Market Trends of Europe Commercial HVAC Industry
HVAC Equipment to Witness a Significant Growth
- A heat pump is a crucial HVAC device that refrigerates heat from colder to warmer areas. Unlike air conditioners and furnaces, heat pumps offer a highly efficient alternative in any climate. Heat pumps use electricity to move heat, resulting in a cooler cold space and a warmer warm space. The heat pump's efficiency is determined by its coefficient of performance (COP) or seasonal coefficient of performance (SCOP), with a higher number indicating greater efficiency. Regarding space heating, heat pumps generally surpass electric resistance heaters and other heater types in terms of energy efficiency.
- Various factors, including government measures and policies, influence the adoption of heat pumps in the region. For instance, the UK government has taken steps to speed up the expansion of heat pump installation. In October 2023, the government raised heat pump subsidies by 50%, from EUR 5,000 (EUR 5,795) to EUR 7,500 (EUR 8,692). The Boiler Upgrade Scheme offers financial assistance to incentivize individuals to switch from fossil fuel heating to more effective, environmentally friendly heating systems. These options may entail air and ground source heat pumps and biomass boilers.
- Electric heat pumps are anticipated to be more prominent in this transition. In the last two decades, there has been a gradual change in heating practices in European homes, leading to the increased popularity of heat pumps in the country. For instance, in 2023, Bosch Home Comfort Group generated a revenue of EUR 5 billion. The sales of heat pumps in Germany rose by 84%, while the business with heat pump hybrids saw a 46% increase. The company plans to invest EUR 1 billion in its European development and production network by 2030.
- Moreover, in December 2023, Johnson Controls unveiled a water-to-water compound centrifugal heat pump called the York Cyk. This innovative heat pump is designed for commercial buildings and can provide high-temperature hot water up to 77°C, making it ideal for high-head conditions. According to the manufacturer, the York Cyk can significantly reduce water and operational costs by up to 50% compared to traditional boiler and chiller applications. Currently, this product comes with a cooling capacity of 400 tons. It offers an impressive output of 1,406 kW for cooling and 2,051 kW for heating. Such developments by the local vendors will increase the demand for heat pumps.
- Furthermore, the growth of the market has been bolstered by government efforts to encourage energy efficiency and the adoption of renewable energy sources. Measures such as subsidies, tax incentives, and regulations aim to reduce carbon footprints and have incentivized consumers to invest in unitary heaters that align with these objectives. The product's growth is anticipated to receive a further boost from the increasing expenditure on building construction and the rise in maintenance and replacement activities.
- Carrier states that the majority of contemporary boilers utilize natural gas or oil as the primary fuel source. The purpose of a boiler is to heat water in order to generate steam or hot water. This steam or hot water is then distributed through pipes to radiators located throughout the home, such as radiant flooring systems or baseboard radiators. Additionally, modern boiler systems are equipped with safety features to prevent accidents and damage. These safety features may include pressure relief valves, temperature monitors, and automatic power shutdown systems. The growing acceptance of these boilers in commercial sectors is anticipated to propel the market forward.
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France to Hold a Significant Market Share
- The government of France has stringent energy efficiency regulations and environmental standards for buildings, which drive the demand for the commercial HVAC market. Building operators and owners must comply with these regulations by implementing energy-efficient heating and cooling systems, ventilation solutions, and air quality management technologies. The need to meet regulatory requirements and achieve energy performance targets creates a significant demand for the HVAC market focused on energy efficiency upgrades, retrofits, and compliance assessment.
- According to the United Kingdom's non-profit organization MSC, France's success can be attributed to factors like a strong preference for electric heating systems over gas, a domestic air conditioning industry that has transitioned to heat pumps, and the implementation of government initiatives to promote heat pump installation, including grant schemes like FranceRenov which provides up to EUR 10,000 per household. New energy-efficiency standards for new homes have also played a role in France's achievements. Moreover, the rise in commercial construction in France is expected to drive the studied market. For instance, according to the FIEC EU (European Construction Industry Federation), despite the war in Ukraine and its consequences, the construction sector in France showed resilience.
- France currently has 27 heat pump factories, with the government's goal to have 1 million new heat pumps produced annually by 2027. France is the primary market and producer of heat pumps in Europe, with heat accounting for 45% of final energy consumption in the country and nearly two-thirds of this heat being produced from fossil fuels. Heat pumps are seen as a significant solution in lowering emissions related to heating. Depending on the specific area, the systems use about three times less energy than gas boilers or electric radiators. The production of many heat pumps stimulates demand for the HVAC market.
- In line with the changing regulations in the region, the companies have been investing in introducing new services, mergers, and acquisitions in the market. For instance, in November 2023, Sonepar announced the acquisition of Hydeclim, a French specialist distributing equipment and solutions for AC and air treatment. Following the group's recent French acquisitions, notably Alliantz (photovoltaics) and CD Sud, this operation will enable Sonepar to expand in the HVAC market and extend its offering to AC and heating installers, particularly in Western and Northern France.
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