The Heat Pump Market in Australia

Australia has a considerably varied climate with four full seasons across most of the continent. As such, efficient, renewable, and sustainable heating and cooling are top priorities for property owners. Heat pump technology is at the forefront of the push for energy-efficient, cost-effective, and environmentally friendly heating/cooling systems.

A heat pump uses electricity to extract ambient heat from air, ground, or water. The appliance redistributes this heat via a specialized reverse-refrigeration mechanism to heat interior spaces and water. Heat pumps offer various benefits over traditional heating solutions that make them an attractive option for Australian consumers. In addition to reducing overall carbon emissions, heat pumps have highly efficient energy-to-heat conversion capabilities.

Heat pumps are also cost-effective long-term due to relatively low operational costs, minimal maintenance, and longevity. For many Australian households and businesses, heat pumps represent a viable alternative to fossil fuel-based solutions such as boilers, and furnaces. Herein is an in-depth look into the Australian heat pump market and the factors that have influenced its growth in recent years.

An Overview of the Australian Heat Pump Market

Australia is among the Asia-Pacific countries that have recorded a significant increase in heat pump adoption over the past few years. Currently, Australia is one of the major heat pump markets in the Oceania region. The primary end users of heat pumps in the country include households, offices, industrial complexes, hotels and resorts, gyms and spas, education institutions, healthcare institutions, and food services.

Heat pumps are primarily used for space heating, air-conditioning, and hot water systems like sanitation and bathing. These use cases have helped position heat pumps as valuable heating/cooling assets for many homes and buildings. The main sales channels in Australia for heat pumps include retailers, online vendors, dealers and contractors, and direct sales.

Residential and commercial sectors employ various types of heat pumps. However, the two types that are mainly used for interior and water heating include air-source heat pumps (air-to-air and air-to-water) and water-source heat pumps.

The heat pump market in Australia has witnessed significant growth in recent years and is expected to register further growth in the near future. For instance, the number of annual air source heat pump installations in Australia increased steadily between 2015 and 2020. According to Statista, there were about 7,800 annual hot water heat pump installs in 2015.

By 2020, the annual installs peaked at around 32,000. This steady yearly install growth translated into an impressive overall heat pump market by 2022. Clean Energy Regulator reported that approximately 423,000 air source heat pumps had been installed in the country in 2022.

Clean Energy Regulator is one of the independent statutory authorities tasked with accelerating Australia’s carbon abatement goals. These bodies administer schemes and policies that the Australian government legislates to reduce, offset, and manage the country’s carbon emissions.

The policies play a crucial role in incentivizing property owners to install energy-efficient appliances such as heat pumps.

The future of the Australian heat pump market also looks highly promising. According to market research groups, the air source heat pump market is projected to register impressive compound annual growth rates (CAGR) over the 2023-2028 forecast periods. Increasing adoption of heat pump technology and positive market forecasts mean plenty of untapped opportunities are in store for established heat pump vendors like SPRSUN.

Further market developments will ensure heat pump solutions remain highly sought after in Australia. The good news is that trusted global vendors like SPRSUN can meet this increased demand. SPRSUN supplies a wide variety of high-quality heat pump systems including air-source heat pumps, heat pump water heaters, and inverter heat pumps.

Reasons behind Australia’s Heat Pump Market Growth

The continued growth of the heat pump market has been attributed to various important factors. These factors include increased awareness and preference for clean renewable energy, government decarbonization policies, schemes, and rebates, heat pump features and capabilities, and low long-term operational and maintenance costs. Below is a comprehensive overview of these key market drivers:

1. Awareness and Preference for Clean and Energy-Efficient Technologies

There has been an increasing social and political push for energy efficiency, decarbonization, and environmental protection in Australia. Heating systems that use fossil fuels contribute to greenhouse gas emissions. Many Australian households show an increased preference for clean, renewable, and efficient energy solutions.

Heat pumps don’t utilize fossil fuels like oil, gas, coal, or propane. They operate on low amounts of electricity to generate heat and are significantly more efficient than conventional heating solutions. The current global energy crisis has also been a reminder of the need to shift toward cheaper, cleaner, and more reliable energy solutions.

