The document discusses lessons that can be learned from Finland's successful adoption of heat pumps to help the UK meet its climate targets. Finland now has over 500,000 heat pumps installed, providing 6% of its heat. There are similarities between current Finnish and targeted UK (2030) heat pump usage. Key factors driving Finland's growth include policies incentivizing efficiency upgrades and new construction, regulations requiring efficient buildings, and funding energy innovation. The document recommends the UK adopt similar policies around new builds, retrofits, long-term incentives, focusing on off-grid homes, and increasing investment in heat pump technology innovation.

1. Raising the temperature of the UK heat
pump market: Learning lessons
from Finland
Dr. Matthew Hannon
DECC Economics seminar series, 1st March 2016

2. Structure
• A brief introduction to heat pumps
• Low-carbon heat: the challenge
• Current status of UK and European heat pump
markets
• Comparisons with Finland
• Learning lessons from Finland (with some caveats)
• Policy recommendations and conclusions

3. Schematic of a heat pump
CCHRC
(2012)

4. Measuring heat pump performance
• The coefficient of performance (COP) is the efficiency of the heat
pump and indicates how many units of output heat can be
delivered per unit of energy input. Typically around 2.5/3.
COP = Energy output / Energy input
• HPs operate most efficiently when the temperature gap between
the heat source and the heat sink (i.e. building) is small but this
changes with the seasons. Therefore, the seasonal performance
factor (SPF) is typically given for annual performance.
• SPF does not give the complete picture of HP efficiency – need to
take into account the efficiency with which the electricity has been
generated and distributed with.

5. Other key characteristics
• Heat transferred either via ventilation
(e.g. space-conditioning unit), central
heating (e.g. oversized radiators;
underfloor heating) or hot water
• High COP demands small
temperature lift, therefore high fabric
efficiency and low temperature/high
surface area central heating (e.g.
35°C) essential
• HPs can be reversible, providing
heating and cooling. Here the heat
source and sink reverse roles.
• HPs operate at multiple scales (a few
kW to tens of MWs)
• Can work as hybrids with other
heating techs (e.g. boilers, solar
thermal and electricity micro-gen
(e.g. solar PV).

6. Air Source Heat Pumps
Pros
• No specific land requirements
• Easy to install
• Relatively cheap
Cons
• Low COP in winter as air temp
low
• Subject to evaporator icing
• Often deemed noisy and unsightly

7. Ground Source Heat Pumps
Pros
• Offer cooling without running
compressor (i.e. natural gradient)
• Higher COP as underground
temps vary much less than air
Cons
• Requires access to land
• Large capex for installation
• Disruptive installation
Dwyer and Evans 2010

8. Scale of the low-carbon heat challenge [1]
CCC (2015)
• Direct buildings
emissions
accounted for
17% of UK GHG
emissions in
2014.
• Split: 74%
domestic, 16%
commercial and
10% public
sector
• Direct emissions
doubled by share
of electricity
consumed in
buildings

9. Scale of the low-carbon heat challenge [2]
• CCC estimated direct emissions for
heating accounted for 12% of total UK
GHGs in 2012, excluding electricity.
• Why? - Heating accounts for 81% of energy
consumed in domestic/service sector.
• Majority satisfied by direct combustion of
fossil fuels e.g. gas (77%), oil (8%),
bioenergy/waste (4%) and solid fuel (2%)
• Also 8% accounted for by electricity use.
Essential off-gas-grid homes demand for
space heating; accounts for 20% of total
residential power consumption (CCC 2015).
Decarbonisation challenge centred on move
away from fossil fuel domestic heating
Figure: Non-transport energy consumption by end use for
residential & service sectors 2013 (DECC 2014)
Figure: Overall energy consumption for heat and
other end uses by fuel 2013 (DECC 2014)

10. Progress since Climate Change Act 2008
Q1 2015 - Temp adjusted
emissions in residential
sector have decreased by
around 7% versus Q1 2009.
Factors responsible? (CCC)
• Boiler efficiency - share of
efficient condensing
boilers increased from
17% of building stock in
2008 to 44% in 2012
• Greater building fabric
efficiency, increasing from
average of SAP 53 in
2008 to 60 by 2013
• Lighting, appliances and
space heating efficiency:
Source: DECC - UK Greenhouse Gas Emissions –
2nd Quarter 2015 Provisional Figures

