Policies, applications and opportunities

What Government policies are there driving heat pump sales? Are there other applications for heat pump use that can be explored? Where are there opportunities for market growth?

There are no assessment questions for this module, it's for information only.

The Off-Gas Opportunity

Heating in the UK

The vast majority of homes in the UK are heated using mains gas, which is cheap and easily available.

In rural areas though, choice is limited - if there is no mains gas and the property is "off the gas grid", then it will be heated by LPG, oil, or direct electric (storage heaters).

It's these off-grid properties which are the "low hanging fruit" for heat pump sales - of course, we are up against air-source heat pumps and biomass too.

Breakdown of fuel types in UK housing stock

Although oil prices are good at the time of writing, there's no guarantee that they will stay that way! Between 2010 and 2014 oil prices rose by over 30%.

The Environmental Argument

In the UK at present...

Buildings are responsible for around 40% of the UK's CO2 emissions.

At a domestic level, space heating alone makes up around 60% of energy consumed by an average property.

Two thirds of gas used in the UK is used for heating.

So does a heat pump help?

The environmentally-friendly options for heating a house are relatively few.

Trying to find something that doesn't burn fossil fuels at all is quite difficult; after all a heat pump, be it air source or ground source, still burns electricity to run, and electricity is generated (mostly!) by burning fossil fuels.

Arguably though, it's better to use electricity because it's cleaner and easier to transport than directly burning the fossil fuel yourself (in the case of oil or LPG).

Of course there are other means of generating electricity to feed into the National Grid, e.g. wind farms, solar PV - and a heat pump is making use of these, even if it's in a small way. 

It's even possible to subscribe to a "Green" electricity provider or tariff.

Of course, because of the way a heat pump works, for every unit of electricity you put in, you get 3-4 units of heat out of it. So you could say that a heat pump has 25 to 30% of the environmental impact that a system fuelled by direct electric would.

Government Policies

What are the main drivers?

The UK Government are keen to reduce our dependency on fossil fuels and are pushing renewable energy sources as an alternative.

They recognise that heat pumps have a part to play in this.

In fact, the UK has a legally binding agreement to produce 15% of its energy from renewable sources by the year 2020. In its plans for achieving this target, DECC (Department for energy & climate change) specifically mentioned heat pumps.

The Climate Change Act of 2008 sets a legally binding goal of an 80% emissions cut by 2050.

There are plenty of "Green" energy incentives that cover all sorts of renewable technologies and energy-saving measures: Feed-In Tariffs for solar PV and micro-CHP, RHI payments for biomass, solar thermal and heat pumps,  and until recently the Green Deal (pushing for better levels of insulation) and ECO funding (making energy companies do their bit too).

šUK Heat Strategy - “The Future of Heating, Meeting the Challenge”

DECC, 2013

The Committee on Climate Change (CCC) are advisors to the Government.

They set out a series of "Carbon Budgets" covering periods of five years each, which serve to illustrate stepping stones towards the 80% reduction in carbon emissions by 2050. 

No Government has yet gone against the CCC's advice.

Heat pumps are considered to be an integral part of the strategy to meet the Carbon Budgets' targets. In order to meet those targets, heat pumps would have to account for 24% of the total heat demand by 2030 - so sales would have to increase:

So we can see that, in theory and in policy, the UK Government has to support the heat pump industry!

Social Housing - Non-domestic opportunity

Micro-district systems

Traditionally, district heating schemes have been the domain of biomass installations.

However a micro-district system, with as few as two heat pumps sharing a ground array, can be a more intelligent way of supplying heat to multiple properties.

District heating systems in the UK aren't common yet, but where they have  been installed, it's more usual to see them using a central plant - normally a biomass boiler, or CHP.

Ground source heat pump micro-district systems have several advantages over this type of installation:

  • No concerns over the quality of fuel used
  • Fewer moving parts so improved reliability
  • Decentralised plant means less downtime
  • Much less maintenance required
  • With each property having its own heat pump, there are no billing issues
  • No heat losses from the "heat main" to account for

Kensa have pioneered this type of installation, which works especially well for social housing landlords because they retain ownership of the properties and the ground array.

The tenant has a controllable, reliable heating system which is comparitively cheap to run, where often they were saddled with expensive-to-run, inflexible storage heaters.

The landlord (often a Housing Association) receives the Non-Domestic RHI payments - paid over a 20 year period these can easily offset the cost of the systems. They also benefit from tenant goodwill, media exposure and the kudos that fitting an environmentally friendly form of heating brings.

Case Study - Yarlington

  • Yarlington Homes
  • š198 properties retrofitted with ground source heat pumps and new radiator system
  • šIndividual borehole per property
  • šJoint funding through RHPP and CERT
  • šDisplacing electric night storage heaters
  • šTypically 1 and 2 bed properties
  • šOff gas grid
  • šInstalled in 90 days!
  • šWinner of 2013 H&V News Award “Retrofit Project of the Year

 

Case Study - Trent & Dove

  • Pioneering project  - Trent & Dove Housing
  • Replacing night storage heaters with wet central heating systems and Shoebox heat pumps
  • 133 homes elevated out of fuel poverty
  • Non-Domestic RHI eligible
  • Completed within 3 months
  • Winner: Best Client (National Housing & Maintenance Forum 2016)
  • Winner: Community Heating Project of the Year (Heating & Renewables Awards 2015)

In Spring 2015, Trent & Dove Housing and Kensa Heat Pumps delivered the UK's most ambitious retrofit upgrades programme of its time, replacing electric night storage heating with Kensa ground source heat pumps connected to a micro heat network over 133 one and two bedroom bungalows over 15 different sites throughout Burton-upon-Trent.

As a result of the success of this project, Trent & Dove subsequently embarked on a second phase of heating system upgrades to ensure more of their tenants benefited from this reliable renewable technology. The second phase of the project is delivering tenant savings of between 30-50% in two blocks of three storey flats.

Costs & Income

  • ECO funding available
  • Non-Domestic RHI eligible

The retrofit project required an investment of £1.8m, which will be recouped via a £2.3m income through the ECO and RHI. Trent & Dove’s initial investment was subsidised by the upfront ECO grant, and will be further off-set by the 20 years of income to be generated via the Non Domestic RHI, thanks to the schemes innovative micro heat network qualifying as a district heating system. The expected payback is 15 years, with Trent & Dove continuing to receive Non Domestic RHI payments as additional income for the remainder of the 20 year RHI scheme.

"Until now, many housing providers have struggled to finance the upfront capital costs associated with ground source heat pumps, even though the maintenance costs and, of course, tenant’s energy bills are significantly reduced. However, Kensa Heat Pumps was able to unlock a combination of funding from the RHI and ECO that made the financial case for the project stack up.

With the support of our contractors and Kensa Heat Pumps, Trent & Dove has achieved an outcome that many housing associations dream of; halved tenant energy bills, halved CO2 emissions in our stock, improved tenant health and well-being, and £2.3m of income through the RHI to off-set our £1.8m investment – and all of this in just 3 months."- Steve Grocock, Director of Property Services, Trent & Dove Housing

For a full account of the project, plus the tenant's opinions on the new systems and the work completed, see the Kensa website.

Holiday Parks - Another non-domestic opportunity

The opportunity

Lodge parks or chalets are becoming a popular option for holidaymakers wanting to stay in the UK, but add a touch of luxury to their break. A staycation used to mean camping in a leaky tent - not anymore!

Often the lodges include touches like hot tubs, rainwater showers, luxurious bathtubs and wood burning stoves. Frequently lodges are ranged around lakes, streams or rivers - often there are opportunities for fishing and sailing.

Kensa's unique combination of technologies means that there's an opportunity here. Combining the Shoebox heatpumps, with their outputs of either 3 or 6 kilowatts, with shared arrays of pond mats gleaning heat energy from the watercourses available on site, gives site owners a chance to capitalise on the Non-Domestic RHI.

In addition, there are the benefits of lower CO2 emissions and running costs than a traditional LPG fired boiler system.

It's important to note the the RHI is not payable on temporary structures. However holiday lodges, and in some cases "glamping" facilities like yurts, can qualify.

How does it work?

In the same way that Kensa's social housing projects have utilised common borehole fields, you can use pond mats as a communal array.

As long as you are feeding two or more heat pumps from the same array, the system qualifies as micro-district and is therefore eligible for Non-Domesic RHI.

