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Heat pump market growing fastDecember 2008

The worldwide market for heat pumps is growing fast, new research by BSRIA shows. European and national legislation that promotes renewable energy, coupled with regulation for energy-efficient buildings and financial incentives have continued to be the main driver of the heat pump growth.

The growth of the heat pump market comes at the backdrop of sluggish or negative growth of the market for conventional heating products such as boilers. The French heat pump market alone increased by 30% in 2007, with generous tax credits being the main driver.

In 2007, the global heat pump market reached nearly 477,000 unit sales, with China accounting for 24.8% of the market volume, France, Sweden and Germany. Collectively, these five countries held an impressive 82% of the total global heat pump market by volume.

Overall, ground/water to water heat pumps systems dominate the global heat pump market. The air-to-water type holds the largest share in namely France, Japan, Switzerland and Norway. Despite ground/water to water heat pump holding the largest share of the German market, in fact, growth was mainly driven by air to water heat pumps, accounting for 16% growth, whilst ground source and water-to-water heat pump sales decreased by six per cent.

Indoor air to water cylinder integrated heat pump water heaters remains a relatively small market; it holds the largest share, by volume, in China with 64, 400 units sold in 2007. Small domestic heat pumps less than 5kW is the most popular system type in this segment. Compared with other water heaters, high prices and low levels of customer awareness prevents the indoor air sourced heat pumps moving away from anything but a niche market in China. In Slovenia this type of system is preferred to ground/water to water or air to water heat pumps.

Despite its double-digit growth in 2006, the German heat pump market experienced a small increase in the region of 1.5%. However, since the conventional heat generator market such as gas, oil and solid fuel boilers dropped drastically by 25% in 2007, heat pumps continue to gain market share in an overall deteriorating market and are expected to see healthy growth of 9-10% in 2008.

Stemming from their growing popularity, several new players have entered the market, whereas before in many countries specialist companies mostly offered heat pumps. In Germany, some large air conditioning suppliers have started to offer inverter-controlled air to water heat pumps for space and hot water heating.

The UK's small heat pump market grew sharply, with sales of around 3,000 units in 2007. Rising energy prices are said to be the main reason of this growth. Ground/water source heat pumps continue to be the global market leader as they are supported by government grants, whereas air to water heat pumps have for the first time been approved for £900 subsidy for the last quarter of 2008.

Switzerland maintains its position as one of the most developed heat pump markets in Europe with a high penetration rate. The market has been growing continuously since the 1990s, with an average yearly growth of 13%.

BSRIA predicts the period from 2008 and up 2010 will see a sustained growth of renewable technologies particularly in Western Europe, Japan and China. While energy scarcity is becoming an issue in several countries, other factors such as changes in building regulation and legislation that aims to reduce green house gases will play a major role in shifting the focus towards adopting energy efficient products in both the residential and commercial sector alike. Although financial subsidies remain limited to very few markets, these have proved to be very effective in promoting the take up of renewables particularly, where tax credits in France (50%) have led to all boiler and air conditioning manufacturers to supply heat pumps. However, suppliers will increasingly face ever-changing technical and legal requirements before their products can be distributed or approved for subsidies.

As fossil prices are expected to remain at high levels also in the years to come, an increasing number of countries around the world are showing strong interest in electricity power generation projects from a mix of renewables sources. While wind turbines projects are attracting most funding together solar thermal, and biomass CHP plants, the desire to upgrade or install new nuclear power stations is seen by many governments as a way to safeguard energy security in the future.

In global terms, sales to installers is the leading distribution channel, followed by wholesalers. In the Netherlands, sales to installers account for 84% of the market. The Japanese market is dominated by direct sales to end-users through retail shops. The residential new build sector is the driving factor of the global heat pump market; however the first time installation sector leads the way in the Japanese market and is a close second in the Norwegian market. Heat pumps for residential applications are mainly used for providing space heating. In contrast, in Japan, China, Slovenia and the U.S heat pumps are predominantly used for water heating only.

For more information on BSRIA's World Heat Pump study click here.