Germany HVAC - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2024 - 2029)

The Germany HVAC Market size is estimated at USD 4.23 billion in 2024, and is expected to reach USD 5.61 billion by 2029, growing at a CAGR of 5.81% during the forecast period (2024-2029).

Key Highlights

• The factors contributing to the expansion of the market in Germany being analyzed include the adoption of advanced monitoring systems, smart technologies, and building automation systems, a greater emphasis on cost savings and maintenance, and improved maintenance and personalized services for HVAC systems.
• Already acknowledged as a mature market for energy efficiency and a green economy, Germany is doubling its efforts in energy diversification and introducing regulations and technologies to tackle climate challenges in HVAC and other sectors. For instance, the government has announced that it would cover up to 70% of the costs of new and sustainable heating systems from 2024, which may let people wait with the applications. Thus, increasing government focus on installing energy-efficient HVAC solutions further drives the role of the HVAC market in the country.
• In addition, the subsidy for heat pumps provided by BAFA in Germany is administered by the Federal Office for Economic Affairs and Export Control. It covers up to 50% of the total installation cost, with a maximum of EUR 3,000 for single-family residences and EUR 6,000 for multi-family homes.
• Integrating new HVAC technologies with existing building infrastructure can be complex and expensive. Issues may exist, especially in older buildings, which can deter upgrades. In addition, although rising energy costs drive demand for energy-efficient systems, fluctuating energy prices can also create uncertainty, impacting investment decisions. Dependence on traditional energy sources can slow the transition to more sustainable HVAC solutions, thus hindering the market's growth.
• Macroeconomic factors like government initiatives and subsidies promoting the adoption of energy-efficient HVAC systems play a significant role. Policies like the energy saving ordinance (EnEV) and incentives for green buildings drive the demand for modern, energy-efficient HVAC systems. In addition, programs offering financial incentives for retrofitting old systems with new, efficient ones boost market growth.

Germany HVAC Market Trends

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.

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.

Germany HVAC Industry Overview

The German HVAC market is fragmented, with the presence of major players like Carrier Corporation, Robert Bosch GmbH, Midea Group Co. Ltd, Johnson Controls International PLC, and Daikin Industries Ltd. Players in the market are adopting strategies such as partnerships, mergers, innovations, investments, and acquisitions to enhance the product offerings and gain sustainable competitive advantage.

• January 2024: Apleona, headquartered in Gerlingen near Stuttgart, Germany, finalized its acquisition of Air for All, a prominent ventilation and air conditioning company. Air for All specializes in cleanrooms and laboratories and caters primarily to clients in the automotive and healthcare sectors. This strategic move bolsters Apleona's technical systems portfolio and significantly enhances its footprint in the lucrative southwest region of Germany.
• October 2023: Vargas Investment Group launched Aira, a direct-to-consumer company that provides heat pumps through a monthly subscription model. Aira debuted in Germany in September, inaugurating a training academy in Berlin. By acquiring Garant Warmesysteme, Aira extended its reach from Berlin-Brandenburg to Saxony and Bavaria in Germany. Aira's ambitious goal is to install heat pumps in 5 million European households within the next decade, with a significant focus on 1 million installations in Germany.

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