In my last blog, I explained why I think now is the time for air/air heat pumps (A/A HP). There are strong opportunities in the residential heating market in Europe. But in our conversations across the heating and energy industry, we still meet challenges from those not yet engaged in A/A HPs. Here are some of the major myths and challenges we hear - and why we still think A/A HPs should not be ignored.
Challenge #1: “A/AHPs are good for cooling but suboptimal as a primary heating solution”.
In our opinion, this lies firmly in the "myth" camp. It is true that A/A HPs have been established for cooling-led applications in southern Europe and the commercial sector for a long time. But A/A HP can also be readily applied to correctly sized heating-led applications, not just to cooling applications. There are plenty of examples of A/A HP installed for heating in colder or temperate climates – where they often meet all the household heat demand. The Nordic markets are a classic example, where A/A HP have been establishing themselves for heating over the past 15 to 20 years. More than a million A/A HP are installed in Norway, for example, primarily for heating purposes. And products are designed specifically for the Nordic climate and optimised for heating.
Challenge #2: “A/A HP installed for heating will increase overall energy demand & cause strain on the grid due to additional summer cooling load which otherwise wouldn't be there”.
The reality is not so problematic, for 3 reasons. First, where A/A HP are installed for primary heating in cool and temperate climates, cooling demand accounts for only a small share of the total demand (5 to 10%). So, house owners are not in practice getting carried away with extra cooling too significantly. Second, with a warming climate and increasingly insulated homes, cooling will become a necessity, not just a luxury. A/A HP are a highly energy effective way to do this. Finally, regarding additional strain on the grid, where this could be an issue, there are solutions which can minimise the impact. PV, for example, is a good fit to balance summer cooling demand.
Challenge #3: “The A/A HP industry is highly cost-competitive, with price points relatively low compared to hydronic systems, so it is challenging to make money, especially if you don't produce them yourselves”.
This is a real challenge, but still not a reason not to engage. Yes, individual A/A HP have a lower average price, and lower gross margin than hydronic HPs. But an A/A HP solution can include a whole package of products to meet the full heat demand of the house, whose value can stack up (e.g. additional indoor units). And there are additional value streams and new business models to explore.
For example, bundling A/A HP with ventilation, PV and water heating as a new build solution can increase the margins. In the retrofit market too, the ability to both heat and cool gives A/A HP a USP as the market moves towards a focus on ‘thermal comfort’ rather than just ‘heat’, opening the door to new propositions like Comfort as a Service. And finally, not engaging in A/A HP could risk losing much more – as heat demand in buildings drops, the economic case for installing hydronic heating systems weakens. This trend is already emerging in some sectors, and ultimately can only boost the market opportunity for A/A HPs.
We see many reasons to engage in the A/A HP market without delay. We will be exploring some of these themes in more detail in our webinar - don't forget to register.