Heat Pump Implementation Scenarios until 2030

An analysis of the technology's potential in the building sector of Austria,

Belgium, Germany, Spain, France, Italy, Sweden and the United Kingdom

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Heat Pump Implementation Scenarios until 2030

An analysis of the technology's potential in the building

sector of Austria, Belgium, Germany, Spain, France,

Italy, Sweden and the United Kingdom

Authors Kjell Bettgenhäuser, Markus Offermann, Thomas Boermans, Michelle Bosquet, Jan Grözinger, Bernhard von Manteuffel and Nesen Surmeli October 22 2013 Project number: BUIDE12080 © Ecofys 2013 by order of European Heat Pump Association - EHPA

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Executive Summary

Aim of this study is to quantify the potential of heat pumps to save CO2-eq emissions and energy and to increase the use of renewable energy in the EU’s building sector until 2030 and to assess related impacts on investments and energy costs. In relation to the F-Gas debate, also the amount of F-gases necessary to realise these potentials is calculated. For that purpose, eight European key markets (Austria, Belgium, Germany, Spain, France, Italy, Sweden and the United Kingdom) have been analysed. In this study three scenarios are calculated, which all comprise the same very ambitious energy efficiency measures on the demand side, but different implementation shares for heat pumps on the supply side. In the scenario with the highest heat pump implementation shares (“HP++”) the overall CO2-eq emissions for heating, cooling, hot water and auxiliary energy in buildings can be reduced by 47% from 2012 until 2030. As a consequence the EU-climate targets for the building sector for 2030 would be more than met, which means that the long-term targets for 2050 can be better achieved than with less ambitious paths. Background

The importance and potential of reducing greenhouse gas emissions in the EU building sector is undoubted and has been proven in various studies1. At the same time, related measures to increase energy efficiency and use of renewable energies in new building and renovation projects support various other important societal and individual goals, such as creation of jobs, improvement of quality of life, security of supply and reduction of dependencies on (fossil) fuels. Consequently, the EU formulated a sectorial target, which aims at decreasing the emission levels by 88%-91% for the residential and services sector compared to 1990 level by 20502. To achieve such targets, significant actions need to be triggered in the EUs national building markets, which need clear prospects and guidance to allow building owners, building industry and financing partners to take timely and well founded decisions. The push of policies towards energy efficiency and use of renewable energy will continue to be a driver, with energy policies, regulations and subsequently building codes coming with stricter requirements for buildings and their constituent parts. At the same time, increasing energy prices

1 i.e. Wesseling, B., Deng, Y. et. al: Sectoral Emission Reduction Potentials and Economic Costs for Climate Change (SERPEC-CC), Ecofys 2009.

2 see European Commission: Roadmap for moving to a competitive low carbon economy in 2050, COM(2011) 112 final, Brussels, 8.3.2011.

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make investors more aware of potential saving options and available alternatives. Together, this will create demand for new technologies and systems. This competition thereby takes place at project and market level, where building owners make decisions on systems/technologies to be used. Furthermore it also takes place on policy level, where policy targets need to be translated into concrete policy frameworks at EU and Member State level. This basically creates favourable conditions for the use of heat pumps in both new buildings and in refurbishments. This study aims at quantifying the potential role of heat pumps in the future supply mix. Therefore the applicability and performance of heat pumps at building level is analysed in this study. Based on this analysis, three heat pump implementation paths until 2030 for the eight focus countries Austria, Belgium, Germany, Spain, France, Italy, Sweden and the United Kingdom are analysed. This study on implementation potentials for heat pumps aims to clarify and underpin the role that heat pump technology can play in the building sector.

Heat Pump Implementation Scenarios

Table 1 shows the definition of the heat pump implementation scenarios. Apart from a Current-Policy Implementation (CPI) scenario, which assumes the full and timely implementation of legislation, the “HP+” and “HP++” scenarios assume a development of heat pump shares towards 50% (HP+) respectively 100% (HP++) of all new buildings and 30% (HP+) respectively 50% (HP++) of retrofitted buildings to be equipped with heat pumps in 2030. Additionally, all scenarios assume very ambitious energy efficiency measures3 to be applied for retrofits and new buildings. Furthermore a decarbonisation of the electricity generation according to the long-term power-sector targets is taken into account.

Table 1: Overview on heat pump implementation scenarios

Scenario Definition

Scenario “CPI” Current Policy Implementation: Full and timely implementation of

all legislation related to energy performance of buildings (and specifically heat pumps) by the Member States.

Scenario “HP+” Ambitious heat pump scenario with increasing shares of heat pumps in new buildings and retrofits (target: 50% share4 for new buildings

in 2030 and 30% in retrofits in 2030).

Scenario “HP++” Very ambitious heat pump scenario with increasing shares of heat pumps in new buildings and retrofits (target: 100% share4 for new

buildings in 2030 and 50% in retrofits in 2030).

3 See Annex oft the study 4 For the “HP+” and “HP++” scenarios the decisive factor “Implementation shares gained from competing Technologies” was chosen, which quantifies the share that heat pump technologies can take in 2030 from the competing non heat pump technologies. Figure 5 (in section 1.6) gives an illustration of this indicator.

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Main Results

Table 2 gives an overview on the main results of the heat pump implementation scenarios for all key markets, which are the overall reductions of CO2-eq emissions, final energy as well as the total yearly costs (covering investments for the building envelope and HVAC-technologies and energy costs).

Table 2: Overview on main results per implementation scenario

Scenario

Energy-related CO2-eq

emissions in 2030 [Mt/a]

Relation to

CO2-eq emissions in 2012

(638 Mt/a)

Final energy in 2030

[TWh/a]

Primary energy in 2030

[TWh/a]

Total yearly costs

(Investments and energy

costs) in year 2030

[billion €2012/a]

Amount of F-gases

needed for production

of heat pumps in 2030

[MtF-gas/a]

CO2-eq emissions

from F-gas

leakages in heat pumps in 2030 [Mt/a]

Scenario “CPI”

424 -34% 2,272 2,197 718 0.0086 17

Scenario “HP+”

385 -40% 2,112 2,074 723 0.0181 26

Scenario “HP++”

342 -46% 1,951 1,945 734 0.0313 39

Conclusions

1. What is the effect of heat pumps towards the 2030 and 2050 GHG saving targets including F-Gas leakages? The total CO2-eq emissions drop by 34% in the scenarios “CPI” from 638 Mt/a in 2012 to 424 Mt/a by 2030, by 40% in the scenario “HP+” to 385 Mt/a by 2030 and by 46% in the scenario “HP++” to 342 Mt/a by 2030. For a better understanding and interpretations these CO2-eq emission reductions are put in context to the existing buildings sector specific GHG reduction targets from the “EU Roadmap for moving to a competitive low carbon economy in 2050” (COM2011-112). Hereby the CO2-eq emissions should be reduced by 37% to 53% by 2030 (based on 1990 numbers) and by 88% to 91% by 2050. From this target corridor in Table 1 it becomes obvious that the targets are getting more ambitious in the period 2030-2050. With all 3 scenarios staying within this GHG target corridor until 2030, especially the HP+ and HP++ scenarios can also pave the way towards 2050 targets.

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Figure 1: Total CO2-eq emissions for all Countries

A prerequisite for increasing heat pump shares is the availability of F-gases for the production of heat pumps. The CO2-eq emissions from F-gas leakages are growing over time, they account for up to 17 Mt/a by 2030 in the “CPI” scenario, for 26 Mt/a in the “HP+” scenario and for 39 Mt/a in the “HP++” scenario (not included in scenarios, but shown separately at the bottom of the graph). As an average in the assessed scenarios, 3.7 tons of CO2-equivalents are saved per 1 tonne “invested” CO2-equivalent emissions from F-gas leakages of the applied heat pumps systems. 2. How much final and primary energy savings can be realized in the scenarios? The overall final energy use for space heating, hot water, cooling and auxiliary purposes is decreasing by 17% in the scenario “CPI” from 2,752 TWh/a in 2012 to approx. 2,272 TWh/a in 2030, while a reduction of 23% to 2,112 TWh/a can be realized in the “HP+” scenario and a reduction of 29% to 1,951 TWh/a in the “HP++”. The primary energy for space heating, hot water, cooling and auxiliary purposes is decreasing by 31% in the scenario “CPI” from 3,203 TWh/a in 2012 to 2,197 TWh/a by 2030, while a reduction of 35% to 2,074 TWh/a can be realized in the “HP+” scenario and a reduction of 39% to 1,945 TWh/a in the “HP++” scenario.

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3. What are the costs of increasing heat pump implementation in the scenarios? The total energy costs (for all systems in the building stock) by 2030 are slightly lower in the scenario “HP++” with 290 billion €2012 in comparison to 299 billion €2012 in the scenario “HP+” and 309 billion €2012 in the scenario “CPI”. The annualised costs (annuities) of all investments (total costs of energy efficiency measures and HVAC systems) are amounting to 409 billion €2012 in the scenario “CPI” by 2030, to 424 billion €2012 in the scenario “HP+” and to 444 billion €2012 in the “HP++” scenario. The total yearly costs in the building sector (energy costs and annualised investment costs) are used as the indicator for economic evaluation. Total costs in 2012 account for 248 billion €2012 and increase up to 718 billion €2012 by 2030 in the scenario “CPI”, whereas they increase up to 723 billion €2012 in the scenario “HP+” and up to 734 billion €2012 in the scenario “HP++”. This represents additional costs of 0.6% in the scenario “HP+” and 2.4% in the scenario “HP++” compared to the scenario “CPI”. 4. Do we achieve the renewable energy shares from the RES-directive? Related to the renewables directive (DIRECTIVE 2009/28/EC), the aggregated target from the Member States` National Renewable Energy Action Plans (NREAPS) for renewable energy delivered by heat-pumps is a share of 2.4% of the gross final energy for 2020 . Figure 2 gives the heat pumps shares (calculated according to the methodology from DIRECTIVE 2009/28/EC) for the three scenarios. The RES-share from heat pumps in the “CPI” scenario could reach 6.3% by 2020, while levels of 7.6% and 9.8% can be reached in the “HP+” respectively “HP++” scenario.

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Figure 2: RES-shares for heat pumps in scenarios

As the contribution from heat pumps to the overall RES-share in the scenarios is higher than expected or targeted by the Member States in their NREAPs, they most likely predict lower heat pump growth rates until 2020 compared to this study. 5. What does that mean? The overall conclusion is that heat pumps can contribute significantly to the mitigation of CO2-eq emissions, energy savings and to an increasing share of renewable energies and is thus an important puzzle piece for reaching the EUs long term targets . This can be realized at moderate additional overall costs in the “HP+” and “HP++” scenarios compared to the “CPI” scenario. Hence heat pumps can play an essential role in the future supply mix. Nevertheless additional policy actions for heat pumps are required with respect to higher implementation. For the “HP+” scenario legal requirements towards nearly-zero-energy-buildings in retrofits (which are now set for new buildings only) should be put in place, with financial incentives to support this development. Furthermore information measures, education and training as well as quality assurance are important elements for higher share of heat pumps in both new buildings and retrofits. For details on further heat pumps specific policies see also the study “Unleashing the Opportunity – European Best Practice in Building Successful Heat Pump Markets”5. As the “HP++” scenario is defined as a theoretical maximum, there are no additional policy recommendations compared to the “HP+” scenario.

5 By Delta-EE

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Table of Contents

Executive Summary iii  Background iii  Heat Pump Implementation Scenarios iv  Main Results v  Conclusions v  

Table of Contents ix  

1   Methodology 1  1.1   Structure and Scope 1  1.2   General Approach 1  1.3   Policy Analysis 2  1.4   Building Stock Analysis 3  1.5   Performance of Heat Pumps on Building Level 4  1.5.1   Useful Energy Demand for Heating and Cooling 4  1.5.2   Coefficients of Performance 4  1.5.3   Final Energy Demand for Heating and Cooling 5  1.5.4   Greenhouse Gas Emissions 5  1.5.5   Investment and Energy Costs 6  1.6   Heat Pump Implementation Scenarios until 2030 7  1.6.1   Forecast on Heat Pump Implementations until 2030 7  1.6.2   Scenario Modelling 10  

2   Policy Analysis 12  2.1   Overview on European Level 12  2.1.1   The Directive on the Promotion of the Use of Energy from Renewable Sources (RES

Directive) 13  2.1.2   Energy Performance of Buildings Directive (EPBD) 13  2.1.3   The Ecodesign for Energy-related Products Framework Directive, Lot 1

(Ecodesign Directive) 14  2.1.4   Energy Labelling Directive 14  2.1.5   Energy Efficiency Directive 15  2.1.6   EU Energy Roadmap 2050 16  2.1.7   Renewable Energy Communication 17  2.1.8   F-Gas Regulation 17  2.1.9   EU Commission decision on an Ecolabel for Heat Pumps 18  2.1.10   Summary of European Policies 19  2.2   National Policies for Key Markets 20  2.2.1   Austria 20  

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2.2.2   Belgium 20  2.2.3   France 21  2.2.4   Germany 22  2.2.5   Italy 23  2.2.6   Spain 25  2.2.7   Sweden 26  2.2.8   United Kingdom 27  2.2.9   Summary of national Policies 29  

3   Building Stock Analysis 32  3.1   Building Stock 32  3.1.1   Floor Area 32  3.1.2   Reference Building Geometries 33  3.1.3   Building Age Groups 34  3.1.4   Retrofit Levels 34  3.1.5   New Building, Retrofit and Demolition Activities 34  3.1.6   HVAC Systems and the Role of Heat Pumps 35  

4   Applicability and Performance of Heat Pumps on Building Level 37  4.1   Outlook on the future heat pump technology development 37  4.2   Indicative Benchmark Simulations 39  4.2.1   Reference Buildings 40  4.2.1.1   Reference Geometries 40  4.2.1.2   Thermal Qualities of Building Shell 40  4.2.1.3   Heat Pump Systems 41  4.2.2   Reference Climate Conditions 41  4.2.3   Simulation Results 42  4.2.3.1   Useful Energy Demand for Heating and Cooling 42  4.2.3.2   Seasonal Performance Factors (SPF) 43  4.2.3.3   Final Energy Demand for Heating and Cooling 44  4.2.3.4   Greenhouse Gas Emissions 44  4.2.3.5   Investment and Energy Costs 46  4.3   Main Conclusions 48  

