On the 16th of June, HPT TCP by IEA arranged a successful digital workshop where reports from HPT TCP member countries were presented. This workshop was attended by several participants from different countries. During this first digital workshop scheduled for 2022, Norway and South Korea delivered their Member Country Reports. Each country has given the national status for (i) Market statistics, (ii) Policy, and (iii) R&D activities.
Rolf Iver Hagemoen, Secretary-General of the Norwegian Heat Pump Association and delegate for Norway in the HPT TCP Exco, gave the first Country Report presentation, which was focused on the heat pump market in Norway. He presented background information about Norway, stating that it is a country of mountains, vast forests, vast empty expanses, and just around 3% arable. The population is over 5.3 million people, with around 1.2 million living in and around Oslo. The member country report presentation emphasized that heat pumps are widely used in Norway; they can be found practically anywhere, even in areas with minus 30 or 35°C weather, in large cities, district heating, and large buildings.
The Norwegian member country report provided the Norwegian energy system demographics, which show that renewables provide 98 % in Norway, with 1690 hydropower plants accounting for 88% of Norwegian production capacity and 53 wind farms accounting for 10% of Norwegian production capacity. The report shows that most buildings in Norway are heated by electricity, either directly or through heat pumps. Furthermore, Norway’s whole transportation sector is being electrified; for example, 64.5% of cars sold in 2021 were fully electric, demonstrating that Norway has an energy system that is truly electrified compared to many other countries.
The member country report provided some of the significant variables that drove the heat pump market, such as the restriction of using fossil oil heating for most buildings since 2020 and increasing CO2 levies for fossil fuels year after year from 2012 to 2020. In addition, incentives were doubled for 2018-2019 to assist people in replacing aging oil burners with heat pumps.
In Norway, air-to-air heat pumps dominate the heat pump market, and one of the reasons for this, compared to many other countries, is that there are many buildings without hydronic systems. In countries like Finland, Sweden, France, and Italy, many buildings have direct electric heating and air-to-air heat pumps. Hagemoen provided an overview of the growth of the Norwegian heat pump market, which began in the 1970s and 1980s with various demonstration projects.
According to the Norwegian member country report presentation, 105,000 heat pumps were sold in 2019, compared to 125,049 in 2021 and 91,894 in 2020, a 36% increase over the 2020 data and a significant rise when compared per capita. Below is more information about the distribution of heat pumps in Norway.
Between 1987 and 2020, almost 1.4 million heat pumps were sold in Norway.
- Air-to-air approx. 1.25 million
- Air-to-water over 50,000
- Brine-to-water over 55,000
- Ventilation heat pumps over 20,000
According to the member country report, if the 2021 heat pump sales data are included, the total number of heat pumps sold in Norway since 1987 rises to over 1.5 million, with more than 1.1 million heat pumps in use, equating to more than 10 TWh of ambient heat.
2021 compared to 2020
- Air-to-air +38%
- Air-to-water +2.5%
- Brine-to-water +8%
- Exhaust air 29.9%
The next country to present its member country report was South Korea. Prof. Minsung Kim of Chung-Ang University began by outlining the structure of the energy price in Korea and highlighting the difficulties and possibilities for expanding the use of heat pump systems there. The member country report highlighted the numerous obstacles that still need to be solved, given that 92.8% of the energy used in Korea is imported, with the remaining 7.2% coming from nuclear and renewable sources. Three years ago, the Korean government announced carbon neutral until the year 2050, which has drastically altered the Korean energy market. By 2030, the Korean government wants to generate 20% of its electricity from renewable sources. By taking into account voluntary citizen participation and large-scale projects, they intend to meet this goal.
The South Korean member country report also provided a summary of the Korean energy status, detailing the overall energy mix of Korea. The total power generation facility capacities have increased by 64% from 2000 to 2019, and currently, renewable power generation covers up to 13%. Korea has experienced electricity shortage problems in recent years because of the rapid increase in industrial sector demand and cooling/heating demand due to relatively low electricity prices. In 2020, the energy consumption of the industrial sector was approximately 62%, followed by residential and commercial consumption at 17.9%, transportation at 17.7%, and public consumption at 2.4%.
In addition, the South Korean member country report discussed some of the primary heat pump market challenges in Korea which need to be overcome to realize the potential and capture the flexibility, which include:
- The characteristics of South Korean buildings, combined with the overall small share of heat pumps in the South Korean heating market, significantly reduce the amount of demand response flexibility that heat pumps could provide in South Korea.
- The gas network in Korea has a high penetration rate of natural gas; in addition, a cultural preference for gas boilers, aggressive promotions from gas boiler companies, and low cognition of heat pumps lead consumers to choose gas boilers.
- Low energy (electricity and LNG) prices. i.e. the retail prices of natural gas and electricity are very low in Korea, and people tend to be more sensitive to the “Initial cost” than the operation cost.
Due to its high energy-saving potential, the global heat pump market has grown rapidly in recent years. According to the member country report, South Korea strives on efforts to spread the utilization of heat pump systems but still lags in market development. The heat pump market size is estimated to be worth 2 – 3 billion USD, including residential and commercial air-conditioning/heat pumps. In 2020, compared to the 1.5 million cooling-only units, only 0.18 million heat pumps were sold for other applications, amounting to a 12 % market share; in the same year, heat pumps also accounted for 15% of the domestic sales.
Korea has one of the lowest electricity prices; for example, the price of electricity for domestic consumers is only 42 % of that paid by UK domestic consumers. Therefore, the electric heat pump can potentially be a competitive heating system in the Korean heating market. However, due to the progressive electricity tariff system for residential uses, a more sophisticated evaluation of energy prices against gas boilers must be done.
Some of the important market drivers for heat pumps in South Korea include the Renewable Heat Obligation for domestic installations. The RHO forces new buildings to have a certain ratio of heat supply of their total heat energy consumption from new and renewable sources. The South Korean government supports measures to improve energy efficiency and the use of new renewable energy sources because it considers heat pumps as key players in achieving its goal of Green Growth with Low CO2. On the government’s road map to Green Energy, heat pumps were selected as one of the 15 green energy sectors to increase energy efficiency.
At the following links you can find the country reports:
The first workshop on the 1st of June 2021, where Austria, China, and the Netherlands presented an update on their national markets, is available here >
The second workshop on the 7th of September 2021, where France, Germany, the UK, and the US presented an updated view on their national markets, is available here >
The third workshop on the 23rd of November 2021, where Japan, Italy, and Canada presented their Member Country Reports, is available here >