This week, Patric and Shub speak with Martin Collignon (Lun) about nothing at all when it comes to heat pumps for Europe, and climate-tech:
What's the latest on the European heat pump craze ?
What are heat pumps anyway, how do they work ?
Why software will free up a lot of installer capacity and skilled-labor hours, and make the installer life easier ?
Why thermal renovation of building stock is skyrocketing, and regulation is accelerating it towards 2050 ?
How to make money with climate-tech ?
Labor Shortage for Heat Pumps
Heat pumps are critical for decarbonizing buildings, but there is a shortage of skilled labor to install them. Software can help make installers more efficient.
Martin discusses how heat pumps will be crucial for reducing emissions from buildings, which account for 40% of energy use globally. However, there is already a shortage of skilled tradespeople like plumbers and electricians to install heat pumps. As Martin says, "We are lacking today already skilled labor and tradespeople that plumber, electricians, HVAC people in general. We are going to have even few of them in 2030 by all accounts from all the forecast that we see." Software that can help coordinate and streamline the installation process, like what Lun is building, can enable the limited skilled labor to be more efficient and complete more heat pump retrofits.
Massive Renovation Opportunity
Building renovations will be crucial to meet climate goals in Europe, as land for new construction becomes scarce. This creates a big opportunity for renovation-focused construction tech.
Patric highlights how in Germany and other European countries, no new building permits will be issued after 2050. As he says, "By 2050, every lot that will ever get built on in Germany will have been assigned a building already. So you can only renovate or tear down." So all construction will have to happen through renovation of existing buildings. This policy shift makes building renovation essential to meet carbon reduction goals in Europe. Companies focused on technologies and processes for efficient building retrofits and renovations are well-positioned to capture this massive opportunity.
Flawed Roll-up Strategy
Roll-up plays in construction tech face challenges, as acquiring small installer companies doesn't address the underlying labor shortage.
The hosts discuss how construction tech roll-ups that consolidate small installer companies have flaws. As Shubhankar says, "I think the real constraint is labor - there are not enough skilled tradespeople. Simply acquiring installer firms doesn't solve this shortage." Additionally, many installers are older and near retirement, so their skills leave when they do. Roll-ups provide economies of scale but don't expand the labor pool, which is the root issue.
Software as Assistant, Not Boss
Construction workflows are complicated with many dependencies, so software needs to act as a guide rather than dictate decisions to tradespeople.
Martin explains how every building renovation is unique and has complicated dependencies. As he says, "You need to understand the house and the home very, very well to make sure that the new system you put in will fit into the old system that exists already." Tradespeople develop an intuition from experience about how to approach problems. Software needs to act as an assistant for installers, structuring data and providing guidance, rather than attempt to prescribe solutions. The real world uncertainties mean software cannot replace human judgment and adaptability on construction sites.
Saving OEM Support Costs
OEMs spend heavily on supporting heat pump installers, so software to reduce that cost could be valuable.
Heat pump manufacturers bear significant costs for technical support of installers, since heat pump systems are complex and installers need help troubleshooting. As Martin says, "I know a lot of people look into this space, so if I can help, let me know." This creates an opportunity for construction tech firms who can equip installers with better information to do their jobs efficiently without relying heavily on manufacturer tech support.
AI Complements Humans
AI has a role in construction tech but needs niche, vertical data. It can't replace human skills and judgment on real world installations.
The hosts agree generic AI has limitations in the built world. As Martin says, "The reality is that the building and the real world is very complicated. And you might have all, it's just impossible to put enough sensors in a home and in a house to make things work." Construction is vertically specialized, so AI needs niche training data to be useful. And physical work requires human adaptability. So while AI can provide guidance, it cannot substitute for tradespeople's expertise and experience needed to handle real-world situations and varied building environments. AI is a complement but not a replacement for skilled labor in construction workflows.
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Keywords: heat pumps, building renovation, construction tech, skilled labor shortage, AI in construction, decarbonization, climate goals, retrofitting, tradespeople, software automation, workflow optimization