Transparency Market Research has released a new market report titled “Geothermal Heat Pumps Market – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2014 – 2020.” According to this report, the global installed capacity for geothermal heat pumps stood at 52,638.18 MWt in 2013 and is expected to reach 119,303.66 MWt by 2020, at a CAGR of 12.8% from 2014 to 2020. In terms of revenue, the global geothermal heat pumps market was valued at US$ 55.30 billion in 2013 and is anticipated to reach US$ 130.5 billion by 2020, at a CAGR of 13.1% from 2014 to 2020.
Geothermal heat pump is a renewable heating technology which utilizes the earth as both a heat source and heat sink. Geothermal heat pumps have proved to be highly capable of substituting conventional heating, ventilating, and air conditioning (HVAC) systems globally. These heat pumps are a method of directly utilising geothermal energy for heating a building. Apart from heating, these systems can be customised to provide cooling as well as hot water when required. Geothermal heat pumps are a widely accepted technology in North America and Europe. These heat pumps are also rapidly gaining ground in Asia Pacific, spearheaded mostly by China’s aggressive initiatives towards utilizing renewable heating technologies.
One of the major requirements of geothermal heat pumps is the installation of ground loops. These ground loops are of utmost importance as they provide a platform for the heat exchange to take place. Depending on the type of ground loop being installed, the market for geothermal heat pumps has been broadly segmented into open loop systems and closed loop systems. Closed loop systems have been further sub-segmented into horizontal loops, vertical loops, and pond/lake systems. Although open loop systems are more efficient, closed loop systems are the most widely utilized loop configuration globally. In 2013, closed loop systems accounted for 85.68% of the global geothermal heat pump installed capacity. Open loop systems are highly dependent on the availability of adequate groundwater reserves. Numerous regulatory hurdles associated with the utilization of groundwater aquifers have played a major role in inhibiting the deployment of open loop geothermal heat pump systems globally.
Both horizontal and vertical loop configurations are highly popular choice while installing a closed loop geothermal heat pump system. Horizontal closed loop configurations involve digging trenches for installation of the ground loops. On the other hand, vertical ground loop installations involve drilling vertical boreholes for placing the loops. Vertical loop configurations are highly useful when relatively lower space is available for installing the ground loop. As a result, vertical loop systems are the most popular and widely installed loop configuration globally. Pond/Lake systems are also highly efficient and require minimal earth moving expenses. However, this loop configuration is highly dependent on the availability of a water body nearby, which significantly stunts adoption rates.
Residential and commercial users are the major adopters of geothermal heat pumps globally. Both the industrial and agricultural sector also utilise geothermal heat pumps; however since the utilization of the technology by these sectors is negligible, they have been incorporated within the commercial sector. Both residential and commercial segments have been further sub-segmented into new building systems and retrofit systems. Both new building and retrofit systems are likely to be equally popular among adopters throughout the forecast period. However, in terms of installed capacity, the retrofit sector is likely to exhibit more attractive growth rates. Mature markets for geothermal heat pumps in Europe such as Sweden, Germany, France, and Switzerland have been utilising this technology for over 20 years. We estimate that within the forecast period, numerous ageing geothermal heat pump units in these countries are likely to be replaced. This is expected to significantly bolster the market for retrofit geothermal heat pumps within the forecast period. A similar scenario might also be observed in the US, which is also a mature market for this technology.
North America and Europe are currently the major markets for Geothermal Heat Pumps globally. In North America, the US accounts for a large majority of the installed capacity. Mature markets for geothermal heat pumps in Europe include Sweden, Germany, France, and Switzerland. Despite the economic crisis in the region, numerous European countries have taken definite steps towards increasing the share of geothermal heat pumps in their heating portfolios. The UK has recently started its Renewable Heat Incentive (RHI) scheme which is likely to bolster the installations of geothermal heat pumps in the country. Regulatory support mechanisms play an instrumental role for any renewable energy technology and geothermal heat pumps are no exception. Annual installations in Sweden, Germany, and Canada, among others have exhibited a definite slowdown post the retraction of incentive schemes. Mature markets for geothermal heat pumps in Europe, especially France and Germany have been registering an alarming increase in annual installations of air source heat pumps. There is a definite threat of substitution of geothermal heat pumps by air source heat pumps in these countries as well as other European economies.
Post retraction of the Federal Tax Credit scheme in the US in 2016, the market for geothermal heat pumps in the country is likely to enter into a temporary phase of uncertainty. China is the largest adopter of geothermal heat pumps in Asia Pacific. Countries such as South Korea, New Zealand, and Australia are likely to emerge as major adopters of the technology within the forecast period. China’s installed capacity of geothermal heat pumps has grown significantly over the last decade. This growth in capacity additions has outstripped the growth in experience of installers and heat pump manufacturers in the country. As a result, there are numerous incorrectly installed heat pump units across China, which are likely to require replacement within the forecast period. Thus, demand for retrofit systems in Asia Pacific is likely to remain high throughout the forecast period. The global market for geothermal heat pumps has been segmented as follows: