Unlocking opportunities that exist at higher temperatures will be key to future growth

LONDON, Oct. 14, 2024 -- The need to reduce the demand for fossil fuels in industrial applications is driving investment in decarbonised solutions such as heat pumps. Coinciding with a rising share of renewables, the technology has gained momentum as a robust choice for achieving a more sustainable level of industrial development. Policy instruments and financing mechanisms will further accelerate the clean energy transition, of which heat pumps will be a core element.

Industrial Heat Pumps are Revolutionising Waste Heat Recovery with Zero CO2 Footprint

The increasing adoption of industrial heat pumps is driven by a combination of factors that make them an optimal decarbonisation solution, positioning them at the forefront of the energy transition. Their ability to decarbonise low-temperature industrial heat demand (<200°C), which accounts for more than a quarter of industrial heat energy use, opens up a significant addressable market.

By using either heat or electrical energy, these pumps can increase the temperature of waste heat to match the needs of a particular process. This allows the waste heat to be reused in the process, leading to significant energy savings and reductions in CO2 emissions.

A Growing Market with Extensive Potential for Industrial Heat Decarbonisation

The global industrial heat pump market will reach 13,150 units by 2035, up from 6,940 units in 2023. Global revenues will reach $9.18 billion by 2035, increasing at a compound annual growth rate (CAGR) of 5.2% from 2024 to 2035. In 2023, China, the United States, and numerous markets in Europe will account for 75% of global unit sales and revenues. The food and beverage, pulp and paper, chemicals, pharmaceuticals, metals, and textiles industries account for a significant portion of demand. Emerging applications are also gaining traction, including carbon capture, data centres, and grid-ancillary services combined with thermal energy storage systems.

Large Industry Universe Dominated by Global Players, While Emerging Companies Make Inroads Through Product Development Efforts

Large players have gained shares due to their strong compressor market domain, sustained product developments, and international foothold. Strategic alliances and partnerships will strengthen companies' market presence. Emerging players are making the already highly fragmented market more competition-intensive and R&D-focused. The number of players in the market above 100°C has been increasing, however, the very high-temperature range above 160°C is where new participants are challenging the legacy competitors. In this range, companies are looking to prove their capability to produce high-temperature heat pumps for a range of common process heat and hot water applications with zero ozone depletion potential (ODP) and global warming potential (GWP).

Neha Tatikota, Industry Analyst at Frost & Sullivan, comments: "Key factors for success include optimising costs, driving product innovation, focusing on refrigerants with lower GWP, enhancing energy efficiency and performance, and improving localisation. Product development emphasises integrating oil-free compressors, steam-generating heat pumps, and plate heat exchangers. Strong customer relationships, tailored solutions, an extensive distribution network, partnerships with compressor manufacturers, ongoing research and development, and support towards policy frameworks are essential for maintaining competitiveness."

"These factors are crucial for heat pump companies to enhance their capabilities, creating opportunities for product differentiation," Tatikota added. "The industrial heat pump sector is expected to experience moderate growth, with increasing emphasis on product development, particularly in the high-temperature ranges."

Europe will be the main hub for industrial heat pump expansion, with a growing focus on high-temperature, high-efficiency heat pumps. National incentives and subsidies will play a critical role in accelerating the transition of European industries. Market growth in Europe is projected to surpass that of the APAC region by 2025, with the gap expected to widen further.

Frost & Sullivan forecasts strong demand in Europe, fuelled by the push for industrial electrification and decarbonisation.

To stay ahead in the fast-expanding industrial heat pump landscape, find out more about the growth opportunities here.

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Kristina Menzefricke

Marketing & Communications

Global Customer Experience, Frost & Sullivan

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