5   Heat Pump Implementation Scenarios 51  5.1   Scenario Definition 51  5.1.1   Reference Buildings and Thermal Qualities of Building Shell 51  5.1.2   Greenhouse Gas Emission and Primary Energy Factors 52  5.1.3   Energy Prices 52  5.1.4   Investment Costs Heat Pumps 52  5.1.5   Technologies in Stock 53  5.1.6   Sanitary Heat Pumps 53  5.2   Scenario Results and Interpretation 54  

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5.2.1   Heat Pump Implementation Development 54  5.2.2   Floor Area Development 62  5.2.3   Final Energy 62  5.2.4   Primary Energy 65  5.2.5   CO2 Emissions 67  5.2.6   Energy Costs 70  5.2.7   Investment Costs 72  5.2.8   Total Yearly Costs 72  5.2.9   F-Gases 73  5.3   Summary and overall Scenario Interpretation 74  5.4   Outlook on Heat Pump Technology Development 77  

References 78  

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1 Methodology

1.1 Structure and Scope

Aim of this study is to quantify the potential of heat pumps to save CO2-eq emissions and energy and to increase the use of renewable energy in the EU’s building sector until 2030 and to assess related impacts on energy use, investments and energy costs. In relation to the F-Gas debate, also the amount of F-gases necessary to realise these potentials is calculated. For that purpose, eight European key markets (Austria, Belgium, Germany, Spain, France, Italy, Sweden and the United Kingdom) have been analysed. The application of heat pumps will be investigated for space heating and cooling and domestic hot water purposes in residential buildings (differentiated by single and multi-family buildings) and commercial buildings (such as offices, retail, and administration buildings) both for new buildings and retrofit situations. The application of heat pumps in industrial processes is not included in the scope of this study. 1.2 General Approach

Figure 3 shows the outline of the general approach to the present study. In a first step a policy analysis is conducted in section 2. This analysis gives an overview of all current and future policies

Chapter 2

•  Policy Analysis

Chapter 3

•  Building Stock Analysis

se 4 •  In-Depth Analysis

Chapter 5

•  Scenario Definition

Chapter 5

•  Scenario Calculation

Chapter 5

•  Scenario Interpretation

Figure 3: Project Approach

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under discussion which are already and will be affecting heat pumps in the key markets. The analysis is done on European and national level. The building stocks of all key markets are investigated in section 3. After having assessed technical improvement potentials for heat pump technologies in an in-depth analysis in section 4, calculations on building level show the technical and economical applicability of different systems in different situations. The results on country level determine possible developments in the future and secure that most cost-effective systems are selected as reference cases. Based on this information, the scenario definition, calculation and interpretation is done in section 5 using the Built-Environment-Analysis-Model BEAM² developed by Ecofys6. In general the following three scenarios are set up for all key markets. They follow possible heat pump development paths up to the year 2030: Scenario “CPI”: Current Policy Implementation: full and timely implementation of all

legislation related to energy performance of buildings (and specifically heat pumps) by the Member States.

Scenario “HP+”: Ambitious heat pump scenario with a 50% share7 of heat pumps in new

buildings and 30% in retrofits by 2030. Scenario “HP++”: Very ambitious heat pump scenario with a 100% share7 of heat pumps in new

buildings and 50% in retrofits by 2030. The following subsections describe the different methodologies used for the separate work packages. 1.3 Policy Analysis

The policy analysis is the first step within the analysis process. Its aim is to quantify the impact of all current policies and those under preparation with regard to the heat pump development and provide the input for the scenario calculation. Therefore a variety of directives on European level are taken into account (such as the Directive on the promotion of the use of energy from renewable sources (RES), the Ecodesign Directive, the European Performance of Buildings Directive (recast) (EPBD), Energy Labelling Directive and Energy Efficiency Directive) as well as the F-gas regulation and some communication documents. Furthermore, an analysis on Member State level focuses on the differences and specifics of the key markets. Here country specific instruments and policy measures as well as heat pump incentive programmes are evaluated.

6 see section 1.6.2 for further information on BEAM². 7 For the “HP+” and “HP++” scenarios the decisive factor “Implementation shares gained from competing Technologies” was chosen, which quantifies the share that heat pump technologies can take in 2030 from the competing non heat pump technologies. Figure 5 (in section 1.6) gives an illustration of this indicator.

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The policy analysis provides an input to the heat pump implementation forecasts in the key markets for the scenario “CPI”. This scenario is based on historic sales data together with the current policies and those under preparation, while the scenarios “HP+” and “HP++” are based on theoretical market potentials without a direct input from policy development. A detailed description of the methodology for heat pump implementation in the different scenarios is given in section 1.6.1. In order to better understand the historic sales data, the main drivers and barriers for all key markets are identified by taking into account the influencing factors policy and market conditions. This enables a better analysis of the current situation and of the impact that policies under development will have. 1.4 Building Stock Analysis

The building stock analysis is an important input to the scenario calculation in section 5. To develop a forecast for the future potential of heat pumps in Europe in 2030 a good knowledge of the building stock in the key countries is necessary. In order to investigate the implementation potential for heat pumps in national markets, the building stock will be clustered according to different characteristics. The building stock is first divided into residential and non-residential buildings and then categorized into different building types, age groups and retrofit levels. Furthermore, construction and renovation rates in the key markets will be evaluated. Non-heated buildings are excluded from this analysis. The following building categories are used for every country: Residential sector

• Single-family buildings (SFH) • Multi-family buildings (MFH)

Non-residential sector • Office buildings (OFB) • Education buildings (EDB) • Trade and retail buildings (TRB) • Touristic buildings (TMB) • Health buildings (e.g. hospitals) (HEB) • Other non-residential buildings (ONB)

On the basis of current statistics and building stock inventories an accurate representation of current building stocks of the key markets is defined. The geometry of the reference buildings and the energy related parameters of the building shells (u-values etc.) for the status quo are adjusted to the local situation. Section 3 provides a comprehensive overview on the representative building stock for all key markets. Specific values, assumed geometries and other detailed parameters used to define the building stocks of the examined key markets can be found in Appendix A and its subsections.

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1.5 Performance of Heat Pumps on Building Level

This section provides an overview on the methodology for the analysis of heat pumps on building level. 1.5.1 Useful Energy Demand for Heating and Cooling

The calculation of the useful energy demand (energy demand of the building, excluding system losses) is performed using the building simulation software TRNSYS. For each of the reference buildings a single zone model is created. The calculations are performed with an hourly resolution considering the local reference climate data, the building’s physics as well as schedules for occupation and internal loads. The simulation determines annual hourly values of the useful energy demand for heating and cooling. Demand adapted system supply temperatures are considered for the calculation of the hourly coefficients of performance (COP) values. The heating supply temperatures are derived from a linear interpolation between the design heating temperature (55°C or 35°C) at 100% of the design heating demand and 20°C at 0% heating demand. 1.5.2 Coefficients of Performance

The calculated Coefficients of Performance (COP8) values of the heat pump systems as well as the derived Seasonal Performance Factors (SPF) consider the energy demands required for compressors as well as other heat pump system related components like fans (air source heat pump) and brine or water system pumps. The electrical energy demands of the pumps within heating and domestic hot water systems are not included. As those are independent from the heat production system they are not further considered.9. The final energy demand is determined by division of the hourly useful energy demands by the COP values. Apart from the significant losses of the domestic hot water systems, which have been assumed for all cases to be 50% of the domestic hot water demand, no further heating system losses are considered.

The used heat pump system models describe highly efficient systems. The resulting efficiency of those systems can be assumed to be standard in the period until 2020.The detailed calculation methods of COPs, as well as determination of EER values of the cooling systems in countries with cooling demand, are described in Appendix B.3.

8 The calculated COP values are variable system values, which are determined based on the actual boundary conditions at the specific hour. Those should not be mixed with the laboratory values, which are determined under fixed conditions. 9 For the gas heat pump the related el. energy demands have been neglected

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1.5.3 Final Energy Demand for Heating and Cooling

The hourly final energy demands are derived by division of the useful energy demand (plus losses for domestic hot water systems) by the actual COP value of the specific hour, which is dependent on the external and internal system temperatures. 1.5.4 Greenhouse Gas Emissions

To reflect the environmental impact of each heat pump technology CO2-eq emissions are calculated based on CO2-eq emission factors. The CO2-eq emission factor for gas is the same for all countries and is considered for gas based air heat pump systems for each building type. The factors for electricity vary due to different shares of energy sources in each country. Thus, CO2 intensity for total power generation for electricity is calculated by using emission factors of primary fuels, combined with the conversion efficiencies of electricity production by using the database providing energy statistics (IEA, 2011). The data is presented in Table 3. Table 3: CO2 Emission factors (g CO2eq/kWh)

Energy type AT BE FR DE IT ES SE UK

Electricity 165 198 88 489 439 294 34 453

Natural gas 202

The total CO2-eq emissions associated to a specific heat pump technology for each country is calculated according to equation (3):

001.0;;;)(,;)(,;;; ⋅⋅⎟⎠⎞⎜

⎝⎛ ++= EFQQQE kikjiCoolingkjiDHWkjikji

(1)

with

Ei;j;k Total CO2-eq emissions for heat pump technology (i) for building type (j) in

country (k) in kg/m2a Qj;k Annual energy demand for space heating for building type (j) in country (k) in

kWh/m2 a Q(DHW)ij;k Annual energy demand for domestic hot water for building type (j) in country (k)

in kWh/m2 a; for only heat pump types based on electricity Q(cooling)ij;k Annual energy demand for cooling for building type (j) in country (k) in kWh/m2 a

EFk CO2-eq emission factor for heat pump technology based on energy type (i) in country (k) in g CO2eq/kWh

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1.5.5 Investment and Energy Costs

In addition to technology prices (see section 4.2.3.5) the economical applicability of each heat pump technology is considered based on the unit price of energy in key markets. Table 4 provides the assumed unit prices for electricity and natural gas including taxes. Energy prices for oil, gas, coal and electricity are adapted to the energy price trends estimated by the European Commission. As a basis the energy prices for 2010 were taken from Eurostat: Band DC: 2 500 kWh < Consumption < 5,000 kWh incl. taxes. Table 4: Average unit energy prices in key countries based on electricity and gas (€/kWh),

Source for Baseline: Eurostat

Energy type AT BE FR DE IT ES SE UK

Electricity 0.19 0.20 0.13 0.24 0.19 0.18 0.19 0.14

Natural gas 0.06 0.05 0.05 0.06 0.07 0.06 0.10 0.04

Ratio electricity/gas 3.2 4.0 2.6 4.0 2.7 3.0 1.9 3.5

The ratio electricity/ gas ("energy price ratio") was specified for the different countries. The energy price ratio is relevant for the comparison of economical performances of systems using different energy carriers. Gas heat pump solutions show much better economic performance in countries with a high energy price ratio, as it is the case for Belgium and Germany. The cost of energy generation with specific heat pump technology for each country is calculated as follows:

PQQEC kikjiDHWkjikji ;;,)(;,;; ⋅⎟⎠⎞⎜

⎝⎛ += (2)

with

ECi;j;k Energy cost for heat pump technology based on energy type (i) for building type

(j) in country (k) in €/m2a Qj;k Annual final energy demand for space heating for building type (j) in country (k)

in kWh/m2 a Q(DHW)ij;k Annual final energy demand for domestic hot water for building type (j) in

country (k) in kWh/m2 a Pi;k Average energy price for the specific final energy based on energy type (i) in

country (k) in €/kWh Determination of costs For the economical evaluation the methodology of the cost optimal calculation according to EU Directive No 244 (2012) is applied. Using an interest rate of 3.5% on capital (financial perspective), all future cash flows over the period under consideration are discounted to t = 0 (starting time). In addition to the investment costs

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(divided into equipment and building envelope) the energy and maintenance costs are included in the net present value representing the total costs. Among other things it is considered in principle:

• Calculation period of 30 years for residential buildings and 20 years for non-residential buildings

• Residual values Energy cost increase rates are assumed in accordance with the guideline to cost optimality calculation as follows:

ð fossil fuels: 2.8% ð electricity: 2.9% until 2015; 2.0% 2016-2020; 0.8% 2020-2025; after 2025-0.3% (according

to the average for households, industry and services) Reduced HP tariffs, which are available at some regions at some countries, have not been considered. Potential regional or national subsidies have also not been considered. The lifecycle (HPs: 17 years, wells and geothermal probe as well as floor heating system: 50 years) and maintenance costs (3% for el. HP and 4% gas HP) are assumed according to EN15459. Replacement investment and residual values have been considered in accordance to the method of the EU Directive No. 244 (2012). 1.6 Heat Pump Implementation Scenarios until 2030

First step in the scenario calculation is the forecast of heat pump implementations until 2030. This section gives an overview on the methodology for future heat pump implementation and the methodology for the scenario calculation. 1.6.1 Forecast on Heat Pump Implementations until 2030

As the market environment is different for new buildings and replacement installations, the forecast for implementation is differentiated between new buildings and retrofit situations. In this approach a general split per technology in the yearly implementation mix of heating systems is done (heat pumps and competing technologies). Starting point is the current yearly implementation mix for all key markets.

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Market Phases The development of markets from first introduction of a product or technology until saturation in a mature market can be described as an S-curve. After a market introduction phase, which is typically connected to relatively low growth rates, a technology has the potential (if accepted by the market) to grow in implementation shares. After being well introduced in a stable market, saturation is likely to happen, in which the implementation of a specific system remains stable, but does not further increase. These different phases are shown in Figure 4. Markets like the United Kingdom, France, Germany, Austria and Belgium are at the lower end of the S-curve for heat pump sales in a growing market which is taking up and accelerating its growth, while Sweden will most likely have market saturations in the near future. Italy and Spain rank in between. The red dotted lines indicate growing implementations per year (slope of tangent is increasing) while the orange dotted lines indicate decreasing implementations per year (slope of tangent is decreasing).

Figure 4: Illustration of the position of different markets within a classical market development curve Market Growth per Scenario The future growth of heat pump markets in the key markets is depending on the market development phase the different countries are in and the assumptions per scenario path. While the market phase per country is assumed as shown in Figure 4, the assumptions per scenario paths are set as follows.

FR

IT

AT

BE

DE

UK

ES

SE

Time

Market saturation

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For the scenario “CPI” the “Future growth rates of heat pump technologies per year” is the leading indicator. This approach is based on historic data and forecasts the future growth rates in yearly implementations by taking the position on the S-curve into account. In this scenario the implementation of heat pumps is increasing for new and promising markets (higher slope of tangent than observed in the past), while they are decreasing for mature markets (lower slope of tangent). Furthermore it is assumed that policies have an impact on the sales potential, see also section 2 “Policy Analysis”. In consequence a leverage factor for expected policy impacts is applied to the sales numbers per key market (describing the assumed increase in sales per year) which is differentiated for new buildings and replacement installations in retrofit situations due to different conditions for heat pump installations. For new buildings no further policy action results in a leverage factor of 1.0, little policy action in 1.2, moderate policy action in 1.5 and high policy action in 2.0. As heat pumps are more difficult to install in replacement installations (retrofits), the leverage factors are lower, see Table 5.

Table 5: Leverage Factors for Heat Pump Implementation in the “CPI” Scenario Impact of

further Policy Action New Buildings Retrofits

No 1.0 1.0

Low 1.2 1.1

Medium 1.5 1.25

High 2.0 1.5

While using the above described leverage factors, it seems reasonable to additionally set a cap to the achievable market growth for the complete timeframe 2012 to 2030 based on limitations in production and installation capacity by country size. Derived from examples of historic market developments, a maximum market growth factor for the timeframe 2012 to 2030 for heat pumps of 10 is applicable for large countries such as DE, FR, UK, ES and IT with little or no import options and a factor of 50 for small countries such as AT, BE and SE with a maximum population of 11 million and technology import options. As a different approach, compared to the leverage factors that are used to develop the CPI scenario, the decisive factor that was chosen to develop the “HP+” and “HP++” scenarios is the “Implementation shares gained from competing Technologies”, which is based on market potentials rather than on historic data. It quantifies the share that heat pump technologies can take in 2030 from the competing technologies. Figure 5 gives an illustration of this indicator, which is equal to the ratio B/A. This approach implicitly includes the position of the country on the S-curve, as the potential becomes smaller with a growing market. The “Implementation shares gained from competing Technologies” are again differentiated, 50% for new buildings and 30% for retrofits. For retrofits the existing district heat supply is considered not to be part of the potential that could switch its technology to heat pumps.

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Figure 5: Illustration of “Implementations gained from competing Technologies”

in the “HP+” Scenario 1.6.2 Scenario Modelling

Based on the expected development and deployment of heat pumps and other technologies described in the previous section, integrated scenario calculations show the impact of different technology paths and implementation numbers for heat pumps in the future. For the scenario calculation the Built Environment Analysis Model (BEAM²) has been used. Ecofys developed this model over the last years to analyse national and international building stocks. Results of the model are energy demand, CO2-eq emissions and energy costs for space heating and domestic hot water in the built environment. The results can then be presented for different types of buildings, building ages, climate zones etc. Input to the model calculation is a database containing international building stock data distinguished by climatic regions, building type/size, building age, insulation level, energy supply, energy carrier, energy costs and emission factors. This can be applied in a scenario tool used for calculating the development over time of the building stock as a function of demolition rate, new building activity, refurbishments and energy-efficiency measures in retrofits, see Figure 6. So far the model has been used in various projects (e.g. for the European Commission) and has contributed to the perception and reputation of Ecofys in Europe.

HP Sales

other Sales

HP Sales

other Sales

add. HP

A

100% of

sales

B

2012 2030

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Figure 6: Structure of the Built Environment Analysis Model BEAM²

Key results of the model are floor area development, final and primary energy demands for heating, hot water and cooling10, greenhouse gas emissions as well as investments required for Heating, Ventilation and Air Conditioning (HVAC) systems, building envelope measures and energy costs. Based on these numbers, employment effects are quantified, while scenario comparisons lead to CO2-eq abatement costs. In addition to these results the fluorinated greenhouse gases are included in the analysis. Based on the outputs of the model on number of heat pumps, the yearly amount of F-gases required for production of heat pumps and the assumed leakages during lifetime of heat pumps are calculated.

10 The cooling demand is fully integrated in the model. As uncertainties and lack of data about the cover ratio of the theoretical cooling demand exist, rough assumptions on the coverage are made. Based on the remaining cooling energy demand one average cooling technology is assumed.

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2 Policy Analysis

This section gives an overview on heat pump related current and planned policies on both European and Member State level for the assessed countries. Section 2.1 describes and analyses the European framework policies and section 2.2 the national policies. The impact of current policies and those under discussion with regard to the heat pump development and sales forecasts are quantified for the scenario path “CPI”, while the scenarios “HP+” and “HP++” represent a theoretical case with measures going beyond the current policy discussions. The input to the scenario calculations are summarized in section 2.1.10 for European policies and in section 2.2.9 for national policies. 2.1 Overview on European Level

This section provides an overview of the current policy framework in place that is relevant for the heat pump technology development and implementations. It is based on the EHPA monitoring report Outlook 2012 – European Heat Pump Statistics. In the effort to realising the 20/20/2011 targets of the EU, the framework conditions have been continuously evaluated and updated throughout the past years. The building sector with its hardly tapped potential has been identified as one of the key sectors to reaching these targets. All of the selected legislation for this overview set requirements for product and building energy efficiency, an increased use of renewable energy and the reduction of greenhouse gas (GHG) emissions. They are discussed with regard to their current as well as expected impact on the heat pump market development. The current legal framework in place sets strong boundaries for the employment of technologies with higher energy efficiency. Also the shift from the use of energy from non-renewable to the use of energy from renewable sources is supported by several measures. Especially, the promotion of renewable energy will have a positive impact on the heat pump market. However, what becomes apparent when examining the legislation presently in place, the support for renewable energy is usually implemented at general level (covering various available renewable energy technologies) and does not specifically target or promote heat pumps. This aspect will be further examined in the following parts.

11 20% reduction of greenhouse gas emissions compared to 1990, 20% energy savings by 2020 (compared to a business as usual scenario) and a 20% share of renewables in 2020

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2.1.1 The Directive on the Promotion of the Use of Energy from Renewable Sources (RES Directive)

The Directive on the Promotion of the Use of Energy from Renewable Sources “RES Directive” EC/28/2009 aims at increasing the share of renewable energies in the overall energy mix within the EU, leading towards reaching a share of 20% renewables by the year 2020. The significance of the RES Directive for the heat pump technology is that it officially recognises it as a technology that makes use of renewable energy sources (RES). In addition to setting the target share of RES to be reached by Member States (MS) it also aims at reducing finale energy demand as well as GHG emissions and therefore securing a stable independent energy supply within the EU on a long term basis. The RES Directive also delivers a common framework of guidelines as a support tool for MS to reach the defined targets. These guidelines touch topics such as eligibility, statistical transfer, joint projects, guarantees of origin, administrative procedures, information, training and access to the electricity grid. Overall, the RES Directive can be reviewed as having a positive impact on heat pump technology, as it acknowledges heat pumps as a technology that makes ambient energy from air, water and shallow ground useful (applies to electrical as well as to gas driven heat pumps). Furthermore, the amount of renewable energy used by heat pumps will be calculated based on final energy. A minimum requirement on seasonal efficiency to be reached at standard rating points is set by the RES Directive and only the heat pumps that reach a minimum efficiency (SPF of 2,53) will be counted. 2.1.2 Energy Performance of Buildings Directive (EPBD)

As of July 2010, the recast of the Energy Performance of Buildings Directive (EPBD) 2010/31/EU is in force, focusing on the improvement of energy performance of buildings, building elements and technical systems via a set of minimum requirements. The directive centres on topics such as providing a framework for the calculation of energy performance, the share of nearly-Zero-Energy-Buildings (nZEB), energy certification of buildings and regular inspections of heating and air-conditioning systems. The directive has already been transposed into national law by Member States. It includes obligatory reporting on the process which is handed to the Commission who can then assess the progress the MS are making. Upon request, the Commission can also provide guidance to MS for a quicker implementation.

The EPBD, as well as the RES Directive, has a positive impact on the development of heat pump technology and heat pumps can benefit greatly from the improved requirements set in the recast. Similar to the directive discussed above, the EPBD recast acknowledges heat pumps as a technology that transfers heat from natural surroundings (air, water and ground) to buildings or industrial applications. The EPBD recast sets minimum requirements for the building envelope and it also requires taking into consideration available heating alternatives prior to construction. Heat pumps can further benefit from the requirements set by the recast on the efficiency of heating, hot water, air-conditioning and ventilation systems alone or as a combination, if a comparison of systems and energy sources is allowed or even encouraged.

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2.1.3 The Ecodesign for Energy-related Products Framework Directive, Lot 1

(Ecodesign Directive)

The framework for the setting of Ecodesign requirements for energy-related products (recast) (Directive 2009/125/EC) aims at establishing Ecodesign requirements for several product groups of the heating sector, where Lot 1 encompasses products like heat pumps, boilers, output capacity as well as heating and combi-systems, Lot 2 covers water heater and Lot 10 includes air-conditioning units below 12 kW. Through the implementation of this directive consumers will have direct insight into the energy consumption of various heating installations and giving them the opportunity to take the energy efficiency into consideration when choosing such a system. The requirements are based on a common methodology and the result will be visualized on a label in the same way as it is already done for several other appliances, starting with a grading system from A+ to G, which will then later be upgraded to A+++ to D in order to take into account expected technical progress. Through this rating system the energy label will function as an advertisement for efficient products for a tenant or buyer. Once implemented, the Ecodesign Directive will have far reaching implications for manufacturers, importers, consumers, contractors, consultants and architects. It is linked to the EPBD and will promote innovation in design and marketing of boilers. So far the final working document is positively perceived by the industry in general and a quick implementation is desired. The document:

- maintains comparability among functionally equivalent products, - enables performance declaration for two different temperature distribution levels (35 °C and

55°C), - is applicable to 3 climate zones (average, warm and cold) and - incorporates system performance via installer label.

The implementation of the Ecodesign Directive will most likely have a positive effect on heat pump technology as it enables the comparison of functionally equivalent heat generators on the basis of efficiency. It applies to a wide range of systems and products, incl. combi-systems for heating and hot water production. At the same time it is independent of the energy source used, covering fossil fuel combustion, solar thermal, electric or thermally driven heat pumps as well as cogeneration. Basis of this comparison is the primary energy efficiency which is determined through the ETA value, where ETA is the ratio of useful heat provided by the product and its annual primary energy consumption. 2.1.4 Energy Labelling Directive

The Energy Label for heat pumps is part of the “Directive on the Indication by Labelling and Standard Product Information of the Consumption of Energy and other Resources by Energy-related Products” 2010/30/EU. It applies to all energy-related products with significant direct or indirect effect on the consumption of energy and other essential resources during their use.

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Similar to the Ecodesign Label discussed prior, the energy label will include the energy performance of a product (with a rating system A to G). Currently, a delegate act for an energy label applicable to heat generators is being developed simultaneously to the implementation process of the energy- related products, Lot 1 and 2. The impacts of the Energy Labelling Directive on heat pump technology can be expected as positive impact. It will be based on system efficiency as determined by the energy-related products Lot 1/2/10 and enable end-users to compare different functionally identical heat generators with respect to this characteristic. This gives the end-users the chance to consider system efficiency and based on this quality, to select the appropriate product for their specific needs. Furthermore, heat pumps benefit from the Energy Labelling Directive as the currently proposed transitional calculation method will place heat pumps in top tier/classifications of the label, making them a desirable option for heating. In the course of implementing the Directive the only heat pumps that will be allowed to enter the market will score an efficiency class of A + or higher. 2.1.5 Energy Efficiency Directive

The Energy Efficiency Directive (EED) (2012/27/EU) aims at increasing the efforts currently made by Member States to use energy more efficiently throughout all stages of the value chain. It therefore contributes directly to the 20/20/20 target of 20% primary energy reduction by 2020. However, according to current energy demand it is necessary for the European Union to more than double its energy saving efforts in order to achieve this ambitious target. The EED was adopted in summer 2012 and will replace both the Cogeneration Directive (2004/9/EC “CHP Directive”) and the Energy Services Directive (2006/32/EC “ESD”). The new directive will cover and regulate all sectors with energy savings potential. In order to improve the energy efficiency of products and installations, measures must be taken to achieve the non-binding target by 2020. The progress will be re-assessed in 2014. If Member States fail to reach the non-binding targets, binding targets will come into force. Among other things, the EED states that Member States should set indicative national energy efficiency targets that are based either on primary or final energy consumption or energy intensity. Furthermore Member States are obliged to renovate 3% of the total floor area of heated and/or cooled buildings owned and occupied by their government each year. National energy efficiency obligation schemes achieving annual savings of 1.5% will have to be put in place and policies promoting the use of efficient heating and cooling systems (using high efficiency cogeneration at local and regional level) will need to be adopted. In this context, a cost-benefit analysis by the Member States based on climate conditions, economic feasibility and technical suitability will need to be performed in order to identify saving potentials. Member States will also have to take on authorization criteria for new electricity production taking CHP and district heating into consideration (incl. urban and rural spatial planning requirements). Member States should create certification schemes for providers of energy services, energy audits and other energy efficiency improvement measures and installers of building elements (e.g. heating, cooling, and hot water). This will help advance the energy services market and ensure access for small and medium-sized enterprises to this market.

