Surf’s up, PE: The green home installation wave is finally here.

Yes, the “big wave” has been touted before. Now it’s really happening.

True, “big wave” predictions for the sustainable home renovations market have circulated for the past decade. Companies invested, the wave fell short, some divested. But key factors have shifted:

• For the private market, surging energy prices meant short-term business cases for investment in lower energy consumption suddenly made sense. That sentiment remains. Private homeowners (60% of Dutch market) are ready and waiting for high-quality, low-price green home solutions that will continue to cut their energy bills.

• Sale price differentiation has increased between energy-efficient and energy-inefficient properties.

• Dutch government subsidies for sustainable homes aim to increase consumer demand, alongside making hybrid heat pumps mandatory from 2026. EU law may well follow suit. Future legislation could also price-cap private rental properties with poorer energy ratings (private landlords are ~6% of the Dutch market).

• Personal vehicle electrification is making home solar panels far more attractive.

• Media attention — and a generalised green push — have snowballed.

• Dutch social housing corporations (34% of market) have made binding promises to the government to heavily improve energy ratings over the coming years. The aim is to prevent energy poverty, which is now spotlighted on the political agenda.

• There’s a serious labour shortage in the home installation sector — an issue for both incumbents (95% of Dutch market) and real-deal scale-ups.

This last point is likely one of the most compelling for PE investors. A naturally advantageous opportunity is shaping up to boost the green installation sector, via mergers in an increasingly interesting incumbent/scale-up landscape. More on this below.

A developing market brings its share of uncertainty, of course. But what we do know is the push for sustainable housing with modern installations isn’t going away. Wall and roof insulation, double or triple glazing, heat pumps and low-temperature radiators are just a handful of the most ​​common, accessible and effective green home solutions. 

And with every summer of scorching heat and winter of hiked gas prices we live through, the more urgent their widespread adoption becomes.

An established market, crying out for innovation and acceleration

In the Netherlands, currently:

• ~10 major installers serve around 55% of the heating solutions market

• Scale-ups are gaining significant traction

• Some 4,000 installers focus on heating solutions (with further installers focused on solar panels etc.). Many are self-employed individuals, without employees.

For PE, the smart strategy is combining the resources of these small, medium and major players via clear-eyed M&A. Upgrading products and ways of working, introducing more innovative products and installation methods to the market, and expanding into pre-fabricated/pre-installation solutions.

The scale-ups have what the incumbents are missing: slick direct-to-consumer sales channels. Their added value is clear in the early stages (marketing and efficiently converting leads to sales). Heat pump scale-up HeatTransformers stands out here, for its seamless, digitalised customer process — from advice and offering through to installation and maintenance. In fact, the scale-up hired from major online retailer Coolblue (which has its own solar panel sales and installation offering) to elevate its retail experience.

There’s clear scale-up value at middle-of-chain stages, too, via product leasing and financing models. Take Climate for Life (with its brands Klimaatgarant and Trans-ID), which leases and maintains installations including (hybrid) heat pumps and solar panels.

Other players are successfully integrating the sector value chain with a smooth, digital approach: Quatt offers advice and direct installation by manufacturers. Quatt is also functionally segmenting installation for enhanced efficiency, to guarantee it goes right first time and effectively utilise scarce expert installers. (A day before installation, a lower-qualified employee visits the home to deliver materials, brief the resident(s) and check the installation location. Then the stage is set for hitch-free expert installation.)

At the same time, leading scale-ups need the incumbents’ clout, operational capacity and reliability to actually accelerate green installations. Working with HeatTransformers, I saw this from the inside. The scale-up installs 20% of the heat pumps it sells, with 80% covered by an established installation company.

So the scale-up/incumbent synergy is already working. Operationally, primarily, by helping scale-ups install their tech in more homes. But it also resolves a major tension in the value chain: manufacturers want to market D2C and control quality, but don’t have the capacity to do all their installations themselves. But the right links between manufacturers and scale-up/incumbent installers would solve this immediate issue of service quality guarantee. And work towards the bigger-picture solution of greener, affordable homes.

Despite the opportunities that exist, vigilance remains essential. Continuous adaptation to market developments is necessary in this emerging market for sustainable solutions. Recently, the growth promise evoyo went bankrupt. Their business model relied too heavily on installations for new-build homes, a proposition that included financing. Declining numbers of new-build homes and high interest rates were significant reasons for the bankruptcy.

There’s much further to go, and better defining each player’s strength-based roles in the value chain represents high-return potential. That’s where PE and green installation need to meet.

PE is the missing link between scale-ups and safe bets

Right now, I’m in the middle of this green installation web: 4 months into a 4-year project bringing together the Netherlands’ 10 largest installers in a collaborative non-profit. The non-profit is funded by a €5 million government subsidy to increase green installations per day, at the right quality and price. Scale-ups are involved, but the majority are more conservative incumbents, employing ~3,000 installers serving 55% of Dutch homes. They span the private and social housing markets with installation and maintenance contracts for heat pumps, gas boilers and ventilation.

Combining their scale with the scale-ups’ propositions and D2C know-how is the way forward. The incumbents are ready for it, already funding innovations to shorten installation times and elevate quality control. And, as outlined, the market capacity is there. Consumer demand and regulatory go-aheads are in place. The government funding’s there. Energy company and power grid interest will also grow, as rising numbers of green home installations intersect with network capacity, availability and scalability.

Now, the green installation take-off just needs private funders who share the vision. PEs ready to invest are set to ride quite the wave.

Advice on next steps? We’re here.

The Strategy Office is a collective of independent strategy consultants. We don’t do hefty reports that fade into oblivion. We do field-sourced, usable advice that tells you what you need to know — waffle not included.

Hans is The Strategy Office’s resident sustainable housing insider, on hand for PEs ready to take those green installation next steps: commercial due diligence, proposition development, commercial strategy, marketing and sales.

Contact him here to get cracking.