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COVID-19 Update: Heat Pump markets expected to recover in the short termNovember 2020

COVID-19 update: Heat Pump markets expected to recover in the short term

BSRIA released its annual Heat Pump Study back in March 2020, just when the first measures to limit the spread of the COVID-19 virus were taken in Asia. At the time of the publication the extent of the pandemic was far from clear and even less so the impact it would have on the market in the short and medium terms. In order to assess the impact of COVID-19 on the heat pump sector, BSRIA Worldwide Market Intelligence carried out the research in Europe, China and the U.S.

Although the COVID-19 pandemic continues to affect the industry, the results indicate that sales started declining in March as the lockdown was first implemented by the government in China. A substantial part of Chinese workers left their work and were then unable to return due to the quarantine. As a result, several manufacturing companies could not resume work, new construction projects were at a standstill and installers were restricted to access sites. While restrictions and the quarantine extended to neighbouring countries, delays in the supply of air conditioners and heat pumps piled up during March-April 2020. Demand is expected to recover as early as 2021, as construction activity bounces back.

Looking at the impact of COVID-19 on the European HP industry, suppliers reported similar issues faced by the local building sector: most construction projects started carried on at a slower pace while some others were cancelled. Production lines at some HVAC manufacturers had to be put on hold for several weeks and installers saw their new installation projects limited by sanitary guidelines. 

However, the measures in place to pull the market towards more energy efficient buildings and products proved to be successful. A meaningful number of private households and project owners embraced their new ways of living to undertake renovation works. In the meantime, installers took the advantage to upskill and promote the benefits of heat pumps. This, along with the financial support allocated to replace old heating systems helped reverse the dip in sales in the new-build sector. Overall, sales of heat pumps in France, Germany, Italy, the Netherlands, and the UK remained on an upward trend.

Feedback from European suppliers indicate that the market started to recover over the third quarter with sales to existing homes offsetting the drop in new projects. Provisional forecast until the end of the year point towards a positive result in the main European markets. The package of financial incentives voted under the EU Recovery Fund are foreseen to keep the demand growing, particularly in the replacement sector. BSRIA expects 2020 to mark another year of strong progression in sales. Double-digit growth rates are likely to be posted in most major European countries. 

As a second COVID-19 wave starts to be observed across Europe and elsewhere, the uncertainty surrounding the duration and severity of this crisis make it hard to anticipate how a recovery could unfold for the new construction industry in the medium term. The number of new building permits have already started to decline over the second half of 2020, which will undoubtedly have negative effects in the next 12 to 24 months. 

Nevertheless, BSRIA remain optimistic on the development of the market in the coming years. The recent announcement made by EU Commission’s President Ursula von der Leyen to more drastically reduce CO2 emissions by 2050 is a clear signal in favour of renewable energies. The renovation wave and a “new European Bauhaus” launched in the EU in October provide a further boost for low emissions buildings and, indirectly, for heat pumps Thanks to the financial support available to homeowners, BSRIA expects a strong surge in sales to the renovation sector. People and businesses are getting used to the “New Normal”, with comfort and energy savings becoming topics of strong focus. Finally, it is expected that environmental awareness will be another driving force to the heat pump market. 

Source: BSRIA based on suppliers’ feedback and BSRIA own analysis Note: sales of air-water and water/ground-water HP in 19 countries in Europe

Please contact wmi@bsria.co.uk to enquire about the latest release of COVID-19 related HVAC market data.