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Overall, a long-term strategy beyond 2020 needs to be established by Member States that deals with mobilizing investment for the renovation of residential and commercial buildings. This strategy should aim at improving the energy performance of the building stock and should address cost effective deep renovations. These renovations should reduce the delivered as well as the primary energy consumption of a building. With the final version of the Directive on its way it is now expected that it will be possible for the EU to realise around 15-17% of energy savings by year 2020, thereby almost fully reaching the target of 20%. The future impact of the Energy Efficiency Directive on heat pump technology is yet unclear, but can be expected to be a rather positive impact. As the EED will be concluded quite quickly and Member States will be obliged to start implementing energy efficient measures in the near future, heat pumps as a well-developed technology can already play a role in energy efficiency obligation schemes. The fact that the EED mentions the efficiency potential of buildings and of distributed energy production is essential for the advancement of heat pump technology. The Energy Efficiency Directive is more focused on increasing the efficiency of large-scale installations, especially CHP and district heat. Therefore the impact on heat pumps is not as big as for other policies. 2.1.6 EU Energy Roadmap 2050

The European Commission has issued a roadmap for moving to a competitive low carbon economy in 2050 (COM(2011) 112 final) to ensure that the political measures in place to achieve the 2020 targets are continued to deliver beyond 2020. For instance it is expected that GHG emissions will be reduced by about 40% in 2050. The “Energy Roadmap 2050” presents different pathways towards a low-carbon energy sector, while at the same time keeping Europe competitive and securing the energy supply. The political measures to achieve the 2020 targets will continue to deliver beyond 2020. The Commission identifies four main components of decarbonisation for the energy sector on which it bases its scenario development:

- Energy Efficiency (mostly impact on demand side), - Renewable Energy Sources, - Nuclear Energy and - CCS (impact on supply side).

Within the Roadmap these components are combined into two current trend scenarios and the following five decarbonisations scenarios:

- High Energy Efficiency scenario, which eventually leads to 41% decrease in energy demand in the building sector by 2050 (compared to 2005 levels)

- Diversified supply technologies scenario, all energy sources compete on a market basis, decarbonisation is led by carbon pricing

- High Renewable Energy Sources scenario, - Delayed CCS Scenario - Low Nuclear Scenario

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The Roadmap states that “renewable heating and cooling are vital to decarbonisation” and gives a clear reference that “locally produced energy sources (incl. heat pumps and storage heater) and renewable energy […] is needed.” Unfortunately this is the only reference within the entire Roadmap leaving the heat pump technology and the entire heating and cooling sector underrepresented and overlooked in all the presented scenarios. We assume that the EU Energy Roadmap 2050 most likely will have no significant impact on the heat pump technology. The roadmap does not contain any direct reference to heating and cooling neither in the council conclusions nor in the report of the ITRE Committee. 2.1.7 Renewable Energy Communication

The Renewable Energy Communication complements the RES Directive. The communication outlines possible policy options for beyond 2020 and further explains how renewable energy and respective technologies can be integrated into the single market to become competitive and ultimately market driven. While fostering competitiveness through administrative regimes, stable and reliable support schemes and easier access to capital the communication also aims at advancing cooperation mechanisms and trade between Member States and thereby encouraging a cross border energy infrastructure. The communication also deals with topics such as completing the internal energy market in the electricity sector by 2014 and allowing the consumers to become producers (prosumers), e.g. promoting smart metering etc. Additionally research and development in the energy sector are encouraged through different EU funding Schemes, such as the Cohesion Policy Fund with Horizon 2020. The Commission is currently working on drafting a legislative proposal which will be published in 2013. However, this communication is considered to have no significant impact on heat pump technology. On the one hand, we consider the equal treatment of technologies, the bonus to those that make use of RES as well as administrative procedures and the R&D programmes that are put into place as positive aspects of the communication that may lead to positive impact. On the other hand, aspects, such as no dedicated recognition and support for the heating and cooling sector in general and heat pump technology in particular may impact the potential of heat pump technology in the future in a negative way. The only reference found in the communication is: “The heating and cooling sector is a very local market, needing local reforms and infrastructure”. 2.1.8 F-Gas Regulation

The F-Gas Regulation (EC Regulation No 842/2006) controls the use of the three fluorinated Gases groups covered by the Kyoto Protocol. Within the regulation heat pumps fall into the category “air conditioning systems and stationary industrial applications” and the regulation follows two main principles:

- Avoiding F-Gases whenever cost-effective & environmentally superior alternatives are available and

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- Improving leak tightness of equipment containing F-gases via labelling, training and certification of personnel and companies handling this type of gases, containment and proper recovery.

So far the regulation has not been properly implemented in all Member States, however it should be noted that in countries where it has been transposed into legislation the regulation has led to stabilized emissions of the F-gases. Currently, the Commission plans to come forward with a review proposal to strengthen the F-Gas regulation and overall EU measures to reduce F-gas emission. There are four policy options based on these efforts:

- No further action, - Strengthening of specific provisions within the F-Gas regulation, - Phasing down by introduction of maximum, gradually declining, limits for the quantity of

F-Gases placed on the EU market, expressed in terms of CO2 equivalent and - Bans by prohibiting the use of F-gases on certain applications

The impact the regulation will have on the heat pump technology is dependent on the outcome of the decision. Most heat pumps use F-gases, as these gases are neither toxic nor flammable and very energy efficient. Therefore change in legislation would have a major impact on the heat pump technology and market and it is not possible to give a realistic assessment of whether the effect of the reviewed regulation will be positive or negative. Assuming it is decided on a ban on F-gases the heat pump market would be faced with major consequences that will be difficult to cope with. Therefore the majority of stakeholders as well as several NGOs have spoken out in favour for a gradual phase-out, giving the market a chance to adapt to the new requirements. How this will affect heat pump technologies depends strongly on the time frame and the strictness of the requirements. Thus, the draft proposal of the Commission will bring more clarity. So far it can be observed that heat pump manufactures are aware of the global warming potential of these F-gases and an effort is made to find more environmentally friendly and safe alternatives while simultaneously ensuring the leak tightness of systems and system elements. 2.1.9 EU Commission decision on an Ecolabel for Heat Pumps

The Commission has decided on an Ecolabel with ecological criteria covering all electrical driven, gas driven and gas absorption heat pumps with a maximum output capacity of 100 kW. The label is based on regulation 66/2010 on the EU Ecolabel. Within this decision sanitary hot water heat pumps as well as exhaust air heat pumps are deliberately excluded. However, it has become apparent that the Ecolabel for this product group is less necessary than for others, as heat pumps and other heat generators are already nearly completely governed by legislation for the duration of their useful life. Based upon this fact the future use of the label is being debated among stakeholders and it remains questionable if the present Ecolabel offers any additional benefits. A positive benefit is that the Ecolabel enables a direct comparison of heat pumps with competing technologies like gas and oil boilers, which highlights the efficiency of heat pumps.

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Therefore the decision is supposed to have a positive impact. Most likely the acceptance as well as the impact of the Ecolabel will be moderate, especially when taking into account the introduction of the mandatory energy label discussed previously, which offers guidance in the same direction. 2.1.10 Summary of European Policies

The previous sections have discussed the major legislative acts currently in place or under discussion on the European level. Table 6 gives an overview of the political instruments and their expected impacts on the heat pump technology. Table 6: Summary of the main legislative acts and their impact on heat pump technology

Legislative Acts Impact on Heat Pump Technology

RES Directive Positive Impact

EPBD Positive Impact

Ecodesign for ErP - Framework Directive; Lot 1

Positive Impact

Energy labelling Directive Positive impact

Energy Efficiency Directive Rather positive Impact

EU Energy Roadmap 2050 No significant Impact

Renewable energy communication No significant Impact

F-Gas Regulation Depends on Decision

EU Commission decision on an Ecolabel for heat pumps

Positive Impact

In the first place, the European legislation has an impact on the national legislation of the Member States and an indirect impact directly on heat pump sales. In principle the current national legislation for heat pumps is assumed in the “CPI” scenario with a full and timely implementation of all legislation pending on national or EU level. As previously explained, the H+ and H++ scenario are developed from a market potential perspective and do not include specific assumptions on (additional) policies, but would make additional policies necessary to be implemented. Apart from the F-Gas Regulation, where a decision is still pending, all policies are included in the “CPI” scenario as they are agreed on already. The following section will discuss national policies for key markets of heat pump technologies while subsection 2.2.9 gives summary tables of the discussed policies and their likely impacts on heat pump technology.

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2.2 National Policies for Key Markets

2.2.1 Austria

In the time period between 2000 and 2009 Austria has experienced a strong growth in the space heating heat pump market. A decline was observed in the years 2009 and 2010 before in 2011 the market picked up again with a 5.1% overall increase in sales compared to prior years and a growth of 13.3% in 2012. Austria is aiming at fulfilling its binding target of 34% for the use of renewable sources by 2020. In 2010 the share of renewable energy sources in final consumption of energy increased to 30.1%. Austria aims at achieving around 80% savings through the combination of energy efficiency measures regarding building shells (63.8%) and heat provision (16.2%) in 2016. Other regulations and requirements aim at promoting the use of RES through “innovative climate-relevant systems” that should be used within the residential and public sectors. Further measures for the increased use of solar heat, heat pumps and biomass heating are currently being planned. In Austria the major instruments related to energy efficiency and RES-use in buildings (subsidies to the residential building sector, building code and inspection in residential buildings) fall into the competence of regions. Efforts have been made towards a harmonisation of building codes based on the individual building codes of the different federal states, the so called OIB-Richtlinien. Additionally minimum requirements on energy-related criteria in the residential building subsidy scheme ("Wohnbauförderung") have been set in place; however there still exists a large variety of regional subsidy schemes which also include financial incentives for the installation of heat pump technology. In general the amount of financial support, i.e. subsidy depends on type of heat pump (in combination with solar thermal or PV system), on the SPF (4.0, in combination with PV/Solar sometimes less with 3.8-3.5) and the household income as well as the situation (retrofit or new build). Overall the policies in place in Austria have a low impact on future heat pump sales. Most action takes place on a regional level. Among regulatory law the current regulations and requirements promoting the use of RES are most likely to have a low to medium impact on heat pump sales. The planned measure for increasing the use of renewables and heat pumps in the heating sector will most likely have a medium impact on sales number. Other laws like the “OIB Richtlinien” and the planned harmonisation of building codes as well as the housing subsidy “Wohnbauförderung” only have low impact on sales numbers. 2.2.2 Belgium

In Belgium energy and related certification of RES installations is administered on regional level in Flemish, Walloon and Brussels Region. Certain policy instruments exist in all regions, with possible difference in the level of implementation. For example the Walloon regional government decided to adopt a more ambitious 20% renewable energy consumption target by 2020, compared to the 13% mandatory Belgian target.

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Implementation of the EPBD in Belgium includes the energy performance standards for new buildings and the energy performance certificate for existing buildings. Both initiatives define maximum levels of annual primary energy consumption and specific transmission heat loss conditions, combining system efficiency and good insulation in buildings. Several policies aim at promoting the development, installation and usage of RES-installations on the federal level in Belgium. There are training programmes for RES-installers. Moreover, the European quality label, EHPA EUcert, is applied on national level for heat pump installations. A certification scheme for companies and installers of heat pumps is also applied in all three regions within implementation of the F-gas regulation. CE-marking of products is also applied under ErP Lot-1 in all regions. Additionally, in the Flemish region a more profound support scheme is developed in form of an action plan. The Flemish government implements the Green Heat Action plan to propose support for specific systems, particularly renewable energy in heating and cooling. Under the action plan grid operators and municipalities are responsible for setting up premium schemes. In the Flemish region a minimum share of 85% of heat demand is to be provided from RES. The seasonal performance is determined to be larger than 4. Among the tax reductions offered by the Federal Government for energy saving measures, a 40% tax reduction is offered for heat pump installations. Heat pumps are also supported by direct or indirect subsidies. In new buildings, the subsidies are linked to the building energy performance index, in terms of primary energy consumption. In existing buildings, the subsidies are related to the energy performance of the system (minimum Ecolabel criteria). Heat pump boilers are only subsidized in the Walloon Region. Similar to Austria a lot of activities are still governed on a regional level. Most regulatory law, financial incentives and information instruments currently in place have a low impact on heat pump sales. Apart from the Green Heat Action plan (in the Flemish region) which will most likely only have a low impact on heat pump sales, hardly any further measures or incentives are in a final planning stage. Among the discussed actions only the financial incentive of a 40% tax reduction for a heat pump installation may have a low to medium impact on the development of heat pump technology. 2.2.3 France

The French government has set the target of a 23% share of renewables in the energy mix by 2020. With this aim the RES Directive is implemented in France by the Grenelle law. In addition to this target, France aims at a 38% reduction in energy demand and a 20% reduction in CO2 emissions. Specific targets for each technology are stated in statutory texts (PPI: “Programmations pluriannuelles des investissements”). The PPI chaleur 15/12/2009 regarding heat pumps mentions that The National RES Industry Roadmap projects are aiming at having two million individual households heated by heat pumps in 2020. This project will be implemented in one step in 2012, aiming at 2,245 million heat pump installations. In order to reach this interim target the French government has included air to air heat pump to the technologies. Within the implementation process of the EPBD, France applies a specific regulation on thermal energy in buildings: RT2012. The RT2012 provides a maximum allowable demand of 50 kWh/m²a for new buildings. Specific targets have been fixed for RES used in single-family dwellings with a

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minimum consumption threshold of 5 kWh/m²a. However, these targets have not been extended to multi-family dwellings. As renewable energy becomes mandatory for individual housing, the heat pump market in new buildings will necessarily increase. The method used for calculating RES for heat pump is different from the one described in the RES directive. It is done in primary energy. The primary to final energy ratio for electricity is taken as 2.58. In France the subsidy scheme for heat pumps operates mainly with a tax reduction since 2005. The cost of the heat pump unit serves as a basis for the deductible amount and the subsidies vary depending on the year of purchase and the type of heat pump. In 2012, the rates were 26% of the cost for a ground source heat pump and sanitary hot water heat pump, and 15% in the case of air/water heat pumps. The French product labelling scheme NF PAC was initiated in 2006. This label sets a minimum COP level, with test conditions in accordance with EN 14511 (nominal and application conditions). Moreover, NF PAC specifies requirements regarding minimum quality levels. Random audits are carried out for monitoring and control by a random and independent body. Additionally, energy saving certificates and white certificates managed by energy suppliers are in operation to financially support heat pumps installations. In France the regulation on thermal energy in buildings (RT2012) with its maximal allowable heating demand for new buildings has a medium impact on heat pump development. Together with the RT2012, the target of increasing the number of households that have heat pumps installed will also have a medium to high impact for heat pumps in the French market. Other policies and financial incentives like the RES Directive, the National RES Industry Roadmap only have low impacts on heat pump development. 2.2.4 Germany

German energy policy is based on the principle of providing balance between security of supply, affordable energy prices, effective environment protection and climate change mitigation in an efficient manner. The Energy Savings Ordinance (EnEV) came into force in 2002 and combines regulations for the insulation of houses with efficient systems engineering to enhance reduction of primary energy use in the German housing stock. This combination makes it possible for building owners to rely on a combination of existing house insulation with efficient heating systems to reach the required standards set by the EnEV. Within this regulation an energy performance certificate EPC (Energieausweis) based on DIN V 18599 and DIN 4701-10 must be provided by owners containing information on the energy balance and energy efficiency of the building to buyers or tenants. The German Act on the Promotion of Renewable Energies in the Heat Sector (Erneuerbare Energien-Wärmegesetz, EEWärmeG) entered into force on January 1st 2009. The EEWärmeG introduces an obligation to use renewable energies to cover the heating energy demand in new buildings and public buildings already erected. The law makes it mandatory that by 2020, 15% of the energy used for heating in newly built houses comes from renewable energy sources. The use of heat pumps is explicitly mentioned as a contribution to reaching that goal.

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Germany has special support incentives within 2012 Guidelines for the support of measures to utilise renewable energies in the heat market providing subsidies for installation and market penetration of heat pumps. The market incentive programme contains two segments, namely investment grants for renewable heating installations up to 100 kW thermal (competency Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA) and long-term low-interest loans (soft loans), including a redemption grant, for installations larger than 100 kW or infrastructure measures (competency The Federal Bank Kreditanstalt für Wiederaufbau (KfW)). The basic support offers funding for the utilisation of renewable energies for heat generation. Support for ground source heat pumps is on average approx. €2800 per installation with an additional support for every kW over 10 kW depending on the heat output. Support for air source heat pumps varies between €1300-1600 whereas the support amount for gas-driven heat pumps is the same as ground source heat pumps. There are limits for seasonal performance of heat pumps in order to benefit from the support incentives. (German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, MAP 2012). Additionally among various renewable energy technologies installations for utilising deep geothermal energy (drilling depth of more than 400 m) and large, efficient heat pumps with a rated heat output capacity of more than 100 kW at the design point are listed as eligible for support. KfW grant amounts to €80 per kW heat output capacity at the design point, but at least €10,000 and at most €50,000 per individual installation (German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, 2012). In Germany the Renewable Energy Heat Law (EEWärmeG) and the Market Incentive Programme are promising measures that have a medium impact on heat pump sales. Other instruments like various labels and the Energy Saving Ordinance (EnEV) and its planned recasting only have a low impact on heat pumps. 2.2.5 Italy

Both, heating and cooling are requested with high seasonal demand in Italy due to prevailing Mediterranean climate throughout the country. Heating and air conditioning systems constitute about one-third of total energy needs. Heat pumps are therefore considered to play an increasingly important role, as they can be used for both, heating and cooling. However, currently they are a niche market in remote locations. Regulations governing Renewable Energy Sources (RES) derive from international regulations and European Commission directives. In June 2010, Italy submitted its National Renewable Energy Action Plan. In March 2011 the RES Directive was implemented by National Legislative Decree n°28. The Decree sets specific targets in order to achieve the overall national target of 17% share of energy from renewable sources in the gross final consumption of energy in 2020. The Decree also reforms the whole system of incentives for RES and introduces some changes in the administrative procedures. National laws are interdependent with regional, provincial and municipal legislative authority. The Legislative Decree provides the general framework, whereas the definition of the specific norms remain the responsibility of further Ministerial Decrees to be adopted namely by the Ministry of the Economic Development (usually in concert with the Ministry of the Environment and Land and Sea Protection) and in some cases with the agreement of the so called “Unified Conference” of regions,

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provinces and towns. For example, water discharge resulting from heat pumps is regulated by the municipalities. The new law will require the adoption of 14 Ministerial Decrees. Additional decrees are required for the obligational use of renewables in new or restructured buildings (article 11), for the certification of installers (in accordance with EU Cert scheme Art. 15 and Annex 4), for incentives for ”thermal renewable systems” for small installations (up to 500 KW) for heat pumps, for biomass and for solar thermal (Art. 28). Further a decree is needed for revision of Annex 3 concerning the total demand for heating, cooling and hot water. Annex 3 states three suggestions for renewable shares as 20% from May 2012, 35% from January 2014 and 50% from January 2017. White Certificate schemes or Energy Efficiency Titles (EET) are important market oriented instruments in force in Italy which represent marketable documents issued by the Energy Market Administrator testifying the energy saved by the energy distribution companies, as well as by their controlled partnerships, and by the Energy Service Companies (ESCO). This incentive scheme has been introduced in the national Decree no 28/2011 also to promote renewable energy sources. Similar to the adoption of the RES Directive, the implementation of the EPBD in Italy is a shared task between the state and the 21 regions and autonomous provinces. Implementation started in 2005, with a national transposition decree, which established a transitional period during which:

• the minimum requirements were tightened by about 30%, with respect to previous levels, • methodologies for determining energy performance of buildings were confirmed, in reference

to the already existing advanced regulations, • Energy Certification of Buildings (ECB) was replaced by a declaration produced by a

professional designer (assessor accreditation was not available yet), which was limited to new or renovated buildings, and then in 2006 was also extended to buildings on sale and rental,

• boiler inspection procedures were slightly improved, in respect to the already existing regulation from 1993.

The implementation of ErP Directive in Italy is done under National Legislative Decree n°15 issued in February 2011. The implementation measures include requirements for electric motors, fans between 125 W and 500 W, air conditioners and comfort fans. Italy as a Member State also undertakes requirements of the Energy Efficiency Directive. However, as the directive is relatively new (September 2012) there are no regulations in Italy for its national implementation yet. Nonetheless, it is highly possible that the directive will have a positive influence on the heat pump market with its requirement of 3% renovation of heated and cooled buildings owned and occupied by the government. In terms of financial incentives, Italy introduced a tax deduction of 55% for the installation of energy efficient heat pumps. This deduction also covers the expenses related to the installation of these systems to substitute existing systems. The timeline of the incentive was extended to June 2013 by the Italian Financial Law of 2012, Law no.83/2012. The same “Decree on Growth” increased the deduction for general buildings renovations from 36% to 50% until June 2013; in this case, also the maximum deductible cost was increased from €48,000 to €96,000. Several regulatory laws and financial incentives with medium impact are in place or being planned in Italy. Among them are planned decrees including the decree for revision of Annex 3 and for the

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implementation of the Energy Efficiency Directive. A 55% tax reduction and a decree for incentives for thermal renewable systems also have medium and low to medium impact, respectively. 2.2.6 Spain

Renewable energy policy of Spain is influenced by EU policies as European Regulations are automatically incorporated as national laws. Three Royal Decrees have been published in the last years to transpose the Ecodesign Directive and the EPBD. So far the RES Directive on the promotion of the use of energy from renewable source has not been transposed.

• Royal Decree 187/2011, related to the establishing of Ecodesign requirements for energy-related products incorporates Ecodesign Directive.

• Royal Decree 1390/2011 aims to regulate the indication of energy consumption and other resources of energy-related product by means of labelling and standard product information. This Decree also incorporates Ecodesign Directive.

• Royal Decree 47/2007 is developed to approve the basic procedure for the certification of the energy efficiency in new buildings. The Decree partially transposes the content of EPBD (Directive 2002/91/CE).

The purpose of the activation plan is to reduce the energy consumption of 330 energy consuming centres belonging to the central government by 20% by 2016, as set out in “Savings Plan and Energy Efficiency in Buildings of the General State Administration (PAEE-AGE)" The savings are supposed to be achieved by performing saving measures and energy efficiency, in the form of energy service contracts, conducted by energy service companies. The objective of the saving plan is a better efficiency of the final use of the energy in line with Directive 2006/32/CE put into force on April 5th in 2006 on energy end-use efficiency and energy services. Additionally the Spanish government developed specific measures or legislation that are directly or indirectly related to the development of the heat pumps. The so-called GEOTCASA Programme aims to promote use of ground source heat pumps for heating, hot water and refrigeration installations. The instruments of the programme are ESCO’s (Energy Service Company) that are authorized according to their technical, economical and operative capacity with prospect to geothermal installations. The programme enhances the firms in the sector to execute a comprehensive service contract with the user to provide renewable energy adapted to their needs. The calls relating to the authorisation of collaborative firms were published in May 2010, within the Spanish Renewable Energy Plan 2005–2010 framework. The financing period is set as 10 years and the total amount varies between 800 €/kW and 2,600 €/kW (max €350,000/project) with an interest rate of 2.2%. The so-called RENOVE project aims at enhancing the replacement of inefficient installed air conditioners that have less than 12 kW capacity, by new class A air conditioner units. Due to the fact that more than 90% of all air conditioners units below 12 kW capacity in Spain are reversible type, the RENOVE Plans are in fact promoting sales of heat pump units. Subsidies within programme vary

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from 150 to 500 € per unit, depending upon capacity, type of equipment or autonomous region. A documentation of the purchase and replacement is required from the installer. Several autonomous regions have launched specific programmes to promote the use of the geothermal energy in heating, cooling and hot water applications with varying scope, duration and the amount of the incentives. However, the fact that several regional governments have programmes in operation with the same aim show the increasing attention that Spanish authorities are conceding to the use of energy coming from renewable sources and specifically geothermal. Spain is currently planning to finance incentive programmes that will most likely have a medium to high impact on heat pumps. The GEOTCASA supports the use of ground source heat pumps while the RENOVE aims at replacing air conditioners which is often done by heat pumps. The current policies in place like the Ecodesign Directive and the planned implementation of the RES Directive have a low to medium impact on heat pumps. The Energy Performance of Buildings Directive already has a medium impact on heat pumps for the Spanish market. 2.2.7 Sweden

The Swedish market is already mature for domestic heat pumps (esp. geothermal heat pumps). The acceptance and use of renewable heating have been quite good for already some years. Parallel to the market saturation for single family houses, the use of heat pumps in multi-family houses and commercial buildings are increasing. However, the prevailing energy policy is promoting the use of biomass and trying to limit the use of electricity for heating. There is no specific policy support to increase the use of heat pumps in heating and cooling. This results in promotion of biomass-based district heating and pellet systems rather than heat pumps. Exhaust air heat pumps that recover energy from the outgoing ventilation air, using it for heating and DHW production, have been frequently installed in new built single family houses during the last 30 years. Around 200.000 exhaust air heat pumps have been installed. The new building regulations set down strict limitations on yearly energy demand per m² and also on electric peak power demand. More efficient and powerful inverter driven exhaust air heat pumps that fulfill the new regulations have been developed. Moreover; direct electricity heating will only be allowed in houses meeting passive house standards and in houses where no viable alternative exists. Air source heat pumps are often used to complement direct electric heating mainly in single family houses. Due to lack of waterborne systems aAlmost all air source heat pumps in this the residential market are of single split type in the single family houses. As a consequence of regulations and due to climatic reasons air to water heat pumps may only be deployed in the southern part of Sweden in the case of new buildings. They may however be installed without restriction throughout the country in the case of retrofit. A tax reduction scheme is applied for heat pump installations since December 8th 2008, both for renovation and extension works in private households. For each owner of a private property the

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scheme provides offsetting of up to 50% of the labour costs related to retrofit works against tax. The maximum amount that may be deducted is approximately € 5,500. Being a mature market for domestic heat pumps there are now regulatory laws in place or underway that have a possible impact on heat pump technology. There are tax reduction schemes that have a low to medium impact on heat pump sales and also various labelling schemes that function as information instruments, but their impact can also be categorized as low. 2.2.8 United Kingdom

The UK government set out its Renewable Energy Strategy in 2009 for achieving the 15% target in 2020. The UK government thus retains responsibility for energy regulation, energy services, appliance labelling, mandatory obligations and energy services. The liberalised energy markets are regulated by an independent body, Office of the Gas and Electricity Markets (OFGEM). Policies related to environment are the responsibility of the Department for Environment, Food and Rural Affairs (DEFRA). DEFRA has lead involvement in all labelling activities of heat pumps, the various preparatory studies (e.g. Lots) and also implementation of F-gas regulations. They are operating the Market Transformation Programme (MTP) that directly addresses Ecodesign and Labelling. The department also has responsibility for the heating systems under the EPBD and administers the National Calculation Methods (Standard Assessment Procedure (SAP) for dwellings and the Simplified Building Energy Model (SBEM) for non-dwellings). The department is in close co-operation with the Department for Communities and Local Government (DCLG) on Building Regulations that requires compliance with CO2 targets that are calculated using the National Calculation Methods and approves any vendor software that uses them. As DEFRA is responsible for F-gas regulation implementation, it has allowed at least four separate commercial registers of “safe refrigerant handlers”, using two different qualification regimes: City and Guilds 2079 and a separate one from Construction Skills. Matters relating to housing and building as well as implementation of EPBD both via Building Regulations for efficiency matters related to air conditions (except heating) and Energy Performance Certificates/ Air Conditioning Inspections are currently under the responsibility of the Department for Communities and Local Government (DCLG). There are no heating system inspections in the UK, but just an information provision arrangement. A number of schemes supported by the relatively new Department of Energy and Climate Change (DECC, established in 2010) provides support tools for heat pumps:

• Enhanced Capital Allowance (ECA) scheme provides tax relief on energy-saving equipment for businesses considering a list of products. Products eligible for the list must meet certain criteria e.g. COPs measured to EN 14511. The scheme is regarded as a certification of quality runs on manufacturer’s self-declaration which is subject to control. The scheme is recently being operated by the Carbon Trust (CT).

• Green Deal and the Energy Company Obligation (ECO) are the government support

mechanisms for the uptake of energy efficiency measures, operated by GEMSERVE. The

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Green Deal finance mechanisms are based on the principle that eliminates the need to pay upfront for energy efficiency measures by enabling use of estimated annual savings on an individual property to obtain a loan to buy efficiency enhancements with a loan tied to electricity bill to the property. The proposed solution includes a new financial payment mechanism, accreditation of the associated Green Deal participants, increased consumer protection and the provision of information to assist consumers in making an informed decision about investing in energy efficiency measures. However, concerns are raised as the Green Deal starts to emerge, as generating electricity and heat will probably be of secondary importance after all insulation measures have been installed.

