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

The United Kingdom HVAC Market size is estimated at USD 2.52 billion in 2024, and is expected to reach USD 3.17 billion by 2029, growing at a CAGR of 4.70% during the forecast period (2024-2029).

Key Highlights

• The HVAC market in the United Kingdom is burgeoning; this market is crucial for ensuring indoor environments are both comfortable and healthy. With a strong focus on energy efficiency and sustainability, the market is at the forefront of technological advances and innovative solutions.
• Energy-efficient heating systems have become increasingly popular in recent years. For instance, heat pumps are gradually becoming an alternative to traditional gas boilers. These devices extract heat from renewable sources such as the air or ground and efficiently warm buildings. By using renewable energy sources instead of fossil fuels, heat pumps contribute significantly to reducing greenhouse gas emissions. Thus, the government is also taking the initiative to adopt heat pumps in the country, further creating the need for installation services and supporting market growth.
• One of the main drivers for the growth of this market is the increasing awareness about climate change and its impact on the planet. As a result, significant efforts have been made to reduce carbon emissions and adopt greener practices. The UK government has set ambitious targets to achieve net zero carbon emissions by 2050, which has created many opportunities for businesses operating in the HVAC market.
• The HVAC market is experiencing growth and change but needs more skilled labor. The shortage is mainly caused by the aging workforce in the United Kingdom, including many baby boomers who are currently HVAC technicians and installers and are set to retire soon. According to the United Kingdom's Office for National Statistics, as of October 2023, the United Kingdom was facing a labor shortage of 12.2% in terms of workers in service industries and 11.3% in the construction sector.
• Macroeconomic factors like fluctuations in energy prices can impact the demand for energy-efficient HVAC systems. Higher energy prices typically drive consumers and businesses to invest in more efficient technologies to reduce operating costs. In addition, policies related to environmental protection, energy efficiency standards, and building codes significantly impact the HVAC market. Stricter regulations often lead to increased demand for compliant and efficient HVAC systems.

United Kingdom HVAC Market Trends

The Residential Sector is Expected to Witness Significant Growth

• The construction sector is vital in driving the demand for HVAC systems in the United Kingdom. With the increase in the construction of residential buildings, the demand for HVAC equipment and services is rising consistently in the country. According to JLL UK, in the United Kingdom, housing projects are expected to increase by 20,000 units in 2025 from the preceding year. Subsequently, this growth is set to accelerate, with new construction starts expected to surge to 220,000 by 2028.
• The market is driven by the vast number of immigrants residing in the country demanding new homes. Furthermore, the market is driven by government initiatives to provide affordable housing and fulfill the housing demand in the country. According to the National House Building Council, Southeast and London emerged as the leading regions for NHBC housing registrations in 2023.
• Population growth in the United Kingdom is fueling the demand for residential HVAC services, primarily through the need for new installations. The maintenance approach for residential HVAC systems in the United Kingdom leans heavily toward proactive and preventative measures to avoid potential issues. These measures include upkeep and rectifying various HVAC system components, such as addressing leaks and corrosion and ensuring optimal air distribution.
• The migration of people from rural to urban areas has surged, prompting government and private sectors to boost investments in housing, commercial construction, and infrastructure. This uptick in construction activities boosts the demand for new heating, ventilation, and air-conditioning systems. As per the UK government, housing benefits expenditure is projected to reach around GBP 15.6 billion in 2023/24.

HVAC Equipment is Expected to Hold Significant Market Share

• The UK government has implemented stringent energy efficiency regulations, such as the Energy Performance of Buildings Directive (EPBD) and minimum energy efficiency standards (MEES). These regulations encourage the adoption of HVAC equipment in new and existing buildings.
• In October 2023, the British government took steps to expedite the adoption of heat pumps. The government raised heat pump grants by 50%, from EUR 5,000 (EUR 5,795) to EUR 7,500 (EIR 8,692). Through the Boiler Upgrade Scheme, the government offers grants to incentivize the transition from traditional fossil fuel heating to eco-friendly options. Eligible replacements encompass air-source heat pumps, ground-source heat pumps, and, in specific cases, biomass boilers.
• By 2028, the UK government expects to have 600,000 heat pump installations annually. Furthermore, the United Kingdom is undergoing a green revolution in its heating and cooling industry owing to a notable upswing in the adoption of heat pumps, driving the demand for HVAC equipment. The UK government asserts that a significant portion of the commercial and residential sectors in the UK are viable for heat pump installations. The government analysis suggests that approximately 90% of homes in Britain possess the necessary insulation and electrical infrastructure to support a heat pump.
• Government subsidies in the United Kingdom significantly drive demand for HVAC equipment. For instance, in May 2024, the UK government introduced a subsidy program to accelerate the uptake of heat pumps in residential settings. This initiative, which quickly gained traction, offers a substantial EUR 7,500 incentive to homeowners in England and Wales. The grant aims to help the transition from traditional fossil fuel heating systems to more sustainable heat pumps.

United Kingdom HVAC Industry Overview

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

• April 2024: Mitsubishi Electric Hydronics & IT Cooling Systems and Mitsubishi Electric Europe BV recently completed the full acquisition of AIRCALO, an air-conditioning firm based in France. In the competitive landscape of hydronic HVAC systems, the ability to offer customized solutions is paramount, especially given the trend toward bespoke products for specific installation sites. AIRCALO stands out by customizing the central unit of its fan coil units (FCUs) and bundling peripheral components and control equipment.
• January 2024: Daikin Air Conditioning UK Ltd acquired the British service company Robert Heath Heating Ltd. This strategic move bolstered Daikin's reach in the United Kingdom's residential heating sector. The acquisition aligns with Daikin's vision of evolving into a comprehensive solutions provider and underscores its commitment to delivering top-notch customer service. This was Daikin's most significant investment in the UK.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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