We recently caught up with Thomas Nowak, Secretary General, European Heat Pump Association to find out how the heat pump market and industry is evolving on the continent.
For those that aren’t familiar with the European Heat Pump Association (EHPA), please tell us about your role in the industry.
EHPA is a sector organisation representing more than 140 members from the heat pump industry – from research to component and product manufactures to consultancies. Our members are active in providing solutions for the efficient and renewables based provision of heating, cooling and hot water for small and large residential installations, commercial buildings, industrial processes and district heating systems.
The European Heat Pump Association provides policy and market intelligence (including statistics – stats.ehpa.org) and a networking platform to our members. We also develop and disseminate information on heat pump technology as well as deliver the position of the heat pump industry to EU policy makers and – via our national associations – also to policy makers on the member state level.
Why is it important that heat pump companies become members of the EHPA?
Can I answer this question with the motto of the European Union? “United in diversity” fits it quite well. Our members are very different from one another, but united in their conviction that heat pumps are the super technology to decarbonise heating and cooling and to make an interconnected European energy system that links thermal energy and electricity a reality. The cake is currently growing and we need everybody on board to develop the EU heat pump markets with the necessary speed.
With regards to legislation: the list of logos on our membership list is quite impressive, I would say, and thus if a company is not yet a member of the EHPA, joining puts them in good company and is a clear sign that the company trusts in heat pumps and intends to help accelerate market development. The heat pump sector is also heavily regulated and the membership in the EHPA saves the need to build up the necessary competence in-house.
Lastly, if cooperation partners are needed, most likely they can be found inside the association and if not, someone knows someone that can help.
Do you think European governments are supporting renewable heating as an industry thorough subsidies, educational campaigns and promotions?
The answer is yes. From an EU perspective heat pumps are recognised in all pieces of energy related legislation. All directive needs to be transposed into national law. In particular the renewable energy directive foresees the promotion of use of renewable energy on the MS level since 2009. The share of renewable heat from ambient energy is increasing, but not fast enough. Thus more action is necessary on the MS level, including a review of energy taxation and the introduction of a CO2 price signal. These measures should be taken in parallel to direct subsidies to accelerate market build up and deployment.
We will require double digit growth for the heat pump market for the next 10 years to achieve the target set forth in the EU system integration strategy: 40% of all residential and 60% of all commercial buildings should be heated by electricity – and that means by heat pumps, considering that the “energy efficiency first” principle is applied.
Which European countries are leading the way in incentivising homeowners to adopt renewable heating?
This is a difficult question to answer, as support schemes are changing very often. In the past, I would have said France, but the recent developments put The Netherlands and Germany on a similar footing.
The Netherlands have declared a move away from gas (gas-free Netherlands) and have reviewed electricity versus fossil fuel taxation to the benefit of electricity. Germany has introduced a bold subsidy scheme that gives a 45% subsidy on the investment cost for the replacement of an oil boiler with a heat pump, 35% for the replacement of a gas boiler. In addition, the country has introduced a CO2 price on emissions from oil and gas use. Countries that want to support heat pumps should do so with a mix of carrots and sticks.
The external effects of using fossil energy should be applied to the energy carrier and at the same time the use of electricity should be released of burdens, which have been applied in the past, just because electricity was seen as too valuable. Today, electricity is the cleanest fuel in many member states. It should also be the cheapest fuel compared to polluting alternatives. Then we need symbolic action. Use of heat pumps in public buildings and social housing to accelerate market development and signal that technology is ready. The industry will deliver since recent technological advancements have made products more efficient and versatile also for complex application areas.
In the UK, the government introduced the Renewable Heating Incentive (RHI) to encourage homeowners to switch to renewable heating. Have governments in Europe introduced any similar schemes?