• Renewable Heat Initiative (RHI), operated by OFGEM, currently only addresses non-dwellings.

The initiative pays a tariff for every kWh of useful heat across a range of technologies. Air to air source heat pumps are considered to be a mature market and too difficult to meter and hence are not seen in the need of incentives. Air to water may be included as long as they are not reversible. So far the majority of the applications were for biomass boilers. There are significant concerns regarding the quality of information provided and quality of heat meter installations which is a fairly novel idea in the UK.

• Micro-generation Certification Scheme (MCS) certifies micro-generation technologies used to

produce electricity and heat from renewable sources. It has started life as Clear Skies programme which is the principle source of grants for heat pumps provided that the product and installer are accredited. It is accepted as eligibility requirement for the Government's financial incentives, which include the Feed-in Tariff and the Renewable Heat Incentive RHI. The scheme has its own set of criteria, uses EN14511 as Standard for heat pumps which covers all renewable products up to 45 kW capacity.

• The Renewable Heat Premium Payment (RHPP) is a one-off grant aiming to meet the cost of renewable heat technologies until formal launch of domestic Renewable Heat Incentive (RHI) tariffs for domestic customers. Eligibility criteria are launched by the government and require micro-generation Certification Scheme (MCS). Air to water and ground source heat pumps are available within the scheme but not air source heat pumps.

Two independent entities, funded by DEFRA, the Energy Savings Trust (EST) and the Carbon Trust (CT), are responsible for administering many of the policies directly related to investment in carbon emissions reduction. The Carbon Trust aims at reducing carbon emissions from all aspects throughout the UK excluding dwellings. The Energy Savings Trust is principally focused on dwellings and has commissioned major research on performance of heat pumps in domestic settings as well as on wind turbines, hot water energy and water consumptions, condensing boilers and other aspects such as solid wall insulation. Compared to the other examined markets many activities are taking place in the UK, especially the planning of regulatory laws and financial incentives. However, most of the measures will only have a low impact on heat pump sales. Other policy and information instruments only have low impacts on heat pump technology.

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2.2.9 Summary of national Policies

Table 7 and Table 8 give an overview on national policies for all key markets in the categories “regulatory law”, “financial incentives” and “information instruments”. All policy instruments are rated according to their impact on the promotion of heat pump technologies with “low impact” (L), “medium impact” (M) or “high impact” (H). Furthermore, a differentiation between current and planned policies is made (both considered in the “CPI” scenario). The scenarios “HP+” and “HP++” are not dependent on current or planned policy implementation, as they are rather defined as theoretical market implementation potential with additional policies until 2030.

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Table 7: Summary of national policies for key markets

Policy AT Eva. BE Eva. DE Eva. ES Eva.

Regulatory Law

Current

OIB  Richtlinien   L   Energy  Performance  certificate  

L   Energy  Saving  Ordinance  (EnEV)  

L   Ecodesign  Directive   L-­‐M  

Regulations  and  requirements  promoting  use  of  RES  

L-­‐M      Renewable  Energy  Heat  Law  (EEWärmeG)   M   EPBD   M  

       Energy  Performance  Certificate   L      

Planned

Measure  for  the  increase  use  of  solar  heat,  heat  pumps  and  biomass  heating  

M   Green  Heat  Action  plan  (Flemish)  

L   Recasting  of  the  Energy  Saving  Ordinance  (EnEV)  

L   RES  Directive   L-­‐M  

Harmonisation  of  building  codes  

L              

Financial Incentives

Current

Housing  subsidy  (“Wohnbauförderung”)  

L  40%  tax  reduction  for  HP  installation  

L-­‐M  Market  Incentive  Programme  (MAP)  

M      

   

Subsidies  linked  to  energy  performance  index  (new  build),  to  energy  performance  of  the  system  (retrofit)  

L          

Planned

   

        Use  of  ground  source  heat  pumps  (GEOTCASA)  

M-­‐H  

   

        Replace  inefficient  air  conditioners  (RENOVE)   M-­‐H  

Information Instruments

Current

   

Training  programmes  for  RES-­‐installers   L   Various  Labels   L  

Savings  Plan  and  EE  (PAEE-­‐AGE)   L  

    EU  quality  label  and  CE-­‐marking  

L          

Planned

   

           

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Table 8: Summary of national policies for key markets (continued)

Policy FR Eva. IT Eva. SE Eva. UK Eva.

Regulatory Law

Current

RES  Directive   L   RES  regulations,  directives,  decree  

L       Renewable  Energy  Strategy  

L  

National  RES  Industry  Roadmap  

L   Transposition  decree   L          

Regulation  on  thermal  energy  (RT2012)   M   ErP  Directive   L          

Planned

    14  Ministerial  Decrees   L-­‐M       Green  Deal   L  

    Decree  for  revision  of  Annex  3  

M       Energy  Company  Obligation  (ECO)  

L  

    EE  Directive   M          

Financial Incentives

Current

Tax  reduction   L   Decree  for  incentives  for  thermal  renewable  systems  

L-­‐M   Tax  reduction  scheme  

L-­‐M   Enhanced  Capital  Allowance  scheme  

L  

Energy  saving  &  white  certificates   L  

55%  tax  reduction  (Law  no.  83/2012)   M      

Renewable  Heat  Initiative  (RHI)   L  

            Micro-­‐generation  Certification  scheme    

L  

            Renewable  Heat  Premium  Payment    

L  

Planned

           Domestic  renewable  Heat  Initiative  (RHI)  

L  

Information Instruments

Current

Statutory  texts  (PPI)  2  Mio.  HP  in  households  

M-­‐H  White  certificate  schemes,  EE  Titles   L  

EHPA  Quality  Label  scheme   L  

Market  Transformation  Programme  (MTP)   L  

NF  PAC  labelling  scheme   L       P-­‐Mark   L   Monitoring  projects  by  Energy  Savings  Trust  

L  

        Ecolabelling  scheme   L      

Planned

               

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3 Building Stock Analysis

This section gives a brief overview of the building stocks in the key markets of this study. All important characteristics such as floor area, reference building geometries, age groups, retrofit levels and building stock activities are summarized here. Detailed information on the building stock for the key markets and other relevant parameters can be found in Appendix A. 3.1 Building Stock

This section describes the current building stock in the key markets which is clustered into different reference buildings, building age groups, retrofit levels and HVAC systems. An in-depth knowledge of these characteristics and their distributions is required as a starting point for the implementation scenario calculations in section 5. 3.1.1 Floor Area

The floor area distribution in the stock is the starting point for any kind of scenario calculation. The building stock data is given for the key markets: Germany, France, United Kingdom, Italy, Spain, Sweden, Belgium and Austria. Germany and France alone account for more than 50% of all conditioned floor area within the key markets. Other comparatively large countries (in terms of floor area) are the United Kingdom, Italy and Spain. Sweden, Belgium and Austria together account for only a small share in floor area of around 8%. A further differentiation by reference building type12 is given in Figure 7. It is evident, that single-family buildings account for the largest share in floor area for each country, even though there is a large variation in the relative shares across the countries. In Germany, for example, the single-family houses account for 40% of all conditioned floor area, whereas in the UK they represent the majority with 70%. The UK has the largest single-family building stock in absolute square meters in comparison to the other investigated countries.

12 The definition of reference buildings is given in section 3.1.2.

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Figure 7: Conditioned Floor Area Distribution per Country and Building Type

3.1.2 Reference Building Geometries

To accurately define a reference building two aspects need to be described. Besides the geometry of the reference building the thermal quality of the building shell such as façade, roof and windows (see section 4.2.1.2 for in-depth) has been defined for this study. The following reference buildings are used: Residential sector

• Single-family buildings (SFH) • Multi-family buildings (MFH)

Non-residential sector • Office buildings (OFB) • Education buildings (EDB) • Trade and retail buildings (TRB) • Touristic buildings (TMB) • Health buildings (e.g. hospitals) (HEB) • Other non-residential buildings (ONB)

According to the analysis of the existing building stock, building types are identified and characterised by their descriptive parameters. As indicated in the previous sections, the single-family house (SFH) is by far the dominating building type for all countries. The second largest amount of m² floor space is assigned to multi-family houses (MFH).

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Retail, educational and healthcare buildings as well as office buildings have the largest shares within the non-residential building sector. There is a high diversity of subtypes among retail buildings, which makes a definition of many different reference buildings necessary in order to receive an accurate representation of the situation in the stock. It was therefore decided to impose the office buildings as the third relevant reference building category for this study, as offices also have distinctive and comparable usage profiles. The most relevant parameters for non-residential buildings, like internal loads, ventilation demand and operation time are similar for all office buildings and the usage profiles do not vary significantly across the surveyed countries, which makes this building type a sensible choice for closer examination. Unlike office buildings, single-family houses differ significantly between the countries. Therefore, the SFHs were divided into two categories, a detached house (for FR, IT, SE) and row-end house (for DE, UK, ES, BE, AT). A detailed description and geometries are given in Appendix A.2. 3.1.3 Building Age Groups

As the age group of a building together with its retrofit level is of significance to the overall energy performance of the building, these two parameters are also part of the investigation. Three relevant age groups are chosen for this study:

• built before 1980, • built between 1980-1989 and • built after 1990.

In all countries, in residential as well as non-residential buildings, more than 50% of all conditioned floor area was built before 1980. In case of residential buildings, the share is even about 60%. Among the focus countries Spain has the largest share of new buildings (built after 1990) of around 30% in the residential sector and 40% in the non-residential sector. For detailed figures on the age group distribution see Appendix A.3. 3.1.4 Retrofit Levels

With respect to the building envelope approximately 50% of all buildings have not been retrofitted at all. This can be observed for all the key markets. As retrofitted buildings in general require lower heating and cooling loads, the retrofit process has impact on the size of future HVAC systems. Appendix A.4 gives an overview on the distribution of retrofit levels in the stock. 3.1.5 New Building, Retrofit and Demolition Activities

Besides identifying the initial retrofit levels in the building stock it is important to have information on the activities taking place within the stock and to know their effect on the distribution profiles of parameters such as floor area, age group and retrofit level. New building rates, retrofit rates and demolition rates are a main characteristic of a country’s building stock and may vary significantly from one country to another. For instance the renovation rate for non-residential buildings in Spain is 4.7%, whereas in France or Italy the rate of renovation is only

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0.2% for non-residential buildings. The new construction rate of residential buildings varies across the countries from 0.5% to 1.3%. The knowledge of these rates forms a vital input to the implementation scenario calculations executed and described in section 5. All new building, retrofit and demolition rates for residential and non-residential buildings for the key markets used in this study can be found in Appendix A.5. 3.1.6 HVAC Systems and the Role of Heat Pumps

The following table provides an overview of the share of different heating and domestic hot water systems for the assessed countries. Table 9: Distribution of heating systems13

HS system DE FR UK IT ES BE SE AU

Gas,c 14,0% 1,0% 8,3% 3,0% 1,0% 7,4% 0,2% 12,9%

Gas,c,vs(+hr) 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0% 0,0%

Gas,nc 30,4% 38,6% 70,9% 51,5% 30,0% 32,8% 0,2% 21,4%

Oil,c 10,0% 0,0% 0,2% 0,0% 0,0% 5,0% 0,0% 1,0%

Oil,nc 18,3% 19,2% 4,2% 20,0% 12,0% 28,4% 8,3% 13,0%

DH 9,7% 0,0% 0,0% 0,0% 3,0% 0,6% 46,0% 12,3%

Wood,nc 14,0% 27,5% 0,8% 14,0% 3,0% 3,2% 14,7% 29,6%

EL 2,8% 12,0% 15,5% 9,0% 35,0% 22,5% 10,0% 6,9%

HP(b-w),el 0,4% 0,2% 0,0% 0,1% 1,0% 0,1% 7,6% 1,4%

HP(w-w),el 0,1% 0,7% 0,0% 0,0% 1,0% 0,0% 0,0% 0,6%

HP(a-w),el 0,3% 0,2% 0,1% 0,3% 3,5% 0,0% 2,8% 0,9%

HP(a-a),el 0,0% 0,5% 0,0% 2,1% 10,5% 0,0% 8,6% 0,0%

HP(a-w),gas 0,0% 0,1% 0,0% 0,00% 0,0% 0,0% 1,6% 0,0%

13 The following abbreviations are used for the heating system mix: c=condensing, nc=non-condensing, el=electricity, HP=heat pump, DH=disctict heat.

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Table 10: Distribution of domestic hot water systems14

DHW system DE FR UK IT ES BE SE AU

Gas,c 10.9% 1.0% 2.5% 3.0% 0.0% 4.4% 0.2% 1.3%

Gas,c,st(dhw) 1.1% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 5.3%

Gas,nc 30.4% 19.5% 69.0% 37.1% 24.5% 32.7% 0.2% 0.2%

Gas,nc,st(dhw) 0.0% 0.6% 0.7% 1.8% 0.0% 0.0% 0.0% 3.6%

Oil,c 7.3% 0.0% 0.2% 0.0% 0.0% 2.5% 0.0% 1.0%

Oil,c,st(dhw) 0.7% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Oil,nc 9.3% 11.7% 3.4% 3.5% 8.5% 18.4% 5.1% 0.7%

Oil,nc,st(dhw) 2.6% 0.4% 0.4% 0.0% 0.6% 0.7% 0.7% 8.6%

DH 4.4% 0.0% 0.0% 0.0% 0.0% 0.0% 45.0% 1.8%

Wood,nc 2.3% 9.3% 0.4% 2.3% 4.7% 0.9% 0.9% 0.8%

Wood,nc,st(dhw) 1.1% 0.1% 0.1% 0.4% 0.5% 0.2% 0.2% 9.5%

EL 29.6% 57.2% 23.2% 51.6% 61.1% 40.1% 44.9% 66.3%

HP (a-w),el (Sanitary) 0.3% 0.2% 0.1% 0.3% 0.1% 0.0% 2.8% 0.9%

14 The following abbreviations are used for the heating system mix: c=condensing, nc=non-condensing, el=electricity, HP=heat pump, DH=disctict heat, st(dhw)=solar thermal systems for domestic hot water.

