HEAT PUMP MARKET ANALYSIS

A heat pump is a device used for cooling and heating by extracting heat from lower heat sources and deliver it to higher potential for water, space, and floor heating/cooling. Technically air conditioner and refrigerator are two prime examples where heat pump is used. Refrigerator and air conditioner work only on cooling cycle, whereas heat pumps can operate on fully reversible cooling cycle. Condenser, evaporator, expansion valve, and compressor are some of the common examples of heat pump. The heat transferred through these components is called refrigerant. Moreover, heat pumps are increasingly used in domestic hot water for kitchen, bathroom, and clothes washer.

Recent Developments:

• In July 2022, Viessmann Group, a company that supplies sustainable climate and renewable energy solutions invested 200 million euros for a new technology site in Poland. This new site will accelerate the production of heat pumps.
• In June 2022, NIBE Energy Systems, a company that provides eco-friendly and energy-efficient solutions launched a new Air Source Heat Pump (NIBE S2125) which is designed to work efficiently. This heat pump uses R290 all-natural refrigerant.

Growing urbanization and complementary regulatory policies are expected to drive growth of the global heat pump market during the forecast period. Significant growth of construction industry combined with growing implementation of strict regulatory policies by governments, especially in China, South Korea, Japan, and the U.S. are expected to boost the demand for heat pumps for residential application. Moreover, subsidies on purchase of heat pumps provided by the government, tax credit schemes and increasing use of energy are expected to boost the market. Countries such as the U.S., Australia, Japan, and European offer subsidies purchase for heat pumps, in order to reduce carbon footprint and increase use of renewable energy for heating and cooling purpose. For instance, the European Union has adopted renewable energy policy, which includes contribution of heat pumps to the EU target of reaching 20% of renewable energy share by 2020. In 2016, the U.K. Government adopted a ‘Zero Carbon’ policy for new homes. Moreover, In Europe, the government provides subsidies for purchase of heat pumps and has implemented several stringent new building regulations such as mandatory use of renewable energy for heating purpose in new buildings. Thus, these factors are expected to boost the market growth during the forecast period.

Restraint:

High installation cost is expected to restrain growth of the global heat pump market over the forecast period. Heat pump requires significant cost for installation, which in turn, is expected to hinder its demand in the near future. The total cost installation includes cost of heat pumps, installation cost, cost of groundwork for ground source heat pumps and cost of ancillary items (buffer tank, manifolds, hot water cylinder). For instance, if per unit cost of heat pump for 11kW capacity is US$ 1,000–US$ 2,000, the cost increases by 25%–30% when installation cost is included. Furthermore, cost-sensitivity is a major issue in emerging economies such as India, Brazil, South Africa, and Poland, which is major factor hindering its adoption.

Global Heat Pump Market- Impact of Coronavirus (Covid-19) Pandemic:

Globally, most countries have been affected by COVID-19 and most of the countries announced a lockdown. This disrupted businesses across the globe. People also lost their jobs during the pandemic which led to financial crises because of which the spending power of people decreased. People spent less on luxurious goods. This led to low demand for heat pumps in the residential sector. Hence, the global heat pump market witnessed slow growth during pandemic.

Asia Pacific held a dominant position in the global heat pump market in 2021

Statistics:

Asia Pacific held a dominant position in the global heat pump market in 2021, accounting for 33.0% share in terms of volume, followed by North America region.

Figure 1: Global Heat Pump Market Share (%), By Region, 2021

Asia Pacific held a dominant position in the global heat pump market in 2021 and is expected to maintain its dominance during the forecast period. The demand for heat pumps is rising in emerging economies such as India, China, Japan, and South Korea due to rising disposable income, the spending power of people have increased and people are inclined towards living a standard lifestyle and spend on luxurious things. Hence, the demand for heat pumps in the Asia Pacific region has increased.

North America is expected to emerge as the fastest-growing region for the heat pump market in the forecast period. This growth is attributed to the various government schemes, policies, corporate and personal tax credits, incentive plans and clean heating and cooling programs which are driving the demand for heat pumps in the residential and commercial sectors in North America.

Air-water heat pump segment is expected to drive the global heat pump market during the forecast period

Among type, air-to-water heat pumps have gained significant popularity and the demand for air-to-water heat pumps is expected to grow significantly during the forecast period. This is owing to significant shift in perspective of air-to-water heat pumps among consumers. Moreover, air-to-water heat pumps are extensively used for domestic hot water due to their high cost-effectiveness and relatively high efficiency compared to conventional heating systems. This trend is expected to continue over the forecast period.

Figure 2: Global Heat pump Market (US$ Mn) Analysis and Forecast, 2018 - 2030

The global heat pump market was valued at US$ 9,050.77 Mn in 2021 and is expected to reach US$ 18,787.23 Mn by 2030, growing at a CAGR of 8.6% between 2022 and 2030.

Major players operating in the global heat pump market include Daikin Industries Limited, Viessmann Group, NIBE Group, Danfoss Group Global, Stiebel Eltron Group, Mitsubishi Electric Corporation, United Technologies Corporation, Panasonic Corporation, Glen Dimplex Group, and The Bosch Group