The global geothermal heat pumps market has a very moderate scope of realizing product differentiation. Thus, the market players need to compete by employing a cost leadership strategy. Competition in the geothermal heat pump market is currently at a medium level but the competition will become high during the coming years, suggests a new report by Transparency Market Research.
Increasing Prices of Electricity Compel Consumers to Shift to Renewable Heating Solutions
Electricity is largely consumed by residential as well as commercial sectors. LPG is the other most commonly used fuels in homes. The rising prices of electricity and LPG, have thus become a cause of concern. Additionally, the increased greenhouse gas emissions from these energy sources are becoming a global issue. Thus, a rising number of consumers are shifting to renewable heating solutions such as geothermal heat pumps. The durability of geothermal heat pumps and their stable cost are also driving their adoption.
Geothermal heat pumps are robust in nature and require negligible maintenance. These systems eliminate the risk of combustion of fuels leading to fumes, unpleasant odors, and flames. The fact that they have moving parts make them all the more resilient and reliable. These benefits of geothermal heat pumps are likely to attract consumers and boost their installments.
Incorrect Estimation of Heat Pump Size and Faulty Installations Can Negate Cost Savings of Consumers
Any error or mismatch in the size of the heat pump installed for a particular sized house can jeopardize the sustainability of the heat pump system and incur huge expenses to the consumer. When the pump installed is incorrectly sized, it is unable to handle the entire load and thus rely on the immersion heater to supply the actual energy load. The high cost thus incurred will negate the savings of the customer, and is expected to be one of the biggest challenges hampering the installation of geothermal heat pumps. Moreover, even an incorrect estimation of insulation of a particular house may lead to various problems, thus making the installation a very sophisticated process, requiring extreme precision.
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“The high installation costs of geothermal heat pumps will restrict small residential owners from installing the system,” state a TMR analyst. The actual price of the pump is only a part of the overall expenditure; surveying, siting, installation of ground loops, and various other groundwork activities increase the expenses associated with the pump. Customers, therefore find it an expensive technology and refrain from its adoption.
Commercial Sector to Emerge as Rapidly Growing Market
While many residential owners may hesitate from installing geothermal heat pumps due to high cost of installation, the same is not true for commercial consumers. The commercial sector is most likely to be the fastest growing market for geothermal heat pump market in the coming years, states TMR. This is because, commercial customers are more focused and attracted to the huge accumulated savings that they benefit from, over the years. Further, commercial consumers are eligible for tax benefits. This results in significant savings over the years, making geothermal heat pumps an attractive option for commercial consumers.
Closed Loop Geothermal Heat Pump Systems to Gain Preference
Based on technology, the global geothermal heat pump market is segmented into open and closed loop geothermal heat pumps. Of these, the closed loop technology segment accounted for 85.68% of the market in 2013. The shares for this segment is expected to rise to 87.99% for by the end of 2020.
By end user, the global geothermal heat pump market is segmented into commercial, residential, and others. Of these, the residential sector accounted for 58.07% of the market in 2013. The residential sector is expected to lead in the market, despite a slight drop in the shares, which is expected by 2020.
By region, Europe accounted for the largest share of 54.9% in the market in 2013, which is expected to increase further to 59.2% by 2020.
According to the report, the global market opportunity in geothermal heat pumps will rise from US$55.3 bn in 2014 to US$130.5 bn by 2020, expanding at a 13.10% CAGR between 2014 and 2020.
This information is based on the findings of a report published by Transparency Market Research titled “Geothermal Heat Pumps Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2014 - 2020.”
The global geothermal heat pumps market is segmented as follows:
Technology
Open Loop Systems
Closed Loop Systems
- Vertical Loops
- Horizontal Loops
- Pond/Lake Systems
End-User
Residential
- New Building Systems
- Retrofit Systems
Commercial
- New Building Systems
- Retrofit Systems
Region
- North America
- Europe
- Asia Pacific
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