Worldwide sales of heat pumps are set to soar to record levels in the coming years as the global energy crisis is accelerating their adoption, according to a new special report by the International Energy Agency. The report provides the first comprehensive global outlook on the state of today’s heat pump industry, including the opportunities and barriers to growth.
“Heat pumps are an indispensable part of any plan to cut emissions and natural gas use, and an urgent priority in the European Union today,” said IEA Executive Director Fatih Birol. “Policy makers should be putting their weight behind this technology that is witnessing unprecedented momentum at the moment. Heat pumps will be central to efforts to ensure everyone can heat their homes this winter and next, to protect vulnerable households and businesses.”
The report argued that heat pumps are a ‘proven way to provide secure and sustainable heating’, highlighting their high-efficiency levels and ability to protect households from fossil fuel price spikes.
According to the report, the currently available heat pumps are three‐to‐five times more energy efficient than natural gas boilers. Over one‐sixth of global natural gas demand is for heating in buildings – in the EU, this number is one‐third. Heating in buildings is responsible for 4 giga-tonnes of carbon emissions annually, which accounts for 10 per cent of global emissions. Installing heat pumps instead of a fossil‐fuel‐based boilers, significantly reduces greenhouse gas emissions in all major heating markets, even with the current electricity generation mix.
It is estimated that only around 10 per cent of space heating needs globally were met by heat pumps in 2021. However, the pace of installation is growing rapidly. In Norway, 60 per cent of buildings are equipped with heat pumps, with Sweden and Finland at over 40 per cent. As the report states, the high adoption of heat pumps in these countries ‘undercuts’ the argument that heat pumps are unsuitable for cold climates.
“All the pieces are in place for the heat pump market to take off, reminiscent of the trajectory we have seen in other key climate technologies like solar PV and electric vehicles,” said Dr Birol.
From a commercial perspective, global sales grew by nearly 15 per cent in 2021, double the average of the last decade, whilst growth in the EU was around 35 per cent. Looking at the CEE region, Poland saw heat pump sales in the first half of 2022 ‘roughly double’ over the same period last year.
Are heat pumps a solution for Europe’s energy security and climate commitments?
Energy security concerns and climate commitments would make heat pumps become ‘the primary means of decarbonising space and water heating’. The report modelled a scenario in which governments meet their climate commitments and pick heat pumps as the proven technology of choice to decarbonise heating, with a global capacity of heat pumps jumping from 1 000 GW in 2021 to nearly 2 600 GW by 2030.
In this scenario, natural gas demand would fall by 80 billion cubic metres, whilst heating oil would drop by 1 million barrels per day, with coal seeing a decline of 55 million tonnes of coal equivalent. In aggregate, this means heat pumps account for nearly half of the global reductions in fossil fuel use for heating in buildings by 2030, with the remainder coming from other efficiency measures.
Regardless of the modelled scenario, the accelerated deployment of heat pumps inevitably increases global electricity demand, although energy efficiency and demand response measures can ‘greatly reduce’ the impact on power systems.
In the context of energy security, the report listed the ability to shield consumers from price shocks as one of the benefits of the accelerated deployment of heat pumps. The average household or business with a heat pump spends less on energy than those using a gas boiler. These savings offset the higher upfront costs for heat pumps in many markets today – in some cases, even without subsidies. The economic proposition of heat pumps improves in the context of today’s energy price spikes: household savings range from 300 US dollars (290 euros) per year in the United States to 900 US dollars (860 euros) in Europe.
In addition, with adequate support for poorer households to manage the upfront costs, heat pumps can meaningfully address energy poverty, with energy bill savings in low‐income households ranging between 2 per cent and 6 per cent of their household income after moving away from a natural gas boiler.
The report also identified several barriers facing the deployment of heat pumps, some of which are universal while others are relevant to particular countries and regions. From the demand side, costs continue to be a major hurdle. Grants, low-interest loans and green mortgages are listed as some of the recommended policy solutions.
Whilst from the supply side, a shortage of skilled installers and manufacturing constraints are considered as two major challenges. Among the policy solutions, the report listed: long‐term certainty in policy support and regulations, as well as visibility into forthcoming regulation changes, including industry consultation; national heat pump deployment targets and roadmaps; securing of heat pump component supply chains; and internationally standardised certification schemes with broad curricula.
“Heat pumps address many of policy makers’ most pressing concerns on energy affordability, supply security and the climate crisis. Policy measures are in place today, but they need to be reinforced urgently to allow heat pumps fulfil their significant economic and environmental potential,” emphasised the Executive Director of IEA.