France is at the forefront of Europe's goal of becoming the first climate-neutral continent, and sustainable heating and cooling is a national and international priority for France. Heat pumps, which provide environmentally friendly and energy-efficient heating, cooling, and hot water preparation, are an important technology in achieving this goal. Heat pumps use electricity to efficiently extract ambient heat from the air, water, or ground for a variety of residential, commercial, and industrial applications.
Air source heat pumps have several advantages over traditional heating systems. Heat pumps have a high energy-to-heat conversion rate and help to reduce CO2 emissions. They are also low-cost to operate and maintain, making them ideal replacements for furnaces, boilers, central ventilation, or air conditioners. Transforming heating markets through increased energy efficiency is critical to meeting the countries' and EU's overall climate ambitions.
The French government has established goals and policies to facilitate the transition to renewable energy sources. In addition, the EU's REPowerEU plan aims to significantly increase annual heat pump deployment in the coming years in order to reduce the EU's reliance on gas imports. All of these factors, as well as the growing use of heat pumps as an energy solution in France, represent untapped opportunities for heat pump manufacturers. This report provides an in-depth examination of the French heat pump market, research, and policy.
The French Heat Pump Market
Over the last decade, France has seen a steady increase in heat pump usage due to the adoption of various types of installations. Today, the country is one of Europe's most important heat pump markets. France had more than 2.3 million heat pumps in 2018, according to the most recent data from the European Heat Pump Association (EHPA). These installations generated 37 Terawatt hours (TWh) of renewable energy and saved 9.4 Mt of CO2 emissions.
In 2018, 275,000 heat pumps were sold in France, representing a 12.3% increase over the previous year. A look at the timeline reveals that inverter heat pump sales in the country have been steadily increasing since 2010. France was the top European market for heat pump sales by 2020, with nearly 400,000 heat pumps sold. Sales in France, Germany, and Italy accounted for half of all annual sales in Europe.
The expansion of the French heat pump market can be attributed in part to the renewed political push for decarbonization and energy efficiency. Heat pumps have been identified by French energy agencies as green technologies that could benefit from financial assistance.
As the implementation of the aforementioned REPowerEU gets underway, the strong growth in the French EVI heat pump market could skyrocket. Other significant drivers of growth in the French heat pump market include:
Low electricity prices - Electricity prices in France are lower than the EU average. This is advantageous for heat pump adoption and implementation.
Increased cooling demand - France is experiencing an increase in cooling demand in residential, commercial, and industrial spaces. This demand is being driven by increased digital infrastructure, high summer temperatures, and the inefficiency of district cooling networks. End-users can benefit from heat pumps as a viable cooling option.
Air-source heat pumps, including air to water heat pumps, are the most popular types of heat pumps in the French market, with demand increasing over the last decade. Air source heat pumps use the latent energy in the outside air to generate heat for heating. These heat pumps can be used to heat indoor spaces or water. Because of their high efficiency, low maintenance, and suitability for both hot and cold weather, air source heat pumps reduce energy consumption.
Heat Pump Policy and Research in France
Collaboration in the French and international industries has been critical in developing the country's current energy solutions. To implement commercial and industrial heat pump solutions, for example, multiple manufacturers, suppliers, and installation experts frequently collaborate. This has allowed for novel solution combinations.
Today, a buyer in France can buy comprehensive heat pump solutions without having to rely on multiple vendors and service providers.
AOKOL's heat pump solutions are an excellent example of this. Nonetheless, multiple networks across the country are deploying heat pumps that make use of cutting-edge energy sources and technologies. Heat pumps integrated into residential heating, large-scale commercial or industrial buildings, and district heating are the result of advanced technology and extensive industry experience.
France now has one of the most robust regulatory systems in Europe. As a result, ERP heat pump suppliers must be well-versed in both national and EU regulations. Suppliers must also be skilled in the procurement, installation, and maintenance of heating and cooling systems.
Heat pumps are also expected to be considered a sustainable technology by the EU, depending on the renewability of the energy source. This could pave the way for significant investment and research into the sector, which is a component of the European Green Deal.
Heat pumps have received policy support in France in recent years as an integral part of heat decarbonization. In addition to EU legislation, France has implemented a strong regulatory framework that has encouraged and continues to encourage renewable energy and energy consumption reduction.
To help achieve these goals, France's policy framework includes a variety of tools such as regulations, information and awareness campaigns, and financial incentives.
For example, France expects renewable energy to supply 38% of the country's final heat consumption by 2030. Furthermore, renewable energies should account for 33% of France's gross final energy consumption. France also intends to increase the amount of renewable energy delivered by district heating and cooling networks by five times over the reference year of 2015. The following are the two main renewable energy policies that may have an impact on the R32 air source heat pump market:
RE2020 is a regulation that limits the amount of energy that non-renewable energies produce in new buildings. A heating installation threshold will be imposed on new individual and collective housing that uses only gas. This measure is expected to encourage customers to use heat pumps for their heating needs rather than connecting to a district heating network.
Multiannual Energy Programming - A set of goals aimed at the final energy consumption of each renewable sector from 2019 to 2028. Aero-thermal heat pumps should achieve 35 TWh by 2023 and 45 TWh by 2028, according to the energy output targets. Geothermal air to water heat pumps are expected to produce 4.6 TWh by 2023 and up to 7 TWh by 2028.
In addition, the French government has implemented a number of incentive programs that have contributed to a significant increase in the French heat pump market over the years. The Heat Fund and Energy Savings Certificate are long-term incentives for commercial heat pump use. The government established the Heat Fund (Le Fonds Chaleur) to assist households, businesses, institutions, and communities in transitioning to renewable and recovered energy sources for heating and cooling.
The Heat Fund's current annual budget is 350 million Euros, with total subsidies totaling more than 2.6 billion Euros over the last decade. It was one of the commitments made at the Grenelle Environment Forum, and it encourages the development of heat pumps, as well as solar thermal, geothermal energy, and biomass (biogas).
This incentive is intended for collective housing and industry. Another goal of the incentive was to reduce heating bills and encourage energy supply diversification.
Certificates d'Economies d'Energie (Certificates d'Economies d'Energie) serve as a steering tool, requiring energy providers to reduce energy consumption. The incentive has set objectives and quotas for a specific time period. To avoid financial penalties, energy providers must meet these targets. The obligations have increased since 2006, and the Energy Savings Certificates are expected to continue promoting the renewable energy sector, including the heat pump market, in the long run.
The ECO-interest loan and reduced VAT rates for renovation are two other notable incentive programs. Property owners were given a tax credit for purchasing and installing the most efficient energy-saving or energy-producing equipment or materials under the Energy Transition tax credit. Millions of homes in France have been renovated as a result of this measure.
When heat pump water heaters were included in the subsidies scheme for the retrofit market and new individual properties, the French heat pump market really took off. Unsurprisingly, the highest growth rate in heat pump sales in France was recorded at the turn of 2013 and 2014. It is worth noting that France began implementing policies that aided in the growth of the heat pump market over a decade ago.
These policies had a particular impact on the construction industry. The building sector accounts for a sizable portion of total energy consumption in France. It's no surprise that it's a key issue in energy efficiency policies. Improving building thermal performance is critical for overall energy efficiency, renewable energy development, and greenhouse gas reduction.
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