Market Trends of Europe HVAC Industry
Air Conditioning Equipment to Hold a Significant Market Share
- A significant portion of the HVAC equipment market is anticipated to be occupied by air conditioning units due to rising residential and commercial user numbers and government regulations requiring energy-efficient and environmentally friendly equipment.
- The increase in Residential and commercial construction activities in the region is also expected to fuel the market during the forecasted period. Retrofitting older buildings with air conditioning is a significant driver of the market. Ductless HVAC units are also appropriate for modern infrastructures with ductwork holes and gaps that cause air leaks. Instead of paying for costly replacements, this factor is driving the demand for ductless HVAC systems.
- According to Comfy Living, Europe will have 84 million smart homes by 2022, with France, Germany, and the United Kingdom leading the way. Demand for ductless systems is expected to rise as smart homes grow. Ductless systems in smart homes regulate air temperature, humidity, and fresh air intake. For example, ductless mini split systems with the ENERGY STAR label use 30% less energy to cool a room than traditional air conditioners.
- Moreover, the market is expected to be driven by several regional vendors' activities. For example, Fujitsu General acquired Distributor in December 2022 to expand its business in Europe. As an air conditioning solutions provider, the Group aims to deliver energy efficiency and comfort by making active upfront investments to strengthen technical support systems for ATW (air to water) and commercial air conditioners.
- In addition, Johnson Controls-Hitachi introduced a new Wall Mount indoor mini-split unit in May 2022 as the latest addition to its PRIMAIRY P300 line of high-efficiency, single-zone commercial mini-split systems. This energy-efficient and cost-effective ductless heating and cooling solution is tailored to the specific requirements of small to medium-sized spaces such as shops, restaurants, and classrooms.
- Several trends, from green and smart technology to automated systems, are expected to shape the future of the commercial air conditioning systems segment. The demand for ACs in residential and commercial settings is expected to rise as the COVID-19 pandemic becomes endemic and permanent WFH models gradually transition to a hybrid working model.
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Adoption of Heat Pumps to Drive the Heating Equipment Segment
- Heat pumps are strategically located to benefit from the environmental sustainability drive. Furthermore, the European Union's sector integration strategy predicts that by 2030, 65% of all commercial buildings will be heated by electricity. According to the data, heat pump sales are only expected to increase as more buildings rely on them for heating and cooling.
- According to EHPA, air-to-air heat pumps were the segment with the most sales in Europe in 2020, with over 670,600 units sold. In the same year, 654,700 air-to-water heat pumps were sold. On the other hand, air-to-water heat pumps were expected to be the industry segment with the highest sales volume by 2022. Over two million air-to-air heat pumps are expected to be sold in Europe by 2026.
- The growing need to reduce reliance on fossil fuels and seek an energy-efficient alternative to furnaces and air conditioners is expected to drive up demand for heat pumps during the forecast period. The European Union's goal initiative to replace gas boilers with heat pumps is expected to drive demand while supporting the United Kingdom's goal to decarbonize its heating solutions. With the increased deployment of heat pumps, the UK government hopes to make this renewable energy source even more cost-effective.
- For instance, in April 2022, the government of the United Kingdom launched the Boiler Upgrades Scheme, which includes a grant of up to GBP 6,000 to install heat pumps (air or ground source) in 90,000 homes across the country. Such initiatives by governments around the region are expected to drive demand for heat pumps in the market during the forecast period.
- Furthermore, the Renewable Energy Hub UK claims that using heat pumps can save consumers 52% on energy costs compared to gas boilers. High gas prices are the primary factor driving the use of Heat Pumps in the area. The government declared its goal of installing 600,000 new heat pumps per year by December 2028, and it is expected that adoption will pick up quickly to meet that goal.
- Furthermore, to further reduce reliance on Russian fossil fuel exports, the French government announced in March 2022 that it would discontinue subsidies for installing new domestic gas heaters and increase support for renewable heat pump systems. Such government investment and initiatives are expected to stimulate the regional market.
- Companies have been launching new and innovative products in the market in response to changing regulations in the region. For example, Cedric Francois in France developed a new core for the heat pump's new system in February 2022. The new heat pump system would replace the compressor with a small unit that contained a patented sound generator. Such unique and innovative products are expected to drive regional HVAC product demand growth.
- Furthermore, Daikin Europe NV announced the expansion of its German heat pump manufacturing base in Güglingen, Germany, in October 2022 to meet the increasing demand for heat pumps in the EU region by investing in local production capacity. Such regional strategic investments are expected to drive the market during the study period.
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