On September 27-28, the European Heat Pump Association organized the Heat Pump Forum in Brussels. The event featured influential speakers from various sectors, discussing heat pumps and their vital role in the ongoing energy transition to combat climate change and ensure energy supply. From the discussions, it is evident at a high policy level that heat pumps must replace traditional boilers to achieve climate targets. However, challenges persist in accelerating their widespread deployment.
Acceleration in investment
The event kicked off with a presentation by Michael Liebreich from EcoPragma Capital. He began by highlighting how a significant spike in energy prices led to a notable acceleration in clean energy adoption. Emerging technologies have become both environmentally friendly and cost-effective. Over the past few years, there has been a substantial increase in investments in renewable energy production, particularly in solar and wind power, as well as electrified transportation. It is highly anticipated that the heat pump sector will experience a similar surge in growth soon!
Are we moving fast enough?
During the panel discussions that followed, a crucial question arose: Are we progressing rapidly enough? While there has been a significant acceleration in the deployment of heat pumps in recent years, the pace is still not up to the required level and falls below the initial expectations for this year. Laura Cozzi from IEA emphasized the need for a clear policy direction. Recognizing heat pumps as a consumer-oriented technology, she stressed that stimulating market demand requires well-thought-out policy decisions at all levels. A key suggestion was to shift costs for end users from upfront expenses to operating costs, achievable through innovative business models. The financial sector was highlighted as having a pivotal role in this shift. It was concluded that all types of business models will be needed to manage the energy transition.
Many panelists agreed that we could not rely on subsidies for the future. They could fit their purpose to create market demand in the beginning, and should preferably have a social element, to support the most vulnerable. The first thing for policy makers to deal with is the running cost for heat pumps in relation to fossil fuel boilers. In many countries, there must be an adjustment between electricity and gas prices for end consumers to a ratio of a maximum of 2, which can, in many cases, be achieved by adjusting taxes and fees! This will create the basis for new actors offering new business models also to those who cannot afford the upfront cost, and it was noted that there are already a couple of new actors emerging on the market, with new and different offers to end-users with a new end-to-end market approach.
What is needed from policy makers to convince end users is clarity and long-term consistent messages supporting the sector. What has been happening in UK and Germany lately, where policy makers back off from ambitious targets and measures, does not help.
The heat pump needs to become the new boiler!
The second day was introduced by Kadri Simson, the Commissioner for Energy from the European Union. She emphasized during her speech that more renewable energy will secure many sectors in Europe, and heat pumps can make a considerable contribution. They have a lot to offer; high efficiency, use of renewable sources, reduced emissions and improved stability since they reduce the reliance of fossil fuels. Therefore, heat pumps should become mainstream in buildings, industry and networks. The heat pump needs to become the new boiler, she claimed!
The role of the financial sector – think big!
One panel especially dealt with the role of the financial sector to accelerate the roll-out of clean energy technologies, especially heat pumps. The message was clear. Today, investors have money, and all needed directives are in place. Now, it is up to the industry to place the heat pumps in a financial product. Bundle your offers and come to the investor with a pipeline. Think big! Here, heating/comfort-as-a-service business models could be beneficial since this would facilitate the bundling. However, again, the price ratio for electricity to gas needs to be sufficiently low for the due diligence to show good results for the financial product.
Delivering the business case of the European Green Deal
Heat pumps could be the hero delivering the business case from the European Green Deal, with EU factories, EU jobs and EU leadership, according to Thomas Pellerin-Carlin, Director of the EU Program. This is of special importance right now since the Green Deal’s narrative as Europe’s new growth model is somewhat “under attack.
Other take aways from the day
- According to large utilities, the lights will stay on, also with 60 million heat pumps. Heat pumps will cause a gross electricity consumption increase by 9-12% in Europe, but the heat pumps will probably not be the problem, but solar PV. Here heat pumps can help by flexible operation. Of course, challenges need to be dealt with at the local level in some places.
- Connected heat pumps offer opportunities to the electric grid, offering flexibility, as well as to the end-consumer, offering improved comfort and cost savings. There are already many actors active on the market exploring this opportunity.
- Without hands, no transition! To ensure a sufficient number of skilled installers, appropriate training is needed, mixing theory and practice – a responsibility which should be shared between the state and the manufacturers.
- Marketing and promotion should be designed to appeal to the emotions of installers and end-users. The end-user doesn’t need to understand how the technology works but feels sure it will deliver comfort and a better climate at an affordable cost.
Caption feature image: Naomi Chevillard, Head of Regulatory Affairs at SolarPower Europe, Alix Chambris, Vice President Global Public Affairs and Sustainability Viessmann, Daniel Strömer Vice President Business Strategies Home Segment SMA Solar Technology and Marta Navarrete Moreno European Policy and Regulatory Manager Iberdrola during a panel on the topic “Heat Pump and photovoltaics: Driving decarbonisation in buildings” during the Heat Pump Forum in Bussels.