03 April 2017
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 | Dave Pearson of Star Renewable Energy explores the obstacles to progress for heat pumps and asks for people to get involved in the debate. You would have to be living in a cave to have missed the drive for a more sustainable world. And yet despite lots of good things, a cluster of bad things and some unintended failings leave us staring down the barrel of missed EU targets and missed Climate Change Act targets. Whatever success we have seen has been largely focussed on the electricity generation sector. |
We have European targets and guidance such as the Renewable Energy Systems Directive. It led to the UK Government supporting renewable heat for heat pumps and biomass and that led to lots of biomass! Why have we not seen much heat pump activity?
Let’s get the more commonly stated “barriers” out first.
Technical
Society has four segments. New vs Old and Big vs Small buildings. Heat pumps don’t work and don’t get warm enough for older buildings is often cited as the main barrier. There are enough examples to set that aside as the “fundamental barrier”. Sure, we want higher efficiency and better temperature reach from smaller system but this is in my opinion being used as a smokescreen (bad pun!) to allow the status quo, i.e. burning stuff, to prevail. Personally I would make smaller heat pumps a bit more expensive and better (not cheaper) but in a discretionary market this doesn’t happen. More in the political part relating to a squeeze on gas (or lack of!) Drammen in Norway runs at 90C with a COPh of 3.05 sourcing heat from a fjord!
Environmental
A curious barrier across several topics, with noise an oft-stated problem. Sort out the economics and business models and they will be quiet enough. Larger river source heat pumps cool the river and we are told this is a problem… except the (Scottish) Environmental Protection Agency don’t agree - they think they are a good idea. So that’s not the issue. Working fluids? This is important but the non-adopters don’t care for the options so that isn’t the barrier. Air quality deserves a mention. Our cities are poisonous because we burn stuff. In cars and in buildings. No other reason. We need to get a grip and stop the root problem. Heat pumps would help. Sure, some bits will be harder but we aren’t even doing the easy stuff.
Commercial
A really odd one. The Renewable Heat Incentive (RHI) pays about 4.5p/kWh (gas costs about 2.5p/kWh) and yet we still don’t see much uplift. The spark gap (ratio of electrical cost over gas cost) is about 3.8 in the UK. We see some of the lowest gas costs in Europe and the worry is that there is a big drive on that bold statement of “eradicating fuel poverty”. We also have to be realistic that unless gas use is prohibited or prohibitively expensive then all we will see is some movement in new build sectors (if planning grew some teeth) and some modest uptake from subsidies. Neither get us to 2035 targets.
So we have to see project costs analysis shift. Too much focus is on capital costs (odd, as they make up only 15% of life costs) but two things should be noted here; we aren’t dealing with an immature technology like PV or LEDs where uplift in volume will lead to a price crash. Secondly, even if the price halved. the projects being proposed and adopted now will not be viable beyond the RHI end (circa 2020/21). So we have to see either much cheaper electricity or much more expensive gas or no gas. Why do people connect to district heating? Invariably because they have to. Why do they purchase from district heating (it isn’t usually mandatory)? Because it is advantageous financially versus the status quo which is rarely if ever gas and they probably will be paying 75% more than gas costs.
The last observation on commercial was related to project funding. A workshop at the European Heat Pump Association (EHPA) highlighted that we currently allow gas providers to “get away with” just supplying gas… and a bill. Why did the wind industry rocket? It was partly subsidies but also obligations on the generators to support deployment or pay a fine. So we need an obligation, as I believe exists in Austria, where as well as a gas bill the utility company has to offer to deploy a heat pump free of capital cost and enter a heat purchase agreement.
Would this work? Here’s what I think would happen and it transcends many of the barriers. Firstly, it would get every utility to pay attention. Secondly, as homeowners could have heat cheaper from, say, a heat pump than gas and provided by a reputable company, they would likely go for it. Then the utilities would establish professional deployment teams who didn’t have to chat up the customer or lose tenders, didn’t have to vary the offering (they would be the owner) but did have volumes that drove deployment costs down. They would then have a collective mass to allow aggregation and demand side management so supporting the grid whilst taking the support available now from the RHI. In short they would side step some of the “nasty big 6” PR pressure, enter into longer term contract for the heat pump bit and scoop some funds and in short make money and improve the consumer engagement. The Government would see progress so win-win-win. Funding models are crucial to deployment as even within industry a 7 year breakeven point is too long for internal funds- blame the stock market. However a 10 year breakeven is a good investment so I can’t say commercial is the barrier… it’s just another challenge.
