18 May 2017

K.2.7.1 Fundamental Economic Analysis of Ground Source Heat Pump Markets in North America


Ground source heat pump (GSHP) sales peaked in North America in 2008-2009, ending a ten-year trend which saw markets grow at annual rates often over 50 %. This was observed in Canada and in the United States. Over the past decade, there were a number of financial assistance programs available in both countries, for residential as well as commercial and institutional applications. While there is evidence that programs had an obvious positive impact on markets, there are many other more fundamental factors which may explain the current GSHP market dynamic. But there is very little analytical work based on economic theory and principles done specifically on GSHP markets. This paper analyses the performance of the North American residential GSHP markets within the framework of a traditional theoretical economic model and discusses the relevance of financial assistance programs as a mean to push the markets forward.