Poor economics limit market growth

Heat pump specialist Bob Long calls for more efficient models of the technology to take on low cost natural gas.

I have been following the Heat Pump Group on LinkedIn for some time now, and a recent topic caught my interest discussing the low number of heat pump installations since the advent of the RHI. Numbers are certainly below those anticipated for the first quarter of this year.

This news will not be well received by installers, and I would certainly be the first to admit my own disappointment regarding the slow growth of the heat pump market. With the exception of householders who have a keen interest in all-things-green, the installation of a heat pump system will always come down to economic viability and, in this regard, the UK market poses some difficult challenges to our industry.

The UK market potential for heat pump technology cannot be compared to other markets where heat pumps have featured successfully for many years, simply because the UK has a comprehensive natural-gas grid, and relatively high electrical tariffs.

To create some illustrative comparisons we can assume that the cost of natural gas is 5p/kWh and electrical energy is 13p/kWh. A heat pump with a COP of 3:1 will provide thermal energy at a cost of around 4.5p/kWh and compares favourably with a natural gas boiler producing 90 percent efficiency at around 5.5p/kWh.

With a heat pump installation costing significantly more than a fossil fuel boiler, customers will naturally want to see an operational saving, and a saving of only 1 pence per kWh of energy delivered is probably the fundamental reason for the low number of installations.

Although the extra cost of fitting a heat pump is supported by the RHI payment, the complex process and low payments for small capacity units often means that the financial gap is not completely met.

Britain’s carbon reduction strategy cannot ignore around 20 million homes as potential and valuable contributors to reduction targets, so either electrical charges for heat pump installations must fall (unlikely), or heat pump efficiency must increase.

At this time, the UK represents a very small proportion of the global heat pump market and therefore it is not surprising that heat pumps are not generally optimised for UK conditions. The UK market needs to have a more efficient design of heat pump, specifically developed to compete with the price of natural gas.

A seasonal performance factor set at a higher level would provoke manufacturers to produce some overdue improvements in heat pump design and efficiency. Enhanced COPs approaching 4:1 would create a price differential close to a 2p/kWh saving, which should result in an annual reduction of around £300.00 from the householder’s heating budget when compared to natural gas, and even higher savings when compared to other fuels.

Over the anticipated lifespan of the installation, savings of at least £4,500 could be made.

If our industry can regularly boast impressive figures like this, and deliver them, the heat pump industry will naturally grow at a faster rate.