In some mature heating markets, heat pumps already have a cost advantage over gas-fired boilers, according to the International Energy Agency's (IEA) recent report The Future of Heat Pumps.

The report states: "Based on average equipment prices and fuel prices (forecast) in 2021...even without subsidies, it is cheaper to use new heat pumps to heat the average home in cold weather than to use natural gas condensing boilers in most major heating markets. "

According to the International Energy Agency, subsidy-free heat pumps are already more cost-competitive than gas-fired boilers in countries such as the United States, Canada, Japan, Italy and China. However, in markets such as the UK and Germany, heat pumps still rely on subsidies to be cost-competitive.

"Even though heat pumps are already the cheapest heating option in terms of life-cycle costs, they rely on financial incentives such as grants and low-interest loans to ease the initial cost Add heat pumps to buildings.”

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The International Energy Agency found that more than 30 countries around the world already offer financial incentives for heat pumps, and these countries together account for more than 70% of today's heating needs. The agency expects heat pump sales to hit another record high in 2030, following sales growth of nearly 15% in 2021. Last year, sales of heat pumps in the European Union increased by about 35%, followed by North America, Japan, South Korea, and China, with growth rates of 15%, 13%, and 12%, respectively.

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However, the report states that heat pumps will only account for 10% of global building heating demand in 2021. Currently, the total installed capacity of heat pumps in residential and non-residential buildings exceeds 1000 GW, of which North America accounts for almost half. Europe has the second largest installed capacity, followed by Japan, South Korea and China. The rest of the world has less installed capacity combined than any of these countries.

"Many pumps are mainly used for cooling during the warmer months, but there are still several months of the year when they are mainly used for heating," the report said. However, due to long-term policy support, the penetration of heat pumps is currently highest in the coldest regions of Europe , meeting 60% of building heating needs in Norway and 40% in Sweden and Finland.”

European heat pump sales could soar from 2 million in 2021 to 7 million by 2030 if governments succeed in advancing their emissions reduction targets and energy security targets, the International Energy Agency said. The region is expected to have nearly 500 GW of installed building heat pump capacity by 2030. The agency predicts that China's installed capacity will show the strongest growth between 2021 and 2030, and surpass Europe in 2030 to become the world's second largest heat pump market. North America is expected to maintain its leading position in the market then.