Heat Pump Market Trends

Growth Drivers

• Increasing Investment in Green Energy – the rising investment in clean energy as well as an increasing step toward electrifying everything, as clean energy advocates, are anticipated to propel the market growth. For instance, it was found that the investment made by the United States in clean energy amounted to approximately USD 55 Billion in 2019. Moreover, as stated by the International Renewable Energy Agency, for every unit of electricity used by the heat pump, 2.5 to 5.5 units of heat is generated.
• Growing Efforts to Reduce Carbon Dioxide (CO2) Emission – the growing global population is leading to the increasing utilization of fossil fuels worldwide which is responsible for elevated amounts of greenhouse gas (GHG) emissions, especially CO2. This, as a result, is projected to boost market growth in the upcoming years. As per data residential buildings in the United States alone contribute to nearly 20% of U.S. carbon emissions, with 50% heated by burning fossil fuels.
• Rising Installation of Heat Pumps – in the Net Zero Scenario, heat pumps are projected to represent over 50% of total heating sales by 2030. The increasing effort from policymakers to popularize the use of heat pumps through offering government incentives, subsidies, tax rebatement, and much more is propelling the sales of heat pumps globally. For instance, over 4 million heat pumps were installed in the U.S. in 2021, up from 1.7 million in 2012.
• Growing Demand from End-Use Industries – as electrical resistance heating is anticipated to be 61% to 131% more expensive than heat pumps. Moreover, oil and propane are 10% to 60% and 53% to 120% more expensive than heat pumps respectively. This as a result is propelling the deployment of heat pumps in many industries, such as paper, textile, food and beverages, chemical, metal, automotive, mechanical, wood, and many others.

Challenges

• Restrictive policies on fluorinated gases (F-gas) –F-gases that are often used as substitutes for ozone-depleting substances are powerful greenhouse gases, with a global warming effect up to 25 000 times more than carbon dioxide (CO2). Hence, this is anticipated to impact even heat pump installations as these appliances also use F-gas as a refrigerant. Although the HVAC industry is already using alternative refrigerants for some applications, a full-fledged ban on F-gas is anticipated to hamper the production of many HVAC appliances including heat pumps.
• Supply chain disruption
• Reluctance in mass adoption due to high cost