Europe Leads The Way With Heat Pump Sales

According to the latest report by the International Energy Agency (IEA), global sales of heat pumps rose by 11% in 2022. This is the second year of double-digit growth due to high natural gas prices and efforts to reduce greenhouse gas emissions. Russia’s invasion of Ukraine and the subsequent war caused a rise in natural gas and electricity prices which encouraged consumers to switch to heat pumps, which are far more efficient than conventional heating technologies.

The steepest rise in heat pump sales was seen in the European Union. Nearly 3 million units were sold which represents an almost 40% increase. Sales of air-to-water heat pumps which are compatible with typical radiators and underfloor heating, were particularly strong, rising by almost 50% in Europe. Nearly half of all European sales were in Italy, France, and Germany. France saw heat pumps exceeding fossil fuel boilers in building sales for the first time in 2022, coinciding with their new ban on gas boilers in new buildings. Some heat pump markets which are still in their infancy such as in Poland and Czechia doubled in size last year. In the Nordic countries where heat pumps have been around for a long time, nearly five times as many units were sold per household than in the rest of Europe.

Demand for fossil fuel boilers is declining in other major European countries though they still have a higher market share than heat pumps. There are many proposals on the table to phase out the most polluting technologies and fuels. The German government is considering plans that suggest that new heating systems must be largely based on renewables from 2024 onwards. There are, in fact, seventeen countries across Europe that have implemented or announced bans on installations of boilers that run entirely on some form of fossil fuel.

Heat pumps overtook gas furnace sales in the United states in 2022 after years of almost equal growth. Most heat pumps are still installed in single family homes in the USA but the number of apartments using heat pumps as their primary heating technology more than doubled between 2015 and 2020. In recent years, manufacturers have developed specialised heat pumps that work efficiently in cold climates to accelerate their deployment in those US regions, where less than 5% of households heated their homes with this technology in 2020.

Sales of heat pumps in China, the world’s largest heat pump market, remained stable even though there was a general slowdown of their economy.

Air-to-air heat pumps are already the most common source of heating in Australian and New Zealand. Thanks to improved efficiencies the heat pumps market is growing in regions with colder climates.

Upfront costs continue to be a major barrier to the heat pump market in Central Asia and some parts of Eastern Europe where many homes are also connected to district heating networks. Large-scale heat pumps, however, would be an effective option to decarbonise these networks which still rely heavily on fossil fuels today.

Currently, heat pumps are mostly to be found in new buildings and existing single- family homes but the IEA says that multistorey apartment buildings and commercial spaces need to be a priority area for growth.

The number of energy efficiency retrofits needs to be stepped up to ensure that heat pumps installed in existing buildings are as efficient as possible and not oversized. This will not only lower upfront and operating costs for consumers but also reduce strains on power systems, particularly if combined with smart controls for flexible operation.

Today, heat pumps meet around 10% of heating needs in buildings globally which corresponds to over 100 million households. This means that one in ten homes that require substantial heating use heat pumps. There are many more households that use heat pumps for only part of the winter or as an extra source of heating in areas where they are mainly used for cooling buildings. The IEA says that the number of installations will need to rise to 20% by 2030 to align with climate goals. If new installations continue to grow at a similar rate to the last two years, the world will be almost on track to reach this goal. However, sales will need to increase by well over 15% each year this decade if the world is to achieve net zero emissions by 2050.

Last year, the European Commission announced its plans to double the deployment rate of heat pumps which was initially proposed in the IEA’s 10-Point Plan to reduce the EU’s reliance on Russian natural gas. Most EU countries are offering financial incentives that make it possible to achieve this target. Speeding up the rollout of heat pumps would also significantly help the EU to improve its air quality where coal and oil boilers are replaced with heat pumps as well as helping with its wider decarbonisation goals.

Sales of heat pumps have been bolstered by financial incentives that are currently available in over 30 countries. Altogether, these countries account for more than 70% of global heating demand for buildings Many of these support schemes were either introduced in 2022 or strengthened. In most major markets, financial incentives make buying the cheapest heat pump models comparable to that of a new gas boiler for consumers. So far in 2023, the USA, Poland, Ireland, and Austria have increased their subsidy levels which is helping to lay solid foundations for further heat pump deployment.

If the deployment of heat pumps is going to continue to grow, secure and resilient supply chains are also required. The five largest global manufacturers have their headquarters in Asia Pacific though around 50% of the production capacity of manufacturers in that region is located elsewhere. Today, supply chains are stretched, particularly for chips and other key components.

Heat pump sales in the UK are lagging behind the rest of Europe. Although heat pumps are a key part of the government’s plan to decarbonise heat a recent study from the UK Energy Research Centre (UKERC) highlights the UK’s poor track record of heat pump deployment and cost reduction. The UKERC say that there has been “little or no reduction” in domestic heat pump installation costs in the UK over the past decade. Academics are calling for a strong policy focus on making heat pumps more affordable for British households.

Despite introducing the financial incentive of a £5,000 (Boiler Upgrade Scheme) grant to help UK homeowners install an air source heat pump in their homes as a greener alternative to gas boilers, air-source heat pump take up is among the lowest in Europe. Even with this grant, installing an air-source heat pump can cost thousands of pounds more than a new boiler. While increasing the subsidy for heat pump installation would help, the government also need to address how people think about them.

As things stand, fear of the unknown, concerns over personal financial losses and the lack of accessible data regarding successful installations is slowing air source heat pump uptake in the UK.