11. Future trends
“In the absence of new
policy, residential
buildings emissions are
expected to remain fairly
flat to 2035, with
emissions from new
homes largely offset by
efficiencies from the
turnover of the boiler
stock” (CCC 2015 p.62)
Numerous measures considered essential to reduce buildings
emissions but heat pumps integral to decarbonisation of heat

12. CCC downgrades heat pump role but still critical
4th Carbon Budget Review (CCC 2013) assumed 4m residential and
0.6m public/commercial heat pumps producing 51 TWh of renewable
heat by 2030, accounting for 12% of the UK's 435 TWh building sector
heat consumption. Total of 4.6m heat pumps.
CCC’s updated 5th Carbon Budget assessment (2015) revises this down
to 2.3m domestic heat pumps (1.1m retrofitted/1.2m new-build). Similar
assumption for pubic/commercial (19TWh). Total of 2.9m heat pumps.
Why the change? – Sensitivities to issues relating to retrofits and
preference for new-build - limiting potential market but improving
performance
NOTE: For the purposes of this research we focus on 4CB estimate.

13. Current status of UK heat pump market
In 2013 104,000 heat
pumps generating 1TWh
of primary energy,
accounting for 0.2% of the
domestic & service sector
heat consumption. By 2030
this number needs to
increase by a factor of 50.
2010 – 2013: UK heat
pump sales averaged
18k/annum. Should this
rate continue only 400k
units installed by 2030; 9%
of CCC 4CB estimate. By
2030 rate needs to increase
by factor of 15 to
265,000/annum
Source: adapted from Nowak et al. (2014)

14. Who should the UK look to for advice?
Source: EHPA

15. Learning lessons from Finland [1]
Finland has undergone a heat
sector revolution over past 40
years
1970 - small-scale biomass and
oil accounted for 90% of heat
supply
2012 – district heating (40%),
electricity (21%), biomass (21%),
oil (11%), heat pumps (6%) and
gas (1%)
Source: Statistics
Finland (2013)

16. Heat pump boom in Finland
Finland has seen unprecedented
growth of heat pump
• 1976 - 200 heat pumps producing
6 GWh of primary energy (PE)
• 2003 – 37,000 heat pumps
producing 0.28 TWh PE
• 2012 - Over 0.5m heat pumps
producing 4.1 TWh PE
Approx. 93% of these domestic with
heat pumps installed in 1 in 5 homes
Weighted 2/3 ASHP and 1/3 GSHPs
Source: EHPA

17. Comparing UK HP market with Finland’s present & future
Given strong similarities between heat pump penetration in Finland today
versus UK in 2030 under 4CB, what lessons can we learn from Finland?
UK Finland UK 2030
(CCC)
HPs installed per
1,000 capita
2 100 66
HPs sold per 10,000
capita
3 113 56
HPs installed as %
of total households
N/A 18% 13%
Primary energy
output per capita
(kWh/capita/annum)
10 756 718

18. Factors driving growth of Finnish heat pump market

19. Transferring lessons from Finland to the UK [1]
Important similarities means lessons could be learnt
High-level energy policy drivers
• Both have Climate Change Acts that include a legally binding target of
an 80% reduction on GHGs by 2050 versus 1990 levels
• Shared focus on raising energy security and improving energy
affordability considering similar levels of net energy import, medium-
term electricity price trends and standards of living. Underpinned by
joint-membership to the EU
Liberalised energy markets
• Unable to simply initiate a nationwide roll-out of heat pumps via
nationally owned energy companies. Instead this can be achieved
primarily through market-based policy interventions.
• Both have predominantly unregulated district heat markets suggesting
similar institutional barriers to heat pump driven DH systems