Many Australians are more aware of the beneficial aspects of heat pumps in this regard. Heat pumps conserve energy, reduce greenhouse gas emissions, and are cost-competitive. This has drawn the interest of a growing number of consumers in Australia.

2. Government Programs and Policies

Governmental support is a crucial determinant of heat pump market trajectories in many regions. The Australian government has implemented various federal and state energy-conservation programs and policies. These policies provide financial incentives and rebates that encourage the adoption of heat pump technology.

For instance, the relatively initial cost of a heat pump has been a major challenge preventing widespread adoption for many households. With government programs such as the Retailer Energy Productivity Scheme (REPS), many residences can install new heat pumps at significantly reduces prices.

Further, under the Victorian Energies Upgrade (VEU), select property owners can replace an electric hot water system with a heat pump at no cost. Overall, Australia has a regulatory landscape that provides policy support and promotes the adoption of energy-efficient and decarbonizing solutions like heat pump technology.

3. The Australia Renewable Energy Target (RET)

The Renewable Energy Target (RET) continues to play a key role in boosting the heat pump sales in Australia. The aforementioned Clean Energy Regulator oversees the RET, which comprises two schemes - large and small scale. These schemes aim to ensure the ecological sustainability of renewable energy sources and reduce greenhouse gas emissions in the electricity sector.

The Small-scale Renewable Energy Scheme (SRES) serves as a great incentive for Australian households to adoption of heat pump technology. SRES achieves this through online certificates for renewable energy sources based on the amount of energy the sources, like heat pumps, can displace. The Small-scale Technology Certificates (STCs) certificates are created in an online registry for correctly installed heat pumps among other energy-efficient appliances.

One certificate is equivalent to 1 megawatt hour (Mwh) of electricity displaced through the installation of a heat pump. SRES creates a financial incentive for property owners to install eligible small-scale appliances like heat pumps. The number of STCs a heating system can create is based on geographic location, the type of system, and the capacity/size of the installed system.

Under the scheme, STC ownership is typically vested in the owner of the installed heat pump. It can also be assigned to retailers or installers, who help with the purchase and installation. They offer considerable discounts in exchange for the creation and sale of STCs.

The SRES offers a notable financial benefit based on the current prices of STCs, ensuring the initial prices of heat pumps are within reach for many households. Over time, the Renewable Energy Target schemes have encouraged the installation of more heat pump systems across Australia.

4. Durability and Low Maintenance Costs

Heat pump systems are highly durable and feature advanced technologies that help keep them operational for extended periods. A top-quality heat pump system has a long lifespan and can function efficiently for more than 15 years. Heat pumps have a higher initial purchase cost compared to conventional heating systems. However, installing these appliances turns out to be more cost-effective over time.

Their durability means that property owners in Australia don’t need to replace their heating systems frequently. Heat pumps also require very little maintenance due to their straightforward operation. Maintenance can be a hassle and adds unnecessary costs for households.

Australian households are more aware of these cost benefits and increasingly opt to install heat pumps over conventional water heating solutions. Upgrading to an air-source heat pump, for example, can reduce water heating costs by up to 70 percent. Australian consumers can save hundreds of dollars yearly on utility bills.

5. Heat Pumps Offer Consistent Heating

A good heating system should provide a consistent heating experience. With traditional water heating systems, the heating capabilities often reduce after continued usage, regardless of the size of the water tank.

As such, a household may run out of hot water rather quickly. Heat pump water heaters offer a consistent heating experience. These appliances have high-efficiency compressors that accelerate heat exchange rates.

With the proper installation of a high-quality system, Australian households can have constant access to hot water as long as they need it. As such, many consumers are making the switch to heat pumps to enjoy these benefits and more. This preference gradually drives Australia’s heat pump market growth.

Conclusion

For many Australian households and businesses, heat pumps have proven to be a clean, cost-effective, secure, and sustainable alternative to conventional heating systems. This key factor has contributed significantly to the impressive growth the heat pump market has realized in recent years.

Government policy plans and incentives have also helped consumers overcome initial adoption hurdles and enjoy the benefits of heat pump technology. The growing role of heat pumps in renewable energy goals means the Australian heat pump market should continue its positive trajectory in the coming years.