Heat Pumps Industry Analysis
A heat pump is an electrical device that is responsible for heat extraction from one end and transfers it to the other end. It is extensively utilized in residential, industrial, and commercial sectors. Common examples of heat pumps include refrigerators and air conditioners.
The growing urbanization and rapid construction activities are driving market demand. As per the United Nations predictions, by the end of 2050 over two-thirds of the population in the world will be living in the urban areas. This rapid rise is projected to take place in the emerging economies of the world. The Asian and African regions are less urbanized and hence offer huge opportunities for new construction to take place, further favouring the growth of the heat pumps market. Hence, these regions account for the fastest-growing urban growth rates. It is predicted that the urban population in Africa will rise from 40% in 2017 to 56% in 2050. The urban population in Asia is estimated to grow from 48% to 64% from 2017 to 2050.
Source: UNDP, Percent Increase of Urban Population in Africa
Significant infrastructure investments are required for the accommodation of this rapid increase, it is further estimated by the UNDP that around USD57 trillion is required by 2030 as over one billion individuals reside in low standards housing and new construction will be required for building houses for around 3 billion individuals by the end of 2030. Hence, the market demand is projected to grow with the development of new houses and the renovation of the old ones with improved living standards. Similarly, in commercial sector as well, with the development of numerous buildings in order to keep pace with the rising global urban population in addition to their evolving lifestyle, the market is further predicted to surge in the coming years. In order to achieve this, the government organizations along with non-government organizations are involved in strategic planning in order to respond to the opportunities offered by the fast urbanization. Also, efforts are being made to enhance public-private partnerships so as to speed up the planned initiatives.
Source: UNDP, Percent Increase of Urban Population in Asia
Heat pumps are highly energy efficient as these offer an energy-efficient alternative to furnaces and air conditioners for climates with moderate heating and cooling requirements. Hence, the rising trend of utilizing energy-efficient systems will continue to propel the heat pumps market growth. Heat pumps make use of electricity for the movement of heat from a cool area to a warm area, this makes a cool area cooler and a warm area warmer. During winters, heat pumps move heat from the cool outdoors into the warm house and during summers, heat pumps transfer heat from cool indoors to warm outdoors. Hence, these systems are capable of providing equivalent space conditioning in less than a quarter of the cost of operating conventional heating or cooling appliances.
Heat pumps are available in three main types, namely air-to-air, water source, and geothermal. These systems collect heat from the air, water, and ground outside the home, industrial or commercial facility and concentrate it for utilizing inside. The most commonly available heat pump is the air-source heat pump. Today, this pump can reduce electricity use by around 50%. High-efficiency heat pumps assist in dehumidification better than the standard central air conditioners, hence, contributing to more energy consumption and providing efficient cooling during summers. The geothermal heat pumps; ground source or water source, are capable of achieving higher efficiencies, the cost of installation is high, but the cost of operation is low as these take advantage of comparatively constant ground or water temperatures. These systems can be installed in areas having extreme climatic conditions in comparison to air-source pumps, hence are sturdy and reliable. Customer satisfaction with these heat systems is also quite high. Additionally, geothermal heat pump systems can help in the reduction of energy use by around 30 to 60%.
The prevalence of certain incentive schemes for encouraging people to install energy-efficient heating technologies is further propagating the market demand. The Government of the UK has put forward a domestic Renewable Heat Incentive (RHI) scheme so that the consumers can invest in low carbon technologies such as heat pumps, and help in lowering the carbon footprint. The government, under this scheme, declared that one can receive quarterly cash payments on the installation of eligible renewable heating technology. Hence, this financial incentive scheme by the government is initiated for motivating householders, communities, and businesses to contribute to the 2020 ambition of 12% of heating originating from renewable energy sources. RHI scheme, which was initiated on 9th April 2014, aimed to offer financial support to the owners of the renewable heating system for a time period of seven years. This RHI scheme covered England, Wales, and Scotland. Furthermore, on 11th March 2020, the government announced that with the end of the Domestic Renewable Heat Incentive scheme, it will further consult on the launching of a novel Clean Heat Grant from April 2022. The grant is poised to help households and small businesses for investing in heat pumps and biomass boilers, supported by £100 million of new funding.
The sudden outbreak of the novel coronavirus that originated from the Wuhan region of China led to the halt of many construction activities globally, either new or renovation activities. Hence, this has put a strong impact on the infrastructure sector, further causing an adverse impact on market growth as well. Many countries including China and Italy were forced to shut-down their production, further resulting in the decline in the production of a wide range of construction materials. Limited public transportation and travel bans led to a slowdown in the project delivery owing to the shortage of the required construction material. Many contractors that were dependent on Chinese goods and materials are facing high price issues and hence decided to cancel their projects, further impacting the market growth. However, with the adoption of new normal conditions, the construction activities are also recovering at a steady pace and this would further lead to steady market growth.
ABOUT THE AUTHOR:
Vibha Saklani is a Market Research Analyst at KSI, working on the estimates and global reports on multiple industries spanning from IoT to food and beverages, with a special knack for healthcare, medical devices, and related markets. With the addition of her formal education in Biotechnology and having a research background, she is able to shed more light on the detailed analysis of the story. To read more articles by her, and for more information regarding multiple global markets, visit www.knowledge-sourcing.com.
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