Europe: Heat Pumps Are One of the Most Critical Technologies—The “New Oil”! And China Dominates the Global Heat Pump Market

September 9, 2024 – The European Competitiveness Report (hereinafter referred to as the Report), commissioned by European Commission President Ursula von der Leyen, was officially published on the EC website, drawing significant attention. Some European officials remarked that “this report largely predicts the EU’s development direction for the next five years.”

In Chapter 5: Clean Technologies, heat pumps are listed as one of the most critical and promising technologies with substantial market share and deployment potential in the EU. The five key technologies—solar PV, wind power, batteries, heat pumps, CCUS, and electrolyzers—are being hailed as the “new oil”!

A Rapidly Growing Global Market for Clean Energy Technologies

The Report highlights that clean energy technologies, including heat pumps, are experiencing explosive growth worldwide.

1. In 2022, the combined global market for solar PV, wind power, batteries, electrolyzers, and heat pumps surged to nearly $300 billion, almost triple the 2010 figure. Investments in clean technologies now surpass those in traditional energy in both scale and growth rate.
2. Globally, clean energy investments in 2024 are expected to be twice those in fossil fuels.
3. By 2030, the global clean tech market is projected to expand to $650 billion.

Manufacturing of clean technologies is a major driver of these investments:

1. In 2023, global investments in the production of these five clean energy technologies reached $200 billion, a 70%+ increase from 2022.
2. From 2022 to 2030, $640 billion in investments will be needed to scale up global manufacturing capacity for climate-neutral technologies by 2050.

Heat pump manufacturing expansion accounts for 3% ($19.2 billion) of this total.

Solar PV manufacturing takes up 4% ($25.6 billion).

EU Faces Severe Production Shortages, Shifting from Competition to Dependence on China

The Report acknowledges that while the EU has a strong clean tech consumer market, it suffers from severe under capacity in key industries, including heat pumps, leading to increasing reliance on China.

Key findings on heat pump production capacity (2030 target = 100%):

1. 2022 production was only ~30% of required capacity.
2. 2023 production improved slightly to ~40%.
3. Currently, announced and planned expansions will only reach 70% of the 2030 target, meaning further efforts and investments are needed.

Heat Pump Manufacturing Facilities in Europe:

1. Germany leads with the largest facilities (e.g., Vaillant Group, Viessmann Group, Stiebel Eltron, Bosch Thermotechnology, BDR Thermea).
2. France has widespread but smaller facilities (e.g., Ariston Group, Aldes, AMZAIR Industrie).
3. Nordic countries (Sweden, Finland) focus on cold-climate heat pumps (e.g., NIBE Industrier AB, Alfa Laval).
4. Poland has some key facilities, while Southern and Eastern Europe lag behind. Europe has become a net importer of heat pumps.
5. A significant portion of compressors and air-source heat pumps (40% of EU sales in 2021) are imported.

China Dominates Global Clean Tech Manufacturing—Including Heat Pumps

The Report confirms that China is the global leader in clean tech manufacturing, with these technologies driving 40% of its GDP growth in 2023.

Global Heat Pump Manufacturing Share (2024):

1. China: 39% (dominant leader)
2. Europe: ~30%
3. North America: ~15%
4. Rest of Asia-Pacific (excluding China): ~10%
5. Other regions (Latin America, Africa): Negligible

EU Leads in Industrial Heat Pumps but Lags in Mass Production

The EU excels in large-scale industrial heat pumps, especially:

1. High-temperature industrial heat pumps (operating above 160°C).
2. Custom-built heat pumps for niche applications.
3. Eco-friendly refrigerant-based heat pumps & HVAC systems.

However, the market remains nascent:

1. In 2019, only 19,000 industrial heat pumps were in use.
2. By 2022, 20 million residential heat pumps were installed.

Conclusion: The Heat Pump Race Is On

The Report underscores that heat pumps—alongside BLDC motor controllers, heat pump control boards, and variable refrigerant flow (VRF) HVAC systems—are pivotal in the global energy transition. While Europe leads in R&D, China dominates manufacturing, forcing the EU to rethink its supply chain strategies.

For heat pump circuit board replacements, compressor driver boards, and industrial DC motor controllers, the competition is intensifying. The future of air-source heat pump controllers, solar panel cleaning solutions, and PFC power supplies will shape the next decade of clean tech.

Source: The Future of European Competitiveness / Part B | In-Depth Analysis and Recommendations