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News I published 25 November 2023 I Ralitsa Ruseva

Heat pumps are the most installed sustainable products, but high investment costs will remain a barrier in the coming years

Sustainability plays an ever-larger role in the installation sector. The combination of climate change worries and high energy prices caused by the conflict in Ukraine has made more sustainable systems and solutions more necessary. Consequently, European HVAC installers and plumbers experience a growing demand for sustainable options from their clients and are involved in more installations of sustainable systems.

Sustainable systems are a broad term, however. As we saw in a previous article, however, as the results of USP Marketing Consultancy’s European Mechanical Installation Monitor show, the sustainable systems asked for the most are not necessarily the sustainable systems that installers install the most.

Most asked-for are not necessarily the most installed sustainable solutions

In 59% of the projects in which sustainability is taken into account, heat pumps are sustainable systems that customers ask their installers about. At some distance, photovoltaics are the second most asked-for sustainable product (21% of sustainability projects). That is what customers ask though, not what is installed.

When we look at the sustainable products that are installed the most, heat pumps are also in the first place. Photovoltaics, however, are not the second but the third most installed sustainable products, following gas boilers or heaters. This shows that there is indeed a difference between the sustainable products that customers ask about the most and the sustainable products that they end up buying and getting installed.

Cost barriers keep some customers reliant on gas

The second-most installed sustainable products are gas boilers or heaters. Also, when we look at which type of heat pumps are installed, air-source heat pumps are installed the most, followed by hybrid heat pumps, which still use gas as well. This is interesting because the transition is supposedly away from gas and towards electrification. So why are gas-reliant systems still installed as much as sustainable solutions?

A clear answer is found in the high prices of fully electric heat pumps. Many consumers may not be able to cough up the hefty investment necessary for a heat pump. However, they may be able to buy a hybrid system, which is generally much cheaper than a fully electric heat pump, or else a new gas boiler or heater that is much more efficient than their old gas system.

High initial investment costs will likely remain a problem in the future

As installers report, the high initial investment costs are a major barrier preventing some people from choosing sustainable systems like fully electric heat pumps. The high demand for those systems is a major cause of this cost barrier. Supply is currently too low for that growing demand, which is driving up prices. This supply bottleneck will likely remain until it is caught up by manufacturers who are currently investing in increasing production. That will increase supply, and competition and will ultimately lead to lower product prices.

However, the initial investment costs are not only determined by product prices. All these products need to be installed by qualified installers, and in the case of heat pumps, installations can take much more time than the old and familiar gas boilers. An increasing shortage of installers causes an installation bottleneck that will continue to drive up labour prices, thereby adding to the initial investment costs.

For a full overview of the trends and developments in the installation sector in six major European markets, we refer you to USP Marketing Consultancy’s European Mechanical Installation Monitor.

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