Geothermal Heat Pump Market Overview
Rising focus towards energy consumption, growing demand for cost effective and efficient air-conditioning system, volatile electricity prices and favourable government initiatives, such as rebates, subsidies and financial supports to encourage the adoption of renewable energy sources are some of the major factors boosting the demand of geothermal heat pumps, across the globe.
On the basis of product, they are categorized as open loop and closed loop. Closed loop geothermal heat pumps flow an antifreeze solution through a closed loop, generally made of plastic tubing that is suppressed in the ground or submerged in water. On the contrary, open loop system uses surface body water as heat conversation fluid that flows directly through geothermal heat pumps.
Europe Stands as the Largest Revenue Contributor
Geographically, Europe has been contributing the largest revenue to the global geothermal heat pump market. Rise in expenditure towards ecological construction coupled with surging demand for heating & cooling system, are observed as the key regional drivers. The market in the region is expected to register a healthy growth during the forecast period. The market growth in the region is expected to be backed by the increment in construction activities, majorly in the residential sector, easy credit amenities and shifting consumer preferences from using non-renewable energy sources towards renewable energy sources. Governments across the region are focusing on rising energy efficiency and reducing carbon footprints, thus further pushing the geothermal heat pump market. For instance, in 2016, Germany’s federal government announced to invest over $250 billion on infrastructure.
Development of Renewable Energy Bolstering the Market Growth in APAC
The geothermal heat pump market in APAC is expected to grow at a significant pace during the forecast period. The development of renewable energy will increase the growth of the regional market. In APAC, the renewable energy sector is set to grow at a rapid pace, strongly driven by countries like China, India, Japan and Australia. For instance, in 2016, the Chinese government announced to increase geothermal energy consumption by three times as compared to the current level, by 2020. The Australian government’s extension of renewable energy targets 45,000 GWh by 2020. All these factors will give a major boost to the renewable energy sector in the region, and consequently drive the demand for geothermal heat pumps.
Global Geothermal Heat Pump Market Dynamics
The global market is being driven by factors such as increasing demand for cost-effective energy solutions as a direct outcome of rising cost of conventional fuels and surging demand for cost efficient space acclimatizing system from residential, industrial and commercial sectors. Further, conducive government initiatives including financial support, allowances, centralized income tax credit, subsidies and renewable heat inducements to increase the adoption of renewable energy, are likely to boost the growth of this market during the forecast period. However, high initial investment and limited availability of resources are obstructing the growth of this market.
Rising Cost of Conventional Fuels to Bolster Market Growth
Continuously increasing prices of conventional fuels such as oil and natural gases are boosting the demand for renewable energy sources. Rising fossil fuel prices are making renewable energy more competitive in the power market. Some of the potential benefits of using renewable energy resource include requirement of less maintenance and minimal impact on the environment. Further, renewable energy brings economic benefits to many regional areas, as most plants and facilities are positioned away from large urban centres and on the outskirts of capital cities. Increasing price of conventional fuels along with growing awareness among population pertaining to the potential benefits of renewable sources, will significantly drive the demand of geothermal heat pumps in coming years.
High Installation Cost to Inhibit Market Growth
High installation costs and faulty installations are slowing down the growth of the geothermal heat pumps market. Companies operating in this market are looking forward to thoroughly understand external conditions and focusing on efficiency enhancement of such pumps. This factor has been creating operational deterrents, thus posing a threat to the global market’s growth.
Geothermal Heat Pump Market Competitiveness
Geothermal heat pump market is highly fragmented. Some of the key players operating in the market include Modine Manufacturing, NIBE, Danfoss, Robert Bosch GmbH, Carrier Klimatechnik GmbH, Trane Inc., Kensa Heat Pumps, Bryant Heating & Cooling Systems, Finn Geotherm UK Limited, and Stiebel Eltron. Key players operating in this market are following the strategy of collaborations to expand their regional presence and enhance customer portfolio. For instance, in September 2016, NIBE acquired the major parts of British-owned Enertech Group with an objective to enhance its global presence. Enertech Group provides a range of geothermal heat pumps, air powered heat pumps, solar energy and biofuel goods along with traditional oil and gas burners, mainly within Europe.