2020 paves the way for greener heating across EuropeApril 2021

 The Green Recovery Plan – a shot to the Heating Industry    

Following months of negotiation, an agreement was reached in December 2020, signalling the last step in the adoption of the EU Recovery Plan. The EU’s long-term budget, coupled with Next Generation EU – the temporary instrument designed to boost the recovery – will be the largest stimulus package ever financed through EU funds. A total of €1.8 trillion will help rebuild a greener, more digital, and more resilient Europe, with about a quarter attributed to fighting climate change, one of the areas of focus in the post Covid-19 era in Europe.

Several EU Member States have started discussing their transition towards a more sustainable energy mix; France, Italy, the Netherlands, Austria, Denmark, Ireland, Greece, Finland, Slovakia, and Slovenia have already decided on the phase-out of coal by 2030.

2021 will also mark a new milestone in the move away from fossil fuels in the building industry. Initiated in Denmark in 2013, the installation of oil boilers has been banned since 2020 – in Ireland in new buildings and in Norway in both new and existing buildings. Austria and the Flemish part of Belgium are applying the same rule in new build this year, while the Netherlands are taking an even more drastic step: the ban of gas in new dwellings since January of this year.

The coming years will also see a major shift in two of the major heating markets in Europe: the tightening of the New Building Regulation in France, which will make it virtually impossible to install oil and gas heating in new homes. On the other side of the Rhine river, the German government announced recently that the installation of oil boilers will be restricted from 2026.

Nevertheless, today, most of the heating in Europe continues to be supplied by oil and gas boilers. The chart below highlights the current penetration of oil and gas boilers across European countries

Share of fossil fuel boiler supplying space heating to the housing park  

When gas and oil are the main sources of energy to heat our homes, it is worth asking which low carbon alternative will lead the way forward.

Heat pumps are leading the way in decarbonising heating

For the last decade or so we have seen increasing demand for more energy-efficient HVAC systems from building industry stakeholders and the public, driven by the implementation of the Energy Performance of Buildings Directive.

When it comes to heat pumps designed for space heating, BSRIA’s latest study revealed, that between 2015 and 2020, the volume of water-based units sold increased on average more than 20% per year in Western Europe1 and over 24% in Eastern Europe2. From 2021 onwards sales are expected to remain on an upward trend. Financial support available through the Recovery Plan, stricter regulation limiting the use of boilers and growing environmental awareness are among the driving factors that HP suppliers quote.

Nevertheless, the outcome of the pandemic must not be taken lightly. Despite economic rejuvenation, the recovery remains fragile, due to ongoing uncertainties in connection with the virus and delay in vaccination programme. Thus, market experts expect HP sales to progress at a slower rate in the five coming years – around 15% and 14% per year on average in the Western and Eastern part of the EU respectively.

Air sourced leads the renewable wave

Air-to-water heat pumps are cashing in on the energy transition, with both monobloc and split sales expected to post double-digit growth rates. They are easier and cheaper to install than ground/water-sourced type; boiler manufacturers are also increasingly expanding their product ranges and training their clients to handle air source HP installation. Air-to-water heat pumps will gain further ground in the new build sector, but also in the renovation sector as standalone installations or in the form of hybrid systems.

The European HP market3 hit a record EUR 3.6bn in 2020, three quarters of which were represented by the sales of split and monobloc systems. By 2025 the market is forecast to nearly double.

It is worth noting, that the need for cooling will fuel the demand for reversible heat pump systems in tomorrow’s homes. As the energy mix becomes greener, heat pumps play a key role as a low carbon heating alternative for more environmental-friendly buildings.

For more information on global, regional, or individual markets, please contact BSRIA Worldwide Market Intelligence: wmi@bsria.co.uk

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