I do not know enough about the details of RHI, but from discussions with colleagues I conclude that the RHI was a good system in principle, but was too complicated to make a market breakthrough difficult, if not impossible – by design. The surprising cancellation of the non-domestic RHI has upset a good part of the UK industry and it is questionable if subsidy schemes should be handled in such a destructive manner, not least as this destroys trust in the market.
Our general advice to governments when it comes to subsidies is they must be long-term, based on clear requirements and transparent when it comes to procedure. Existing legislation should be used when it comes to prove of efficiency and the application process should be as simple as possible without jeopardizing quality. Using EU ecodesign regulation and certificates like the CEN HP KEYMARK is advisable in this context.
What misconceptions do homeowners across Europe have when it comes to heat pumps?
That depends on the homeowner that you ask. It is often known to a lesser extent that heat pumps work in almost all conditions and application areas. Heat pumps work in renovation projects, as direct boiler replacements and they work in cold climate zones.
Most homeowners have at least one heat pump that they use and trust on a daily basis: their fridge. If you have an A+ rated dishwasher or dryer, you have additional units and if you own an electric car, there are already four refrigerant cycle based products in your household. The technology is mature and trusted. Homeowners not sure about a fit should contact an installer that has a good track record of installing heat pumps on a daily basis. They can provide the necessary advice, as can advisors or one-stop shops like Superhomes in Ireland or Energiesprong (now active in several countries).
So whatever misconception may exist, most can be overcome with more information.
In the UK, we’ve spoken to many manufactures and installers, and one of the biggest challenges is specialist labour when it comes to sizing, installing and commissioning heat pumps correctly. Is this is a challenge that European countries face?
In principle a boiler installer can install a heat pump. The key question is who is dimensioning the unit and looks at the building as a system. This is where I see a shortage of labor and competence. Some can be overcome by services offered by the manufacturer, some by third party planning offices and experts. I am confident that a continuously increasing demand for heat pumps will make this sub-sector more and more interesting for engineering students and other experts. Becoming a heat pump specialist is the entry ticket for an interesting, versatile and fulfilling career. After all, the decade of heat pumps has just started.
Are there any developments in the heat pump industry that are occurring globally that European countries should be looking at and implementing?
Demand is increasing. The heating and cooling sector is shifting to refrigeration cycle based technology at high speed and that is a global phenomenon. Experts around the globe are realising the advantages of the technology: highest efficiency, the use of renewable energy, no CO2 and other emissions at the point of operation (indoor and outdoor air quality improvements), demand side flexibility, local employment and export opportunities.
More people and companies active in the field will lead to an ever faster development cycle and lead to better, even more versatile products. As economies of scale apply, the unit cost will go down – we are estimating about 36% cost reduction by 2030 on the cost of manufacturing. Potentially an additional reduction in installation and servicing due to more compact, integrated units and the deployment of IoT (Internet of Things) for remote maintenance.
In your opinion, what are some the challenges that the renewable heating industry will face in Europe?
The main challenge we face today is a distorted energy price system. More than half of all EU governments are taxing electricity higher than oil and gas. The most efficient technology can still be the most expensive when it comes to operational cost. This needs to be corrected if end users want to be attracted to invest in heat pumps on a large scale. Similarly, a CO2 price signal should be introduced in all markets where this is not yet the case, and fossil fuel subsidies need to be reviewed and phased out as soon as possible. Last, providing flexibility to the electricity grid should be given a value to enable cost savings during operation and the development of new business models.
How do you see the heat pump industry evolving?
I am very optimistic and think we have entered the decade of heat pumps. It is the most efficient technology and more and more end consumers are beginning to realise this. Then there are spillover effects from other electrification trends in transport and photovoltaics. Families that put PV on their house or buy and EV think about their heating system and end up considering a heat pump based solution. And here again, heat pump technologies are mature and reliable. They provide comfort and make their users feel good as they help them contribute to a cleaner, more sustainable world and that’s what many people want to do.
If you would like to find out more about the European Heat Pump Association, please visit their website.