Here’s a statistic worth celebrating: the number of air-source heat pumps (AHSP) installed since 2011 has just ticked over half a million, with more than half of that number installed in the past three-and-a-half years.
The rise in popularity of heat pumps has parallels with the Australian rooftop solar industry, which enjoyed stellar growth rates in the late Noughties.
As illustrated in the SunWiz chart below, since 2020 the number of heat pumps deployed each year has been growing by 50%, while the number of rooftop solar systems hasn’t grown at anywhere near the same rate.
Part of that is due to the relative maturity of the PV industry – 50% annual growth rates are difficult to maintain when you’re deploying 300,000 systems per year.
Meanwhile, the stunning growth rate in heat pumps is already starting to slow down. So far this year, installations are up by 13% on a year-to-date basis compared to 2023.
Nevertheless, the growth spurt means the PV market is no longer an order of magnitude bigger than the market for air-source heat pumps (ASHP). Last year there were four heat pumps installed for every solar hot water system.
SunWiz believes heat pumps – with their lower cost, neutral visual amenity, and significant bill reduction contribution – are eroding some of the market from PV.
This means solar retailers, already contending with reduced average sales prices due to the fall in panel prices, face competition from heat pump sales.
Who’s installing heat pumps?
Many solar retailers recognise the wisdom of the old adage, “if you can’t beat ‘em, join ‘em”. Data shows that half of ASHP installations are performed by companies that also install rooftop solar.
But there are still a lot more PV companies that aren’t installing ASHP (yet) – only 20% of PV installers are also installing heat pumps.
That said, the chart below shows most ASHP installation volume is being done by specialists, even if they are doing some rooftop solar too.
Around 50% of Victorian ASHP installation is done by the top nine companies in the market, and only one of those installs Hot Water and PV in equal proportion.
Meanwhile, the market supply chain is changing too, with a “changing of the guard” of ASHP manufacturers. As of early 2024 there’s a new #1 ASHP manufacturer, with the third-ranked manufacturer also making fast gains.
Part of this dynamic is also playing out in the average size of hot water tanks, which has been declining considerably.
Who’s buying heat pumps?
What’s immediately observable is that households in regional Victoria and north-western Australia like heat-pumps and PV in almost equal measure.
In the cities, Sydney’s outer west is where heat pumps are being installed most, whereas Melbourne has a comparably even distribution of heat pump installations but with preference for rooftop solar over ASHP in the metropolitan area.
In Adelaide and Perth, meanwhile, ASHP sales and installation appear to remain a missed opportunity.
Warwick Johnston is managing director of SunWiz. SunWiz monthly subscriptions now cover ASHP + Solar Hot Water, ESS, and PV, with topics covering market size, manufacturer market share, leading retailers, prices, and locations.
