further. The hybrid heat pump is still affordable. It costs around 4,000 euros with subsidy and installation. A fully electric heat pump costs around 7,000 euros with subsidy. Still, a heat pump will be a big expense for many households. I welcome creative financial constructions that are being devised. At some companies, employees can buy a heat pump inexpensively through the work expense scheme. They get a discount if they surrender some vacation days.
For owners of an existing home, the hybrid heat pump is the best solution. The device, which is slightly larger than a shoebox, is installed next to the central heating boiler. The central heating boiler jumps in only when it is very cold. The combination of a new central heating boiler and a hybrid heat pump can yield gas savings of up to 70 percent. With high gas prices, the investment will pay for itself within a few years.’

You like to get things moving, you say. Does that work with a supervisory position at a state-owned company that focuses on the longer term?
‘There are different dynamics within Gasunie than within a commercial company. The playing field is different. We must deal with the Ministries of Finance and Economic Affairs, but also with the Consumer and Market Authority. I find it challenging to understand how that works. To a large extent, it is about monitoring tariff setting and using the right methodologies. But it is also about important investment decisions, such as about CO2 capture. Recently the judge gave the green light for the Porthos project. In future, this will allow CO2 from industries in the Port of Rotterdam to be transported and stored in empty gas fields under the North Sea. If we do not do this, the Netherlands will simply not achieve the Paris climate goals. There are more major investments in the pipeline that are crucial to the success of the necessary energy revolution. The impact of all these projects will lead to significant CO2 reductions. It takes guts to dare to make the right investment decisions.’

This interview was published in Management Scope 08 2023.