Human
Human factors of course have a part to play but we live in a democratic society. This basically means most people will behave to suit themselves (nearly) within the rules. Some will be more adventurous but ultimately if it comes down to a balance of risk and reward, numerous studies show that risk weighs more highly- nine fold. We can without changing the fundamental economics or technology shift this ratio by increasing adoption and hence awareness and then we see people starting from a position of “I’d like one too!” We also reduce the perception of risk as more good exemplars will exist. So it comes down to the chicken and egg.
Political
Politics is a terribly complex business with front of house politicians and back of house strategist civil servants. The problem is the electoral cycle and perhaps investment cycles. We have agreed we need to decarbonise and we have agreed this means less gas. We can also agree that free-market electricity will never be as cheap as free-market gas (you make half a unit of electricity from a unit of gas using an expensive power station - the maths ain’t hard.) So we need to see gas rising in price or being prohibited.
This brings me back to old vs new. Here’s some reality of the enormity of the task… we can’t even decide not to use gas boilers in new build houses! The oddity of the builder receiving a “per plot” fee from the gas company needs some scrutiny but the builder themselves are a fairly predictable beast. They want to build the most attractive houses, as quickly as possible and sell for as much profit. Forcing a heat pump on them gets a predictive response. So the government need to decide. “Do we want to see this happen or not?” Both individual heat pumps and district networks can work but not if you let the builder decide. Personally, a bit like the utility company, I’d help them gain something with a side portion of a bit of pressure and see if they really are so against it. A bit of public perception of “hey my house has a nasty gas boiler” would help but that comes back to humans and perception.
By far the biggest barrier is that our political system is doing nothing to encourage people away from gas and nothing to force them away from gas. All the effort (and I do think there has been loads) has been on encouragement onto the new thing but change doesn’t happen like that. Think smoking or polybags or seatbelts. We need a government ready to behave like a dictator or a parent. My kids like sweets and they are allowed them, but not for breakfast.
Let's get together
I don’t expect you to agree with everything I’ve said, and I certainly don’t think I’ve covered all the barriers. So let’s get together and explore it as a group.
Take this quick survey – even if you thought the article was rotten (you get to say why!)
http://tinyurl.com/Barriers2HP
Let’s get the more commonly stated “barriers” out first.
Technical
Society has four segments. New vs Old and Big vs Small buildings. Heat pumps don’t work and don’t get warm enough for older buildings is often cited as the main barrier. There are enough examples to set that aside as the “fundamental barrier”. Sure, we want higher efficiency and better temperature reach from smaller system but this is in my opinion being used as a smokescreen (bad pun!) to allow the status quo, i.e. burning stuff, to prevail. Personally I would make smaller heat pumps a bit more expensive and better (not cheaper) but in a discretionary market this doesn’t happen. More in the political part relating to a squeeze on gas (or lack of!) Drammen in Norway runs at 90C with a COPh of 3.05 sourcing heat from a fjord!
Environmental
A curious barrier across several topics, with noise an oft-stated problem. Sort out the economics and business models and they will be quiet enough. Larger river source heat pumps cool the river and we are told this is a problem… except the (Scottish) Environmental Protection Agency don’t agree - they think they are a good idea. So that’s not the issue. Working fluids? This is important but the non-adopters don’t care for the options so that isn’t the barrier. Air quality deserves a mention. Our cities are poisonous because we burn stuff. In cars and in buildings. No other reason. We need to get a grip and stop the root problem. Heat pumps would help. Sure, some bits will be harder but we aren’t even doing the easy stuff.
Commercial
A really odd one. The Renewable Heat Incentive (RHI) pays about 4.5p/kWh (gas costs about 2.5p/kWh) and yet we still don’t see much uplift. The spark gap (ratio of electrical cost over gas cost) is about 3.8 in the UK. We see some of the lowest gas costs in Europe and the worry is that there is a big drive on that bold statement of “eradicating fuel poverty”. We also have to be realistic that unless gas use is prohibited or prohibitively expensive then all we will see is some movement in new build sectors (if planning grew some teeth) and some modest uptake from subsidies. Neither get us to 2035 targets.
