Heat pumps heat up as President Lee's backing spurs second round of government support

A heat pump product by Kyung Dong Navien [Kyung Dong Navien]

The heat pump market is stirring as President Lee Jae Myung calls for faster adoption of the technology and the government moves to select additional products for its second round of support. Amid growing expectations that the gas boiler-dominated heating market will gradually shift toward heat pumps, Kyung Dong Navien has emerged as the most aggressive player among boiler makers in responding to the change.

Second round launched on president's push

The government is pressing ahead with heat pump policy by selecting additional eligible products following its first round, industry sources said Tuesday. The Ministry of Climate, Environment and Energy published its plan for the second product selection under the 2026 Heating Electrification Project on July 14. Manufacturers wishing to participate may apply through Monday.

President Lee said at the National Fiscal Strategy Conference on July 13 that expanding heat pump adoption is "a national task of rationalizing energy use that must be accelerated," adding that increasing the budget for the initiative should be considered. His direct mention of heat pumps and call for speed have given fresh momentum to related policy.

As the word "pump" suggests, a heat pump works by drawing in heat. It absorbs thermal energy from outdoor air and uses it for indoor heating and hot water. Unlike electric heaters that generate heat directly from electricity, heat pumps use refrigerants and compressors to transfer heat from outside to inside. Because they can deliver more thermal energy than the electricity they consume, they are drawing attention as a tool for cutting carbon emissions in building heating.

The government has designated this year as the inaugural year of heating electrification and has moved in earnest to expand heat pump adoption. The policy foundation was further strengthened in March, when air-source thermal energy was officially classified as renewable energy. The Ministry of Climate, Environment and Energy has allocated 14.4 billion won ($10.4 million) for heat pump installation support this year, covering up to 70 percent of installation costs.

Given that the program is in its early stages, the initiative is focused on relatively warm regions such as Jeju. The aim is to supply heat pumps to standalone homes that have solar panels installed or planned, reducing the electricity burden while verifying product performance and cost-effectiveness in real residential settings.

A Kyung Dong Navien air-source heat pump installed at a home in Jeju. [Reporter Boo Ae-ri]

Kyung Dong Navien, Autech Carrier make second bids

Kyung Dong Navien is the boiler maker moving most aggressively in response to the policy shift. The company views heat pumps not merely as air-conditioning and heating appliances but as next-generation heating solutions that can replace or complement conventional boilers, and has been preparing to enter the domestic market on that basis.

Having missed out on the first selection round in May, Kyung Dong Navien is staking everything on the second. In the first round, the company fell short on points due to issues related to partner suppliers whose outdoor units are manufactured in China, even though the core system had been localized.

In May, Kyung Dong Navien opened a "Heating Electrification Center" in Jeju, building a service framework that covers not only product supply but also design, installation and maintenance. Because proper design and installation — accounting for a home's structure, piping and insulation — matter as much as product performance for heat pumps, the company's nationwide service network is seen as a key competitive advantage.

Kim Yong-beom, executive vice president for sales and marketing at Kyung Dong Navien, said the company has "half a century of know-how in systems integration," adding that "a boiler is not a home appliance you can simply set down like a TV or a refrigerator — it is equipment that must be connected to water and piping."

Kyung Dong Navien has laid out a vision to sell about 210,000 heat pump units annually by 2035, planning to leverage its existing boiler distribution network and corps of installation technicians and service staff to capture the early market quickly.

Air-conditioning and HVAC company Autech Carrier is also working to secure a spot in the second selection round. "We were unfortunately not selected in the first application, but we are working to participate in the heating electrification project in the second round," a company official said.

Autech Carrier began developing an inverter hybrid boiler in 2011, before the domestic heat pump market had taken shape in earnest, and started selling it commercially in 2014. The company plans to compete in the residential heat pump boiler market by drawing on more than a decade of accumulated technology.

LG Electronics' all-in-one heat pump system boiler. [Provided by LG Electronics]

Samsung Electronics, LG Electronics join the race — but hurdles remain

The expansion of the heat pump market is also blurring the line between the home appliance and boiler industries. Samsung Electronics and LG Electronics have been targeting global heat pump markets, including Europe, on the strength of their air-conditioning and HVAC technology. As the government's heating electrification policy gains momentum, both companies are widely expected to apply the products and technology they have been selling abroad to the domestic market. Products from both Samsung Electronics and LG Electronics were selected in the ministry's first heating electrification product round in May.

Home appliance makers hold an edge in HVAC technology that delivers both cooling and heating simultaneously, as well as in inverter compressors. Boiler companies such as Kyung Dong Navien, by contrast, have a deeper understanding of Korea's ondol, "a traditional underfloor heating system," and hot-water-centered residential culture, along with heating pipework, installation and service networks. Who can first build a product and service offering optimized for Korea's residential environment is expected to be the decisive variable in the market going forward.

However, there are concerns that government support alone will not be enough to grow the heat pump market quickly. Heat pumps require not only outdoor and indoor units but also hot-water tanks and piping work, making installation costs higher than those of conventional gas boilers. The fact that the government and local authorities are covering up to 70 percent of installation costs reflects a judgment that voluntary demand is hard to secure without eliminating the upfront cost burden.

The electricity rate structure is another variable. Even if a heat pump itself is highly efficient, consumers may not feel the economic benefits they expect if residential electricity bills surge when heating demand peaks in the depths of winter.

The drop in heating efficiency as outdoor temperatures fall is also a challenge to be addressed. Because heat pumps draw thermal energy from the atmosphere, extreme cold spells place a greater load on the compressor. In response, the government plans to run the initial program centered on Jeju and southern regions, then expand the rollout based on verified performance data.

boo@heraldcorp.com