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4 Applicability and Performance of Heat Pumps on Building Level

This section provides an analysis for the applicability and performance of different heat pump technologies on the building level. The analysis per building type and heat pump technology provides the expected efficiency of a system, the final energy consumption, the CO2-eq -emissions and the overall costs. In order to analyse the operation of heat pumps for space and water heating purposes until 2020, the expected technology developments are taken into account. 4.1 Outlook on the future heat pump technology development

Heat pumps can play an important role in the necessary conversion of the European heating markets. Although the existing variety of heat pump technologies is already vast, it will increase even more in the future. Apart from different heat sources (ground, water, air, exhaust air, etc.), different driving energy sources (electricity, thermal energy) can be distinguished. Furthermore, different demand types (e.g. space heating, domestic hot water (DHW) and cooling) in all possible combinations as well as hybrid systems such as solar thermal collectors, peak load boilers or PV-panels can be distinguished. On average an increase in efficiencies for most heat pump systems can certainly be expected. This will be achieved by further optimisation and wider application of more efficient components (compressors, valves, heat exchangers, pumps, fans and controls e.g. modulating systems). According to the IEA technology roadmap (IEA, 2011a) a 2% improvement of coefficients of performance (COP) by 2020 (compared to 2007) is defined as a necessary milestone. Considering the developments of recent years an efficiency increase of 20% until 2020 appears to be a very ambitious but not unrealistic target taking into consideration the trends of the past 10 years (Eschmann (2012)). Trends such as an increased number of heat pumps at the renovation or the need of very small heat pumps for (nearly) zero energy single-family houses will continue. Those trends and the resulting demands will be the major drivers for new technology developments and system efficiency improvements. Table 11 gives an overview about external circumstances and the expected effects on the heat pump technology development: Table 11: External circumstances and their effects on the technology developments

External circumstance Effect on technology development

Energy price increase Efficient systems such as ground or water source heat pumps but also very efficient air source heat pumps will benefit from the expected energy price increases.

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External circumstance Effect on technology development

European Legislation, Ecodesign for energy related products, energy labelling directive, Ecolabel

The European Ecodesign and labelling initiatives will have a positive effect on the markets.

Relation of electricity to natural gas, oil and wood pellet prices

For a lot of European countries the electricity price is actually less than three times higher than the price of natural gas (see Table 4). This is a very advantageous situation for electrical heat pumps. It is possible that, due to enforced implementation of renewable electrical power production systems (to reach the 2020 targets), the electricity prices will increase faster than the prices of other energy sources.

Strengthening of regulations for new buildings

Single family passive houses and (nearly) zero energy buildings need very small heat pumps (2 -5 kW).

Enforced renovation of old buildings

Need for flexible systems being able to cope with the individual restrictions of renovations. These are mainly: 1. Limited space 2. High system temperatures (radiators need 50 °C and up) Air source heat pumps are obliviously the most suitable solutions for the space restriction as air is an everywhere available heat source. The efficiencies of the air source systems are constantly improved further to deal with the necessary high temperatures. Possible solutions could be integrated hybrid systems (e.g. in combination with a peak load gas boiler) and well adapted insusceptible controls, which have to ensure by continuous parameter adaptation that the systems always run in optimum mode.

Rapidly decreased prices for PV systems

An increased development of systems with PV integration is expected. Especially for reversible systems (heating- and (significant) cooling mode). There are also good opportunities for heat pump systems replacing solar thermal domestic hot water systems.

Increased cooling demands due to heat island effects, climate change, increasing comfort demands and higher internal loads

The increased cooling demand will lead to an increased demand of reversible systems. At moderate climates also developments of highly efficient ground source systems with built in direct (passive) cooling are promising.

Specific subsidy programmes or other policy of market-relevant countries

Various specific developments thinkable (examples): F-Gas reduction programmes would enforce the development of refrigerants with a lower greenhouse effect, like CO2. Minimum efficiency requirements for heat pumps like the EEWärmeG in Germany will strengthen the development of energy efficient products.

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External circumstance Effect on technology development

Necessity to search for technologies to stabilize the grids (smart grids with demand side control)

Especially in the long term, heat pumps can offer an important contribution to grid stabilisation. For that suitable and intelligent controls and the implementation of additional storages, which are able to react on variable energy prices need to be developed. Development of system combinations (e.g. with CHP systems)

Increased implementation of mechanical ventilation systems, which are necessary for the fresh air supply of high insulated airtight buildings

Potentials for exhaust air heat pumps, typically to serve the domestic hot water demand.

Necessity to increase trust for a technology switch. The ecological and the economic performance of a heat pump system is highly dependent on the operation efficiency. The possible real system efficiency spans are higher than e.g. among gas boilers.

To increase the trust in heat pump systems, improvements by implementing monitoring systems to indicate the seasonal performance can be successful.

4.2 Indicative Benchmark Simulations

The following analysis per heat pump technology category will show the technical and economic performance of the systems (suitability) under the different country specific circumstances. The analysis per building type and heat pump technology category will provide key parameters such as the efficiencies of the systems, the CO2-eq -emissions and the overall costs, which are necessary for the further analyses until 2020. For the main two technology categories, air to water heat pump and ground to water heat pump simulation calculations have been performed to determine the influence on the country specific boundary conditions (cost and energy prices and energy demands, which are dependent of the building quality as well as the climatic conditions). Furthermore, a “gas heat pump (air to water)” solution has been examined for comparison reasons. To be able to analyse the operation of heat pumps for space and water heating purposes until 2020, the expected technology development must be taken into account. This is important to come to a conclusion regarding the share of heat pumps in the future fuel mix and the possible trade-off between different heat pump technologies.

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4.2.1 Reference Buildings

4.2.1.1 Reference Geometries

The reference buildings are defined in section 3.1.2. For the indicative benchmark simulations single-family buildings, a multi-family building and an office building are taken into account, see Figure 8. All other reference buildings are relevant for the scenario calculation in section 5. The parameters and geometries concerning the used reference buildings can be found in Appendix A.2.

Figure 8 Reference Buildings for the indicative benchmark simulations: SFH (detached), SFH (row),

MFH, Office

4.2.1.2 Thermal Qualities of Building Shell

In contrast to the reference building geometries which are the same for all countries15, the thermal qualities are differentiated per market. The thermal properties of the buildings’ shells are considered separately for each country and building type. The buildings’ shell specifications were considered to be in compliance with country specific new building standards. For this selection it was considered that heat pumps systems require comparably high investment costs, which are strongly related to the installed capacity.

15 The single-family house reference geometry is differentiated in two types: detached and row-house.

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Regarding the U-values of the countries, they can be put together in three different groups. Countries with high, with medium and with low U-values. Countries with high U-values encompass Spain, Italy and France, countries with medium U-values encompass of Belgium, Germany and United Kingdom and the third group composed of Sweden and Austria have the lowest U-values. A table containing all U-values per building element and country can be found in Appendix B.1. 4.2.1.3 Heat Pump Systems

As an installation of new mechanical ventilation with heat recovery (HR) is neither realized in all the retrofit and nor in the southern new build cases, it has been assumed that only the office buildings in Germany (60% Heat recovery (HR) rate) and all building types in Sweden (80% HR rate) consist of such a system. For all reference buildings different heat pump systems have been analysed. The heat pump technologies analysed in this study are listed in Table 12. Table 12: Analysed heat pump technologies

Energy Carrier

Heat source

Electricity Brine Heat Pump (bore holes)

Air Source Heat Pump

Ground Water Heat Pump

Natural Gas Air Source Heat Pump

For a maximum coverage, especially for the important refurbishment sector a maximum heating system temperature of 55 °C was considered. This is a conservative assumption. The optimal case is a floor heating system (< 35°C), which also has been examined. For domestic hot water production 60°C has been presumed. 4.2.2 Reference Climate Conditions

The climatic conditions forming the basis for the reference building simulations as 8,760 hourly values for temperature, humidity and radiation. Data originate from the weather database Meteonorm 6.1.

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The following locations were considered as reference points for climate conditions:

• Austria (Vienna) • Belgium (Brussels) • Germany (Würzburg) • Spain (Madrid) • France (Paris) • Italy (Rome) • Sweden (Stockholm) • United Kingdom (London)

The specific graphs showing the hourly ambient temperatures for these locations can be found in Appendix B.2. 4.2.3 Simulation Results

The result of the analysis per building type and heat pump technology is presented in this section. Depending on the calculated useful energy demand, the overall costs of heat pump alternatives, respective CO2-eq emissions are presented as well as the expected efficiency of each system. Detailed tables of all the results can be found in Appendix B.4. 4.2.3.1 Useful Energy Demand for Heating and Cooling

The energy consumption of each reference building in the key markets is calculated by the transient system simulation tool TRNSYS. The buildings in warmer climates such as Italy and Spain present relatively higher cooling demands, especially for office buildings. It is remarkable that due to the building shell quality and the efficiency of the ventilation the space heating demand is not that much related to the climate. Sweden for example indicates only an average space heating demand for a SFH of 60.7 kWh/m2a and an office of 37.1 kWh/m2a, while France indicates the maximum value for a SFH of 97.6 kWh/m2a and for an office of 56.5 kWh/m2a. The results of the simulation for space heating and cooling demands are presented in Table 13. Table 13 Annual energy demand per building type in each country (kWh/m2a)

AT BE FR DE IT ES SE UK

Space Heating Demand

Single-Family House 61.2 75.9 97.6 82.2 40.2 57.3 60.7 58.7

Multi-Family House 80.7 90.5 90.4 104.3 35.2 64.2 49.9 73.8

Office 45.8 53.8 56.5 39.8 18.6 39.9 37.1 48.2

Space Cooling Demand

Single-Family House 0 0 0 0 11.2 10.5 0 0

Multi-Family House 0 0 0 0 25.3 26.1 0 0

Office 14.3 4.5 6.6 2.5 32.6 28.0 6.8 4.0

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Domestic hot water (DHW) demands are considered in a simplified approach as a constant input for the analysis for all the countries. For office buildings DHW demand is assumed to be zero. The respective demand and loss estimations are provided in Table 14.

Table 14 Estimated DHW demand and loss (kWh/m2a)

Single-Family House Multi-Family house Office

DHW demand 13.0 16.0 0

DHW demand losses 6.5 8.0 0

4.2.3.2 Seasonal Performance Factors (SPF)

The technical applicability of each heat pump technology is reflected in the expected efficiency of the system, namely the Seasonal Performance Factor (SPF) values calculated for different heat pump technologies in countries per service type. The Seasonal Performance Factors were derived under consideration of the calculated hourly COP values (details of definition of used COP values and calculation method see section 1.5.2). As the product variety of gas heat pumps is actually very small, the expected performances of those systems in the future can only be roughly estimated. With an SPF of 5.8 the water heat pump with a floor heating with 35°C design temperature in Italy is the most efficient system. Due to higher system temperatures lower efficiencies are calculated for the DHW systems. Even with an efficient air source heat pump in Stockholm it is not possible to achieve a SPF above 3 for a system with 55°C design temperature. The SPFs for gas heat pumps range between 1.3 and 1.5. Table 15 shows exemplary the SPF values for the single-family houses, while those for the multi-family houses and office buildings are given in Appendix B.4.1. Table 15 SPF values for heat pump technologies in each country for single-family houses

AT BE FR DE IT ES SE(1) UK

Space Heating 55°C design temperature Brine Heat pump 3.9 4.2 4.3 4.1 4.7 4.4 3.8 4.2 Air Heat pump 2.8 3.2 3.5 2.9 3.5 3.3 2.7 3.4 Water Heat pump 4.0 4.3 4.5 4.2 4.9 4.5 4.3 Gas Heat pump 1.3 1.4 1.4 1.4 1.3 1.4 1.3 1.4

Space Heating 35°C design temperature Brine Heat pump 4.9 5.0 5.1 5.0 5.5 5.4 4.6 5.0 Air Heat pump 3.4 3.9 4.1 3.5 4.5 4.0 3.2 4.1 Water Heat pump 5.2 5.3 5.4 5.7 5.8 5.7 5.3 Gas Heat pump 1.5 1.5 1.5 1.5 1.5 1.5 1.4 1.5

Domestic Hot Water Brine Heat pump 2.6 2.6 2.6 2.6 2.7 2.7 2.5 2.6 Air Heat pump 1.9 2.0 2.0 1.9 2.1 2.0 1.8 2.0 Water Heat pump 2.5 2.5 2.5 2.8 2.7 2.7 2.5 Gas Heat pump 1.0 1.0 1.0 1.0 1.1 1.1 1.0 1.1

(1) Sweden is an exception in terms of the water heat pump as the temperature of the groundwater is so low that it would freeze during operation. That’s why the water heat pump is not investigated.

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4.2.3.3 Final Energy Demand for Heating and Cooling

The hourly final energy demands were derived by division of the useful energy demand (plus losses for domestic hot water systems) by the actual COP value of the specific hour, which is dependant of the external and internal system temperatures. This was again done for the important reference buildings single-family house, multi-family house and office building. The detailed final energy results per country and technology for the single-family houses are shown in Table 16, while the results for multi-family houses and office buildings are given in Appendix B.4.2. Table 16 Specific final energy demands for heat pump technology in each country for single-family

house (kWh/m²)

AT BE FR DE IT ES SE(1) UK

Space Heating 55°C design temperature Brine Heat pump 15.6 18.1 22.5 20.6 8.5 13.1 16.0 14.0 Air Heat pump 21.5 23.5 28.0 29.0 11.4 17.5 22.4 17.3 Water Heat pump 15.2 17.7 21.9 20.1 8.2 12.6 13.7 Gas Heat pump 45.6 54.0 68.6 62.7 31.1 40.5 45.7 40.8

Space Heating 35°C design temperature Brine Heat pump 12.6 15.0 19.0 16.9 7.3 10.6 13.2 11.6 Air Heat pump 17.8 19.7 23.9 24.5 8.9 14.4 19.0 14.3 Water Heat pump 11.9 14.2 18.0 14.9 6.9 10.0 11.0 Gas Heat pump 41.6 50.9 65.4 57.8 26.8 38.3 41.9 39.2

Domestic Hot Water Brine Heat pump 7.5 7.5 7.5 7.5 7.2 7.2 7.8 7.5 Air Heat pump 10.4 10.0 9.8 10.4 9.3 9.7 10.9 9.6 Water Heat pump 7.7 7.7 7.7 7.7 7.3 7.3 7.7 Gas Heat pump 19.7 18.9 18.6 19.8 17.7 18.5 20.4 18.3

(1) Sweden is an exception in terms of the water heat pump as the temperature of the groundwater is so low that it would freeze during operation. That’s why the water heat pump is not investigated.