So we have to see project costs analysis shift. Too much focus is on capital costs (odd, as they make up only 15% of life costs) but two things should be noted here; we aren’t dealing with an immature technology like PV or LEDs where uplift in volume will lead to a price crash. Secondly, even if the price halved. the projects being proposed and adopted now will not be viable beyond the RHI end (circa 2020/21). So we have to see either much cheaper electricity or much more expensive gas or no gas. Why do people connect to district heating? Invariably because they have to. Why do they purchase from district heating (it isn’t usually mandatory)? Because it is advantageous financially versus the status quo which is rarely if ever gas and they probably will be paying 75% more than gas costs.
The last observation on commercial was related to project funding. A workshop at the European Heat Pump Association (EHPA) highlighted that we currently allow gas providers to “get away with” just supplying gas… and a bill. Why did the wind industry rocket? It was partly subsidies but also obligations on the generators to support deployment or pay a fine. So we need an obligation, as I believe exists in Austria, where as well as a gas bill the utility company has to offer to deploy a heat pump free of capital cost and enter a heat purchase agreement.
Would this work? Here’s what I think would happen and it transcends many of the barriers. Firstly, it would get every utility to pay attention. Secondly, as homeowners could have heat cheaper from, say, a heat pump than gas and provided by a reputable company, they would likely go for it. Then the utilities would establish professional deployment teams who didn’t have to chat up the customer or lose tenders, didn’t have to vary the offering (they would be the owner) but did have volumes that drove deployment costs down. They would then have a collective mass to allow aggregation and demand side management so supporting the grid whilst taking the support available now from the RHI. In short they would side step some of the “nasty big 6” PR pressure, enter into longer term contract for the heat pump bit and scoop some funds and in short make money and improve the consumer engagement. The Government would see progress so win-win-win. Funding models are crucial to deployment as even within industry a 7 year breakeven point is too long for internal funds- blame the stock market. However a 10 year breakeven is a good investment so I can’t say commercial is the barrier… it’s just another challenge.
Human
Human factors of course have a part to play but we live in a democratic society. This basically means most people will behave to suit themselves (nearly) within the rules. Some will be more adventurous but ultimately if it comes down to a balance of risk and reward, numerous studies show that risk weighs more highly- nine fold. We can without changing the fundamental economics or technology shift this ratio by increasing adoption and hence awareness and then we see people starting from a position of “I’d like one too!” We also reduce the perception of risk as more good exemplars will exist. So it comes down to the chicken and egg.
Political
Politics is a terribly complex business with front of house politicians and back of house strategist civil servants. The problem is the electoral cycle and perhaps investment cycles. We have agreed we need to decarbonise and we have agreed this means less gas. We can also agree that free-market electricity will never be as cheap as free-market gas (you make half a unit of electricity from a unit of gas using an expensive power station - the maths ain’t hard.) So we need to see gas rising in price or being prohibited.
This brings me back to old vs new. Here’s some reality of the enormity of the task… we can’t even decide not to use gas boilers in new build houses! The oddity of the builder receiving a “per plot” fee from the gas company needs some scrutiny but the builder themselves are a fairly predictable beast. They want to build the most attractive houses, as quickly as possible and sell for as much profit. Forcing a heat pump on them gets a predictive response. So the government need to decide. “Do we want to see this happen or not?” Both individual heat pumps and district networks can work but not if you let the builder decide. Personally, a bit like the utility company, I’d help them gain something with a side portion of a bit of pressure and see if they really are so against it. A bit of public perception of “hey my house has a nasty gas boiler” would help but that comes back to humans and perception.
By far the biggest barrier is that our political system is doing nothing to encourage people away from gas and nothing to force them away from gas. All the effort (and I do think there has been loads) has been on encouragement onto the new thing but change doesn’t happen like that. Think smoking or polybags or seatbelts. We need a government ready to behave like a dictator or a parent. My kids like sweets and they are allowed them, but not for breakfast.
Let's get together
I don’t expect you to agree with everything I’ve said, and I certainly don’t think I’ve covered all the barriers. So let’s get together and explore it as a group.
Take this quick survey – even if you thought the article was rotten (you get to say why!)
http://tinyurl.com/Barriers2HP
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