Heat Pump Sales Declined in Most Market in 2023 – Which were the Reasons Behind and How to Reverse the Trend?
According to IEA’s Clean Energy Market Monitor published on 1st of March, global heat pump capacity additions in 2023 fell by around 3% compared to 2022. The only market where sales increased was China (+12%) while the market decreased by 15% in United states, by 5% in EU and by 10% in Japan.
This slowdown is a major concern for the manufacturers. In Europe in particular, several manufacturers have already announced significant expansion plans in recent years, which may now be jeopardised.
The market decline is also bad news for climate targets around the world. Heat pump sales need to grow by 20% every year of this decade to meet IEA’s Net Zero Emissions by 2050 scenario. In 2021 and 2022, global markets reached almost this level, but in 2023 the momentum was broken. There’s an urgent need to reverse this trend, as heat pumps are key to the global transition to clean heating.
Reasons behind
The reasons behind this trend are explained by Rafael Martinez Gordon at the IEA to be high interest rates and inflation, first of all since the heat pumps are a major investment for the households but also since construction of new buildings, where many of the heat pumps are installed, slowed down in many heating markets. At the same time, natural gas prices (especially in Europe) have been at much lower levels compared to the peaks in 2022.
How to reverse the trend
To reverse this trend, stability is of high importance. To be able to meet climate targets manufacturing capacity must be increased, investments for such expansions can only be secured if there is a stable policy framework to support a market growth for the technology. There should be clear incentives for electrification and transition away from fossil fuels, according to Rafael Martinez Gordon at the IEA. He also points out that electricity is still significantly more expensive than direct use of fossil fuels on many markets. There is a clear need to tilt energy tariffs and taxes in favour of electricity to enable consumer to make cleaner choices.
At the same time the European Heat Pump Association reports that EU’s Heat Pump Action Plan, which as due to be published in early 2024 to support the sector, is delayed by the European Commission until ‘a time to be decided’. The association points out that the high interest rates mentioned above in combination with changing national policy measures are unsettling investors and consumers.
Moreover, there is a need to raise awareness and inform policy makers as well as end consumer about the benefits of installing heat pumps – that heat pumps works well in cold climates, in new and existing buildings, and that they lead to reduced emissions and very often to reduced energy bills. However, support might be needed for low income households, since the upfront cost can be a barrier.
Avoided emissions
According to the report, heat pumps for space and water heating installed worldwide since 2019 avoid around 50 Mt of CO2 emissions annually.
Sources:
https://www.ehpa.org/news-and-resources/news/heat-pump-sales-fall-by-5-while-eu-delays-action/
https://www.linkedin.com/feed/update/urn:li:activity:7171052813039448064/