By Nikolaus J. Kurmayer | EURACTIV.com
04-11-2022 (updated: 04-11-2022 )
Heat pump and air conditioner producers suffer from the chip shortage just as much as carmakers do. [Shutterstock/AliaksaB]
Europe’s move away from gas towards heat pumps, which suffers from various bottlenecks, is subject to another scarcity that may impact production volumes: the global chip shortage.
Buildings are responsible for around 40% of the EU’s energy consumption and 36% of its greenhouse gas emissions.
Heat pumps, which come in many shapes and sizes, are set to play a significant role in decarbonising heat while increasing efficiency. Some work off residual heat from underground, while others use air or water, but they all have one thing in common: computer chips are necessary for their production.
Chips, or semiconductors, have been in strong demand, with limited supply, since late 2020. When car manufacturers restarted production, a resurgence of COVID-19 in Asia’s key chip producer regions shuttered factories again.
This resulted in a global chip shortage. And while reports focussed on impacts to the automotive industry, which requires 100s of chips per car, other industries also felt the pinch.
“In addition to high demand, other influences on the global procurement market are leading to a shortage of certain components (semiconductors, pumps, etc.),” explained a spokesperson at Bosch Thermotechnology, one of Germany’s heat pump manufacturers.
“Bosch Thermotechnology cannot completely escape this market trend,” they added.
Russia’s war on Ukraine may have also compounded these issues that originally stemmed from the COVID-19 supply squeeze.
“There are also additional shortages due to production stoppages at other manufacturers and disruptions in the supply chain caused by Corona and the war in Ukraine,” the spokesperson added.
So far, the industry has remained quiet about the issue, with most large heat pump makers declining to comment when approached by EURACTIV.
Others merely acknowledged “component shortages” in their business without elaborating further. One story making the rounds in the industry is of a heat pump manufacturer who was offered to trade fans in exchange for chips.
Sky-high gas prices have sent demand for heat pumps booming across Europe, exposing a range of bottlenecks limiting industry’s ability to deliver, including a shortage of skilled labour, as well as the need to simultaneously insulate buildings to ensure maximum efficiency.
Kai Schiefelbein, the CEO of Stiebel-Eltron, is among the rare company bosses who have gone on the record to address the issue.
“The microchip shortage hits us twice,” Schiefelbein told Capital. “Where we use them ourselves in our controls – and with our suppliers,” he added.
Stiebel-Eltron has been forced to stop production at times, due to missing chips.
Especially in Germany, where the car industry is chip-hungry and weighs heavily on the economy, heat pump makers complain about being left out.
“Chips are primarily being allocated to the automotive industry,” Max Viessmann, CEO of heat pump maker Viessmann, told Fortune.
“Do we need more cars or do we need more heat pumps to make our households and industrial processes become independent [of fossil fuels],” he bemoaned.
A massive surge in domestic demand may add to their worries. As of 2024, the German government aims to have 500,000 heat pumps installed annually, up from about 150,000 in 2021.
Hoping to achieve its 2024 target of producing 500,000 heat pumps a year, the German government is pushing the industry to make necessary investments amid fears it will end up like the solar panel industry.
Going forward
While analysts expect the chip shortage to come to an end in 2022, the EU has already started taking the matter in its own hands.
In February, the European Commission tabled its European Chips Act with the objective of ramping up production of semiconductors in Europe.
The shortages “made more evident the extreme global dependency of the semiconductor value chain on a very limited number of actors in a complex geopolitical context,” the EU executive said when it unveiled the proposal.
To address the EU’s dependence on foreign chipmakers, the act wants to facilitate the establishment of first-of-a-kind facilities, cutting-edge fabrication plants – or mega fabs – by co-financing their construction.
The Czech Republic, which currently holds the EU’s six-month rotating presidency, is aiming to close a deal on the proposal by 1 December.
The Czech presidency of the EU Council circulated a second compromise on the Chips Act last week, addressing the outstanding points such as the proposal’s scope, the formation of consortia, and emergency measures.
[Edited by Alice Taylor and Frédéric Simon]
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