Domestic hot water heat pumps: Breathing new life into aging oil boilers?
This is the second blog in our series highlighting some outcomes from our study on domestic hot water heat pumps (DHW HPs), recently published for members of our Heat Pump Research Service. [For more information on the study or the Service please contact us]
As discussed in our previous blog, Domestic hot water heat pumps – An electrifying outlook!, DHW HPs are the fastest growing sector of the European heat pump market – the market could double in size to more than 120,000 installs per year by 2017. We have already discussed the major opportunity lying in the replacement of direct electric water heaters. But we also see huge growth opportunities for DHW HPs in upgrading existing heating systems – here we focus on oil boilers. DHW HPs with oil boilers represent opportunities for manufacturers, utilities and policy-makers!
- For boiler manufacturers, there is an opportunity to ‘upsell’ existing oil boiler installations with a DHW HP (not to mention the new proposition in the boiler replacement market – where new boilers can be sold packaged with a DHW HP)
- For heat pump companies, DHW HPs are a low cost - and therefore lower risk - way to shift customers away from oil heating and get them used to the idea of heat pumps – building the foundations to grow a bigger heat pump business
- For utilities, DHW HPs are a valuable part of an energy services offering - a low upfront cost product which can deliver energy cost savings to existing customers who are on oil, and ultimately give utilities more happy customers
- For policy-makers, DHW HPs represent a low cost way to decarbonise the oil heating sector – and a first step for customers to get used to heat pumps
Why are oil boilers a target sector for domestic hot water heat pumps? Low oil boiler summer efficiencies = high energy bills = unhappy customers! Oil boilers typically have much lower efficiencies in summer, when they are being used only for hot water production. This may not be such an issue for modern oil boilers, but summer time efficiencies of existing, aging oil boilers could be as low as 40%, and certainly not much higher than 70%. What is the result? High energy bills for customers! Domestic Hot Water Heat Pumps are a low cost way to reduce energy costs for oil customers Oil boiler + DHW HP = lower energy bills = happy customers! A DHW HP installation means the oil boiler can effectively be switched off in the summer. Delta-ee’s modelling indicates that the running cost savings achieved by upgrading an oil boiler with a DHW HP in markets like the UK, Germany, France and Poland can be significant – with payback times reaching below 3 years in some scenarios. Of course, the customer proposition is sensitive to evolution of oil and electricity prices – in markets like Germany there is a risk to the strength of the proposition from the already high electricity prices. However, many European markets are already seeing the benefits from the use of DHW HPs with oil boilers, and we think there is plenty of opportunity in oil boilers with non-optimal performance. There is already a market for the application of DHW HPs with oil boilers – and the potential is huge In Germany, around two thirds of the 10,000 DHW HPs installed last year were installed alongside an oil boiler – the hot water tank of the oil boiler is replaced by the DHW HP (with integrated tank), to boost summer efficiencies. We see the same application of DHW HPs in other markets, such as Switzerland and France. The potential is huge. In Germany alone, 50% of existing oil boilers - an incredible 3 million systems – are already more than 18 years old and could potentially benefit from efficiency improvements with DHW HPs. If we add to this the installed base of >3 million oil boilers in France and >1 million in the UK it is easy to see how the addressable market stacks up to several millions. Realising just a fraction of this potential will keep the wheels of the DHW HP market turning...