Amid a slump in heat pump sales in Europe, industry association EHPA said it wanted to focus on making the product more attractive so European manufacturers could compete with their overseas rivals.
Heat pumps are seen as an important step towards clean, climate-neutral heating and cooling of households, reports Euractiv. In 2022, heat pump manufacturers in Europe managed to sell 3 million units, a record for the fast-growing industry. Thus, they tripled the 1 million units sold in 2016. However, a slight decline in sales was then reported in 2023, marking the end of the industry's boom period.
Sales this year will turn out to be significantly worse, according to market data compiled by the EHPA. Compared to 2023, sales in the first half of 2024 are down 47%, putting the industry on track to sell fewer than 1,5 million units this year, a level last seen in 2019. Tough start then for Paul Kenny, the association's new director and former adviser to Eamon Ryan, Ireland's energy minister, who took office on September 1.
"The situation is not good at all. The decline is due to four main factors: a lack of qualified installers, electricity prices that are too high compared to gas, difficulties in working with customers and the high initial costs of heat pumps, which are often expensive to buy but cheap to operate. People who don't have a heat pump and want a heat pump face the barrier of a really poor supply chain," says new EHPA director Paul Kenny.
Debate on China
Heat pump manufacturers, like other clean technology sectors, are worried about Chinese competitors eating into their market share. Today, Europe's share of global heat pump capacity is 20%, according to the International Energy Agency (IEA). By 2030, this number is projected to reach 30% based on investments announced to serve the growing domestic market.
"All our producers have to compete, but whether they are competing fairly is the question we have to ask at the European level. But given the complex supply chains that span the globe, even EHPA members who manufacture everything in Europe probably still have quite a few components that come from China,” explains Kenny.
According to the EHPA, Chinese companies benefit from their large domestic markets, which accelerate innovation and create pressure to compete as multiple firms vie for dominance.
"What Europe needs to learn is that if you want European producers, you have to have European customers," Kenny also points out.
The lesson from Germany
Initially, Brussels was working on a Heat Pump Action Plan to increase demand with a horizon of the end of 2023. Then a German draft law that was supposed to make heat pumps mandatory from 2024 caused a major crisis in the fragile government coalition in Berlin. In the end, the law fell off the agenda.
"We watched the situation unfold with a bit of horror, to be honest. We thought the politics of the German Greens were really stupid and dangerous,” says Kenny.
Instead, he says, governments should resort to incentives.
Planning for the future
Going forward, Kenny wants to provide more detailed advice for EU countries to promote the use of heat pumps.
"It's very easy to point out the high-level solutions, but what we need is a huge amount of work on all the details in every country," he says.
It promises a much more detailed analysis of the actual tasks to be performed in each individual country, in each individual jurisdiction.