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Heat pump costs projected to fall by 40%

26 October 2021, Edinburgh, UK: Today, Delta-EE, the specialist new energy research and consulting company, reveals that heat pump costs could fall by as much as 40% over a 10-year period. As much as 20% of this cost reduction will largely be driven by market competition squeezing margins across the supply chain.

The new research published in response to the Heat and Building Strategy identifies two scenarios for cost reduction – a base case and optimistic projection. Both forecasts consider the same cost reduction techniques, with the different profiles largely driven by customer install numbers. Factors considered include making installation simpler, increasing the number of bulk orders – for example in social housing, and optimising manufacturing processes (e.g. with more automation), which could each contribute up to a 10% reduction in heat pump costs.

“While overall the grants announced in the Heat and Building Strategy are a step in the right direction to decarbonising a crucial area in the UK’s overall emissions, these proposals are not sufficient to achieve the government’s decarbonisation goals. Our research suggests reaching a 25-50% cost reduction, as proposed in the Heat and Building Strategy, is unlikely to be met, especially by 2025 as is currently suggested.”, notes Lindsay Sugden, Head of Heat at Delta-EE.

The cost reduction trajectory highlighted in the research’s optimistic scenario would reduce the marginal cost of a heat pump compared to a gas boiler to around £4,000. It is therefore not enough in itself to bring down the upfront costs of a heat pump in line with a gas boiler. Additionally, to reach the optimistic scenario, the report notes there would need to be installs in the high hundreds of thousands, which is a significant step up on today’s install figures of an expected 50,000 in 2021.

“While a reduction in upfront costs is important, heat pumps currently can’t compete with gas boilers on running costs, even with a gas crisis as the backdrop. Our modelling suggests that current running costs for heat pumps need to be a third lower than they are today to achieve a payback against a gas boiler. A shift in levies from electricity to gas (as currently being discussed in the UK) could go some way to addressing this issue – for example Denmark has seen success through reducing taxation on electricity for heat. But there are also other ways to address this through for example CO2 taxes, and time of use tariffs”, adds Sugden.

In the base case scenario where there are less installs and market competition, cost reductions could be as low as 25%. The report suggests stable policy support, training enough installers, fostering a market of innovation all while promoting public awareness will be essential to ensure maximum and sustainable cost reductions.

ENDS.

 

About Delta-EE

Delta-EE (www.delta-ee.com) is a research and consulting company helping companies navigate the change from ‘old energy’ to ‘new energy’. Headquartered in Edinburgh and with offices in England and continental Europe, our clients comprise many of Europe’s leading utilities; heating appliance manufacturers; controls companies; policy makers; and investors. Delta-EE provides a range of subscription research services, consultancy and specialist summits.

 

Media contact

Aspectus

Catherine Hunter

Catherine.hunter@aspectusgroup.com

077177 36110

Delta-EE debuts Energy Insights+ on heels of market demand

European customer spend on new energy services will grow by 32% annually in next 5 years

12 August 2021, Edinburgh, UK: Delta-EE, the specialist new energy research and consulting company, released their State of New Energy Market 2021 report that looks at the shift towards energy as a service across industry sectors. The report shows that despite COVID-19, the new energy market in Europe is progressing faster than expected with a 53% increase in customer spend in 2020, compared to 46% in 2019. With more new energy services becoming available over the next five years, Delta-EE expects a slower but steady customer spend growth of 32% annually, with eMobility seeing the fastest growth rate.

New research reveals UK is a front runner on EV charging

Europe on track for 2.7 GW of operational hydrogen electrolyser capacity by 2025

Delta-ee s’implante en France

Paris, le 21 mai 2019 - En choisissant Paris pour cette nouvelle implantation, Delta-ee, renforce sa position d’expert pan-européen, permettant aux organisations de développer les meilleures stratégies, modèles économiques et offres clients pour la transition énergétique.

Cette installation lui permet de resserrer les liens avec sa base installée de clients en France et en Europe, et de proposer un accompagnement plus étroit aux entreprises européennes de services publics, aux industriels, aux entreprises technologiques et aux start-ups innovantes.

European market value for connected climate control tech tops 718M€ last year, new report reveals

Delta-ee opens new European office in Paris

21/05/2019, Paris: Delta-ee, the specialist ‘new energy’ research and consulting company, has opened an office in Paris. The expansion reinforces the company’s position as a pan-European ‘new energy’ expert that enables organisations to develop the best strategies, business models and customer propositions for the energy transition.

The move to Paris allows the company to not only cement relations with existing clients based in both France and across Europe, but also to provide an additional level of support to European utilities, manufacturers, technology companies and innovative start-ups.  Furthermore, it will strengthen Delta-ee’s capability to offer energy market expertise in European regulation, policy environments and the nuances of different national approaches to ‘new energy’.

Delta-EE expands team on back of green recovery

European Electrical Storage Market Grows 75% in 2018 to 1470 MWh

New research from EASE and Delta-ee shows 2018 was a stellar year – but this very high rate of growth won’t be maintained into 2019.

COVID-19 to change 80% of consumers heating habits this winter

New research reveals heightened focus on behavioural change as customers adapt to the pandemic

New report quantifies the future value of smart meters to households

European connected home market set to grow, despite COVID-19

Delta-EE, the specialist new energy market research consultancy, has released its Connected Homes; State of the Market 2020 report revealing over 7.5 million homes across Europe now have connected home energy devices with 13% growth expected this year, despite COVID-19.

Delta-ee: Consumers open to giving third party apps control of their hybrid heating systems, according to Freedom Project

UK EV chargepoint market set for 29% annual growth despite COVID-19 impact

European Electrical Storage Market Grows by 49% in 2017 to 589 MWh

Surplus wind power could heat Scottish homes in new National Grid ESO and SSEN project

A new multi-partner project led by National Grid Electricity System Operator (ESO) and Scottish and Southern Electricity Networks (SSEN) is exploring the potential to use electric heat demand in off-gas areas of Scotland to soak up surplus wind generation, rather than reduce wind farms’ output.

La maison connectée prend son envol en Europe mais la France reste en queue de peloton

Regulatory uncertainty and market saturation slows energy storage growth, reveals new report

23 March 2020: Today, the European Association for Storage of Energy (EASE) and Delta-EE, Europe’s leading new energy research and consulting company, launch the fourth edition of the European Market Monitor on Energy Storage (EMMES). The report demonstrates the European market grew by a total of 1GWh in 2019, a significant slow-down compared to 2018. Front-of-meter installations slowed dramatically in 2019, while residential behind-the-meter capacity was the fastest growing market segment.

New Delta-ee electric vehicle research predicts public chargers to account for only 8% of charging

New research uncovers how drivers will behave and what it means for charging infrastructure, utilities and the electricity system

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