20. Transferring lessons from Finland to the UK [2]
BUT key differences do exist…
Housing Stock
• Age - 20% of England’s housing stock was built before 1919,
compared with 3% of the stock in Finland. Older homes typically less
energy efficient impacting upon heat pump efficiency
• Type - 26% of England’s housing stock is detached vs. 40% of
Finland’s. Larger houses more amendable to GSHPs as they typically
require working fluid pipes to be laid underground outside.
Energy Infrastructure
• 23.2m UK homes (84%) served by gas boilers connected to a grid
stretching 285,000 km. Finland’s gas grid is constrained to the south,
stretching only 3,100 km and serving 22,000 (>1%)
Climate
• Much cooler climate in Finland with the average temperature in
Helsinki is 5.4 °C compared to 9.6 °C in London, presenting a greater
natural demand for heat than the UK.

21. Policy recommendations to raise UK heat pump deployment
New homes
Energy efficient ideal for heat pumps, a view shared by CCC. In 2013-14
Finland granted 29% more permits to build homes per capita than the
UK. Raising UK new build-rate pump deployment essential.
Essential regulations exist to ensure new buildings meet very high
energy efficiency standards and these allow for renewable heat solutions,
as in Finland. Removal of Zero Carbon Homes scheme raises questions.
Retrofit
80% of the UK’s 2050 building stock has already been built (UKGBC
2008), suggesting that retrofitting is an essential route to heat pump
deployment. Looking to Finland, this might be encouraged in the UK
through tax-breaks for homeowners to undertake renovations or
extensions.

22. Policy recommendations to raise UK heat pump deployment
Balance capital grants and long-term incentives
Running these two in parallel could ease both the high upfront CAPEX
cost barrier and the high ongoing OPEX costs. The existence of just one
of these schemes will mean one of these persist.
Funds need to be reapportioning from existing schemes (e.g. RHI) or
new funds are raised. Latter could be achieved via a levy on fossil fuels
as in Finland that would simultaneously offer a low-carbon subsidy and
make fossil fuel solutions less financially attractive.
Focus on off-grid properties
Subsidies could be specifically aimed at the 3.6m off-grid homes that
typically pay more for heating via electricity or oil fired systems. Whilst
not all will be suitable for heat pumps, just 50% of these could make a
major contribution to the 4th CB.

23. Policy recommendations to raise UK heat pump deployment
Innovation
In 2011 UK’s spend on energy RD&D programmes ranked in 19th out of
25 OECD countries, with Finland ranking first
Energy innovation essential to reduce heat pump CAPEX and OPEX to
bring costs in line with gas fired boilers. Key challenges include:
• System integration
• Novel heat pump technologies (e.g. absorption, thermoacoustic)
• Hybrid heat pumps that utilise different inputs (e.g. gas + ambient
energy) and output functions (e.g. heating + cooling)
• Reduce component costs (e.g. compressors, refrigerants)
• Controls to optimise performance to different loads and conditions
• Improved design, installation and maintenance methodologies
See: European Technology Platform on Renewable Heating and Cooling
(2012) Strategic Research Priorities for Renewable Heating & Cooling Cross-
Cutting Technology

24. Conclusions
• CCC’s targets for heat pumps are necessary to meet CBs but present a
major challenge for the UK
• Finland offers a glimpse of how this could be achieved, presenting
similar levels of heat pump deployment today as the UK in 2030
• Numerous factors have contributed to Finland’s impressive roll-out of
heat pumps (e.g. housing stock, energy infrastructure and climate) that
cannot be easily replicated in the UK
• BUT sufficient similarities exist (e.g. energy policy drivers, market
structure, EU membership) for some lessons to be learnt
• Five recommendations are made:
1. Stimulate new-build and/or efficiency renovation of existing stock;
2. Establish robust building regulations that allow for renewables;
3. Reduce heat pump costs via increased energy RD&D;
4. Balance long-term subsidies with capital grants; and
5. Focus heat pump subsidies on off-grid properties

25. Thank you!
Email: m.hannon@imperial.ac.uk
Twitter: @hannon_matthew
Web: http://www.imperial.ac.uk/people/m.hannon
Link to paper:
http://www.sciencedirect.com/science/article/pii/S0301421515002347