If you only attach one heat pump to the array, it's likely that the system would be eligible for Domestic RHI as the lodge would be considered a single dwelling.

A suggested layout - lodges 1 to 13 are all using a communal array of 13 pond mats, with a 6kW Shoebox heat pump per lodge. Each lodge has a small unvented hot water cylinder fed by the heat pump. The Showbox is able to deliver flow temperatures of up to 60°C.

Costs and benefits

Capital cost per lodge for this type of project would be around £7000 per lodge, a total spend of £90,000.

The estimated RHI return per lodge over the 20 year duration of the Non-Domestic RHI (say £14,000) multiplied by 13 gives a total return of £182,000.

That doesn't include the fuel savings that could be made versus LPG, or the CO2 savings and "green" credentials gained by the site owner.

 

Larger homes - a domestic opportunity

Heat pumps can work for bigger houses, too

Traditionally, heat pumps haven't been considered as a viable means of heating older properties, especially where improvements to the fabric of the building are not financially or practically possible.

Kensa have worked closely with several different installers to tackle this stereotype. It can be done, and with success. 

It's also a pervasive myth that heat pumps are only good for smaller properties with low heating demands. However Kensa's wide range of units, including twin-compressor heat pumps with capacities of up to 24 kW on single phase, are proving that bigger homes can also benefit from using ground source technology

Case Study - River House

  • Grade II Listed building, so fabric improvements could not be made
  • Radiators used to heat the property - underfloor was impractical
  • On-site lake, so pond mats were sunk into the lake as an energy source
  • Ground source heat pump replaced a 20yr old mains gas boiler

This spacious farmhouse was listed, so the new owners were limited on what improvements could be made to improve the building's energy efficiency.

They decided to replace an old mains gas boiler with a 24kW twin compressor heat pump, fed by "pond mats" sunk into the lake which was on the property.

Normally there's no need for planning permission when installing ground source (unlike air source), but because the house was listed, the improvements to the heating system had to be approved.

The Domestic RHI payments (over 7 years) would cover the cost if the initial investment, and even though the home was previously heated with mains gas, because the boiler was older and inefficient, the heat pump's running costs were lower than those of the boiler.

 

 

Case Study - Gwylfan-y-Glaerwen

  • 800m² self-built house in Carmarthenshire
  • Unusual ground array - mixture of straight pipe and boreholes
  • House uses solar thermal and solar PV as well as the heat pump for maximum efficiency
  • System is able to dump unused heat back into the ground arrays, further improving efficiency

The owner of this property had an engineering background and with Kensa's support, designed a heating system that would provide heating and hot water to this large custom-built property.

The system was eligible for Domestic RHI payments and was accredited under Kensa's MCS Umbrella scheme.

Other applications - processes and "eligible uses of heat"

Case Study - Spring Garden Centre

  • Two 45kW plant room heat pumps
  • One 25kW High Temp plant room unit for DHW
  • Providing heating and hot water to the retail floor and cafe of a garden centre
  • Eligible for the Non Domestic RHI

On a larger scale, it's perfectly feasible to use ground source for heating different types of spaces as well as dwellings.

Underfloor heating is used to heat the shop floor and cafe/dining area of the garden centre. As long as the area is fully enclosed, the system remained eligible for Non-Domestic RHI. The heat pumps themselves are housed in a plant room located on the upper storey.

Eligible uses of heat

It's worth remembering that the Non Domestic RHI will pay out for heat used for what OFGEM consider "eligible purposes" - not just for space heating and hot water.

"Eligible purposes" is a broad term that encompasses industrial and commercial processes which require heat - for example drying foodstuffs or fuel (wood or biofuels), industrial cleaning processes, pasteurisation, or manufacturing chemicals.

You can't claim RHI support for buildings that are temporary or only partially enclosed, and you can't claim for anything that releases heat directly into the open air - for example under-pitch heating at a leisure centre would not be eligible.

So:

  • Polytunnels - no
  • Tents - no
  • Greenhouses - yes
  • Yurts - possibly, depending on how long they will stay in place, and the construction

Cooling is not considered an eligible use, but the heat harvested during the cooling process can be fed back into the ground and used as an energy source for the heat pump, improving efficiency.