Heat pump sales falling, risking €7 billion in investments

The latest data from the European Heat Pump Association (EHPA) reveals that sales have declined throughout 2023 despite a strong first quarter. Out of ten countries analysed only Germany and The Netherlands experienced continued heat pump sales growth throughout the second and third quarters. Sales in Austria, Denmark, Finland, France, Italy, Norway, Sweden and Switzerland all declined quarter on quarter. Whilst in total for all ten countries annual quarter on quarter growth in Q1 was 22%, it was flat in Q2 and down 14% in Q3. In total for the first three quarters of 2023 compared with 2022, sales are up just 1.8% meaning that a further average decline in Q4 is likely to result in an overall market decline in 2023 in Europe.

Declining sales are attributed to the following factors:

  • Ambiguous communication from policy makers
  • Changing government policies and subsidies
  • Falling gas prices
  • Flat Electricity prices

The European Commission is due to publish a heat pump action plan in early 2024 which will address the above issues. Decline in heat pump sales throughout Europe places decarbonisation targets at risk along with €7 billion of investment announced by heat pump and component manufacturers from 2022 to 2025.

DATAportl tracks market activity in more than 150 applications across many sectors. Market softening in 2023 is not isolated to the heat pump market and has been experienced in the majority of consumer and related markets. This is in part owing to strong growth during 2022 and overstocking of inventory which has taken a few quarters to burn through as global economic concerns and rising energy costs have reduced consumer spending confidence in many countries.

The heat pump market suffers the same sporadic trends that renewable energy markets and others pinned to utility or government incentives and subsidies do. One challenge not covered in the EHPA’s analysis is the required volume of capable installers for what is a relatively new solution varies widely in each of the European countries covered. The consumer demand for heat pump technology may not be converted into sales and installations due to this and (in our opinion) is something that should also be addressed in the European Commission action plan. Availability of skilled installers in Germany and The Netherlands is likely to be higher due to the greater maturity of the technology in these countries and likely reflects in part in continued growth compared with others.

The original article is here.

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