Market Trends of Germany HVAC Industry
Residential Sector to Hold Significant Market Share
- The country's HVAC systems in residential settings have been growing due to increased demand for energy-efficient heating and cooling systems. Rising energy costs and government incentives for energy-efficient home upgrades drive this growth. For instance, in September 2023, in Germany, newly constructed homes qualified for tax credits, even without stricter efficiency standards. These credits allowed new building projects to offset 6% of the investment costs against taxes in the initial year. The eligibility window spans projects commencing construction between October 1, 2023, and September 30, 2029.
- Germany has introduced regulations to encourage the development of nearly zero-energy buildings, thereby pushing residential structures to enhance energy efficiency by utilizing efficient energy sources like heat pumps. Heat pumps are commonly employed as heat sources in single-family homes and terraced houses, and their usage is also progressively expanding in apartment buildings.
- The KfW regulation for subsidies on HVAC equipment, such as heat pump funding, is designed to support the installation of renewable heat pumps in Germany. The program offers financial support of up to EUR 5,000 for single-family homes and up to EUR 10,000 for multi-family housing. Numerous energy companies in Germany are advocating for the use of heat pumps. The subsidies usually cover up to 50% of the entire installation expenses. Such initiatives by the companies and government in the market are expected to complement the demand growth for HVAC services in the country.
- In 2023, a significant trend emerged in Germany's construction landscape: 75% of newly approved buildings began featuring heat pumps. Out of the total new residential constructions approved, 76% were set to rely predominantly on heat pumps. Furthermore, data reveals that nearly 65% of the approximately 96,800 residential buildings completed in 2023 embraced heat pumps as the primary heating solution.
Understand The Key Trends Shaping This Market
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HVAC Equipment to Hold Significant Market Share
- The increasing effects of global warming are driving the growth of HVAC equipment. This trend is especially pronounced in countries such as Germany, where soaring temperatures require air conditioning.
- Several older buildings in Germany require renovation to meet modern energy standards, leading to increased demand for HVAC retrofitting and upgrades. Government incentives for building renovations and retrofits further stimulate this demand. The country's aging infrastructure necessitates replacement and maintenance services, driving ongoing demand. Regular maintenance requirements to ensure system efficiency and longevity contribute to the demand for HVAC equipment. Presently, approximately half of Germany's buildings rely on gas heating systems.
- For instance, in August 2023, the Building Energy Act (GEG) aimed to incrementally boost the utilization of renewable energy sources for heating in commercial and residential buildings. Under the GEG, all new heating systems must derive at least 65% of the energy from renewable sources, whether in existing or new constructions. Existing systems can remain operational and undergo repairs as needed. Notably, post-2024, the act will allow for the installation of gas heaters, provided they are hydrogen-compatible, allowing for potential conversion in the future.
- Germany offers substantial grants for HVAC equipment like heat pumps. According to EHPA, landowners can receive up to EUR 18,000 for ground-source heat pumps and up to EUR 15,000 for air-source heat pumps. On January 1, 2024, the German government, in collaboration with the BWP, introduced enhanced funding options. Under these new provisions, property owners can now access a maximum subsidy of EUR 21,000 when installing a heat pump. Notably, while these grants are open to all, they are especially advantageous for low-income families.
