BELGIUM: Daikin Europe has readjusted its heat pump sales forecasts for 2024 after a continuing shortfall in European demand and no expectation of a significant demand increase this year.

In September, Daikin Europe said it would not be renewing the contracts of 500 temporary employees at its Ostend heat pump plant, due to a sharp fall in heat pump sales. In addition, it was to ask 870 permanent Ostend workers to take 12 days of economic unemployment before the end of December. It has now announced 18 days of additional temporary technical unemployment between January and March 2024 for all operators at the Ostend factory.

The move is a further reaction to a continuing decline in heat pump sales. After a good first quarter, most European and Nordic heat pump markets experienced declining heat pump sales last year. Analysis by the European Heat Pump Association of sales in ten countries over the first nine months of 2023 recorded declining sales of space and hot water heat pumps after a good first quarter.

Daikin confirmed that the residential heat pump heating market had been going through a slowdown in demand since the spring of 2023.

“Daikin has decided to introduce 18 days of further temporary technical unemployment for its factory operators in Ostend, Belgium. The measure is intended to cap the production of heat pumps to newly forecasted levels,” the company said in a statement.

“Based on the current market situation and analysis of economic indicators, Daikin does not expect a significant demand increase in 2024,” it added.

Although heat pumps are seen by the European Commission as an important solution to achieve the EU Green Deal’s carbon neutrality ambitions, Daikin blames several converging factors for putting a stop to the growth in demand in Europe – the sharp drop in gas prices, a scaling back of support for heat pumps by several European governments, the European Commission’s postponement of the heat pump action plan and high inflation and higher interest rates.

“Daikin calls on all actors to continue to address barriers that slow down the transition to low carbon heating, such as the price ratio of gas versus electricity,” the company said, calling for a level playing field for the technology.

“The clean energy transition is an effort, we as society must make, one way or another. It will benefit society as a whole, create sustainable jobs and reduce dependency on fossil fuels. Even if today we go through a slowdown in demand, we believe in heat pumps as key technology for low carbon heating and cooling of buildings, and remain ambitious for the future,” said Daikin Europe  president Toshitaka Tsubouchi.

In response to the positive policy recognition of the heat pump technology and the rapidly growing demand in 2022 and prior years, Daikin invested in its European heat pump capacity, and is investing €300m in a new residential heat pump factory in Łódź, Poland. The site is currently under construction and is set to open in the autumn of 2024.