The differences in final energy demands are higher than those for heating demand (i.e. 68.6 kWh/(m²a) for gas heat pumps in France and 6.9 kWh/(m²a) for water heat pumps in Italy), as the SPF values per technology, temperature level and country vary significantly. 4.2.3.4 Greenhouse Gas Emissions

The local CO2-eq emission factors play the dominant role when comparing CO2-eq emissions of electrical heat pump systems for different countries. In Austria, Belgium, France, Germany, Italy, Spain and the United Kingdom the water heat pump is the solution with the lowest CO2-eq emissions, directly followed by the brine heat pump. Due to climate conditions Sweden has no ability to install a water heat pump, hence the brine heat pump is the most CO2-eq effective system followed by the electric air heat pump. The least effective system in most countries is the gas heat pump (Austria, Belgium, France, Spain, Sweden and United Kingdom). Germany, United Kingdom and Italy have the highest CO2-eq emission factors and thus the CO2-eq emissions for electricity-driven heat pumps are also the highest. The lowest emissions for electric-driven heat pump can be observed in Sweden and France. Gas heat pumps indicate only lower emissions than el. heat pumps for air source heat pumps in Germany and Italy. Among the electric

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heat pumps the ground water source heat pumps indicate specific CO2-eq emissions, which are in average about 30% lower than for the air source heat pumps. Comparing the building types, caused by the building size and high internal loads, office buildings indicate the lowest specific CO2-eq emissions. Mainly because of the higher domestic hot water demand multi-family houses indicate higher specific CO2-eq emissions than single-family houses. A closer consideration of the two different systems, the floor heating system (35°C) and the radiator heating system (55°C) shows that there are no major differences according to CO2-eq emissions. Figure 9 and Figure 10 show exemplarily the specific CO2-eq emissions for floor heating and radiator heating systems in Austria per reference building and heating systems. All results for the different countries and technologies are given in detail in Appendix C.2.

Figure 9 Austria: Heating demand related CO2-eq emissions of the three building types with floor

heating in [g/kWh]

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Figure 10 Austria: Heating demand related CO2-eq emissions of the three building types with radiator

heating in [g/kWh]

4.2.3.5 Investment and Energy Costs

The costs for heat pump systems have been assumed to be identical in the countries investigated. In order to adjust the installation costs, other costs and maintenance costs to the national cost structures, cost factors have been used. Furthermore, the derived net present values of the investment costs, the energy costs and other annual running and maintenance costs have also been specified. For the economical evaluation, the methodology of the cost optimal calculation according to EU directive No 244/2012 has been used. Due to that an observation period of 30 years for residential buildings and 20 years for non-residential buildings has been considered when calculating the total costs. The considered interest rate is 3.5%. The average energy price increase is 2.8% for fossil fuels and 0.8% for electricity. Further details of the calculation method are explained in section 1.5.5. The results of the economical calculations depend mainly on the following factors:

- Useful energy demand of the building - SPFs of the technology - Energy prices - Investment costs

Figure 11 and Figure 12 show the overall results of the economic evaluation using the example of Austria. The detailed graphs and tables that illustrate the economical calculations of all countries can be found in Appendix B.4.4.

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Figure 11 Austria: Specific investment and running costs for the three building types with floor

heating (€/m²)

Figure 12 Austria: Specific investment and running costs for the three building types with radiator

heating (€/m²)

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Under the presumed circumstances the high efficient ground water solution is the most economical solution. Especially for bigger buildings like the multi-family houses (MFH) and non-residential buildings (office) the low specific investment costs for the wells are very advantageous. Due to the size and the lower heating demand the lowest specific costs were mostly indicated for the office buildings. The lower system temperatures of the floor heating system compared to the radiator heating lead to a lower energy demand and finally lower total costs. As the total costs differences due to the system temperatures changes are relevant for all heat pump types and the running costs are only one part of the total costs, they cause no significant changes of the relations between the different heat pump types. Because of the assumed high investment costs and the specific efforts for the gas system implementation (gas connection, maintenance, exhaust system) at the single-family houses (SFH) the highest specific costs were expected for those systems. But as mentioned before, this technology is not developed enough, to allow well founded predictions, especially for small, SFH suitable sizes. In Austria as well as in Belgium the water heat pump comes along with the lowest overall costs, the second best economical solution is the gas heat pump for offices and MFHs and the brine heat pump for the SFHs. Predominantly, due to significantly lower energy costs in France and the UK the investment costs become a more important parameter. For the SFH the electrical air heat pump and the brine heat pump are similar; the second most economical solution. For the MFH and the office building the gas heat pump becomes the second most economical solution with slightly higher energy costs but low investment costs compared to the other solutions. The comparably high energy costs and the high ratio of electricity to gas price makes the gas heat pumps at the MFHs and office buildings in Germany a competitive solution as the second most economical heat pump. The brine heat pump is the second most economical solution in Italy. In Spain for SFHs and MFHs the brine heat pump solutions are also the second most economical solution. For offices the gas heat pump is the second most economical solution. For the MFHs and offices the brine and the gas heat pumps indicate only small differences and are the second most economical solution. In Sweden the most advantageous economical results are observed for el. brine heat pump solutions for SFHs and gas heat pump solutions for MFHs and offices. 4.3 Main Conclusions

In this paragraph the boundary conditions for potential future developments of heat pumps in the eight key markets until 2020 are examined in detail. Besides a general outlook on the most promising future heat pump technologies, the potentials for different heat pump technologies categories, which can be very different for the key markets, are examined. For this purpose, simulation calculations for a set of reference buildings are performed to determine the ecological and economic performance for the main heat pump technologies. This data is necessary for a well-founded prediction of the development of the heat pump markets in the key markets, which is the task of the next step of this study.

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For nearly all buildings, excluding buildings situated in extreme climates like Sweden, water source heat pumps are economically and ecologically the best of the examined solutions. However the restrictions of this technology, given by geological circumstances, legislation and space limitations are considerable. Also for ground collectors source solutions strong restrictions due to limited space have to be considered. Very efficient systems have chances at markets with high energy prices and also high energy demands like in Germany and Sweden. To increase the trust to switch to a heat pump system in those countries integrated monitoring systems insuring the required efficiency would be beneficial. On the other hand in countries with low energy prices and low energy demands like Italy, UK, Spain and France the investment costs are the crucial factors. Gas heat pumps have actually only very low market shares and product varieties. But this technology is expected to have good chances, at least as bridge technology, especially in the renovation sector exchanging existing gas boilers in countries with comparably low gas prices as it is the case in Germany, Belgium and UK. The potentials strongly depend on system costs compared to those of the less efficient gas condensing boilers, especially for the single-family house sector. For this study very high prices for small gas heat pumps have been assumed to consider necessity of further developments. Considering already existing technologies, the gas heat pump is among the most economical solutions for office buildings in most countries. Due to the high CO2-eq emission factors for electricity in UK and Germany the gas heat pump still can also ecologically compete with electrical solutions which themselves have the potential to improve automatically with decarbonisation of the electricity production. It should also be mentioned that thermal driven heat pumps have the potential of operating (nearly) climate neutral when using biomass. The necessary heating system sizes for single-family houses in this study range from 5 to 10 kW. With regard to tightened regulations it can be expected that those sizes will further decrease. Hybrid systems with gas boiler and electric air heat pump will have good market chances for renovation of multi-family houses in Germany, where the energy price structure (high el./gas price ratio) and the climate (cold continental winters) are advantageous. Because of the strong increasing share of renewable electricity production, also intelligent controls to use heat pumps as grid storage will surely be needed. Hybrid systems with PV will have good perspectives in the southern countries with high cooling demands, like Italy, Spain, southern France and probably also Austria, preferably in non-residential buildings but also in multi-family houses, where additionally also a major part of the domestic hot water demand can be covered by the system. In the same countries and for the same reasons as mentioned before reversible systems are promising solutions. But also in moderate climates such as in Germany or northern France reversible systems using the cooling demand to heat the domestic hot water in residential buildings or integrated direct cooling systems using the cold of the ground will be interesting regarding economic and ecological aspects.

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Besides the mentioned integrated systems for heating, domestic hot water and cooling, it is expected that also solely domestic hot water solutions will improve their market relevance. The main technology will be the exhaust air heat pump, which requires a mechanical ventilation system. Those systems can be observed in multi-family houses of all ages and in all countries. Also in single-family houses, especially in the northern and middle European countries like Sweden, Germany and Austria nearly all new buildings are expected to have mechanical ventilation systems in the future.

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5 Heat Pump Implementation Scenarios

This section shows the impacts of different heat pump implementation scenarios for all key markets until 2030. The aim is to quantify the potential of heat pumps to reduce final and primary energy demand as well as CO2-eq emissions for heating and cooling purposes in three different scenarios. 5.1 Scenario Definition

Based on the policy evaluation, building stock data and in-depth analysis the scenario calculations are a central part of the analysis. Using the Ecofys Built-Environment-Analysis-Model BEAM², the following three heat pump development scenarios are set up for all key markets up to 2030: Scenario “CPI”: Current Policy Implementation, taking into account a full and timely

implementation of all legislation related to energy performance of buildings (and specifically heat pumps) by the Member States. In this scenario very optimistic assumptions towards the policy implementation are taken.

Scenario “HP+”: Ambitious heat pump scenario with a 50% share16 of heat pumps in new

buildings and 30% in retrofits by 2030.

Scenario “HP++”: Very ambitious heat pump scenario with a 100% share16 of heat pumps in new buildings and 50% in retrofits by 2030.

For all scenarios a decarbonisation of the EU electricity mix is assumed according to the sectoral emission reduction targets from the EU Roadmap 2050 17. 5.1.1 Reference Buildings and Thermal Qualities of Building Shell

The reference buildings geometries are defined in section 3.1.2 and appendix A.2. For the heat pump implementation scenarios in this section all previously defined buildings are taken into account. In contrast to the reference building geometries which are the same for all countries - the thermal qualities are differentiated per key market, see Appendix C.1.1 for more details.

16 For the “HP+” and “HP++” scenarios the decisive factor “Implementation shares gained from competing Technologies” was chosen, which quantifies the share that heat pump technologies can take in 2030 from the competing non heat pump technologies. Figure 5 (in section 1.6) gives an illustration of this indicator.

17 see European Commission: Roadmap for moving to a competitive low carbon economy in 2050, COM(2011) 112 final, Brussels, 8.3.2011.

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Summarising the thermal qualities it can be said that there is a general tendency for older age groups to have poorer insulation standards. In northern climates (e.g. Sweden) the thermals standard is generally higher than in southern climates (e.g. Italy or Spain). For retrofits or new buildings the standards are always higher than the situation in stock. 5.1.2 Greenhouse Gas Emission and Primary Energy Factors

The primary energy factors and the CO2-eq emissions factors have been determined and applied according to Molenbroek et al. (2011) and EHPA (2012) respectively. The primary energy factors for fossil fuels are assumed the same for all key markets, while the primary energy factors for district heat and electricity are considered as an average for all key markets that will decrease by 2030. The same structure is applied for the CO2-eq emission factors. The CO2-eq emission factors for fossil fuels and district heating are the same for all examined countries, whereas CO2-eq emission factors for electricity are an average and decrease until 2030. The detailed tables are given in Appendix C.1.2. 5.1.3 Energy Prices

Energy prices for oil, gas and electricity are taken from Eurostat Statistics. Energy prices for district heat, coal and biomass are investigated for Germany and scaled to the other countries with price indices. The information from Eurostat differentiates prices for domestic and industrial use, depending on delivered volume. The future energy price increase rates according to the cost-optimal methodology (Directive 2010/31/EU) are applied, which are 2.8% for gas, oil, biomass, district heat and 2.0% for electricity and coal. The energy price developments for the different countries can be found in Appendix C.1.3. 5.1.4 Investment Costs Heat Pumps

For this part of the analysis it is assumed that the investment costs for new build and retrofit case are the same within a heat pump technology type. The only exception made here was for air to air heat pumps due to missing information. For this technology it was assumed that the investment costs for the new build case are similar to the costs for an air to water system and for the retrofit case the investment costs for the air to air heat pump are around 30% higher than the costs for an air to water heat pump. The calculations were done based on estimates for Germany and were then calculated for the other countries based on country factors provided by the BKI (Baukostenindex). Brine/water heat pumps Costs for retrofit and new build case are assumed to be similar (range: 1580-2260 € /kW).

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Water/water heat pumps Costs for retrofit and new build case are assumed to be similar (range: 530-1870 € /kW). Air/water heat pumps - electric Costs for retrofit and new build case are assumed to be comparable (range: 1080-1400 € /kW). Air/water heat pumps – gas Costs for retrofit and new build case are assumed to be comparable (range: 570-2560 € /kW). Air/air heat pumps Due to the lack of information a few assumptions have been made for this type of technology: costs for the new build case

are assumed to be comparable to the costs for an air/water heat pump. For the retrofit case it is assumed that an additional 30% of the investment costs for an air/water heat pump apply when installing an air/ air heat pump (range: 1410-1830 €DE/kW).

For all other technologies and measures applied to the building envelope standard assumptions for the determination of the investment costs have been used (for details see tables in Appendix C.1.4). 5.1.5 Technologies in Stock

The heating system mix in stock for all key markets is determined as the average mix for residential and non-residential buildings. Mostly domestic hot water is supplied with the heating system or electrical heaters. For all non-heat pump technologies average technical parameters have been applied. The SPF values for all relevant heat pump technologies are based on the in-depth analysis in section 4. They are clustered per zone (see appendix C.1.5) for the scenario calculations and are differentiated for space heating and water heating. The SPF values are weighted averages for the countries within a zone and weighted averages for the building types. Furthermore, the temperature levels are assumed to be 75%, 35°C and 25%, 55°C. The detailed assumptions on the technical heat pump parameters are listed in Appendix C.1.5. 5.1.6 Sanitary Heat Pumps

As increasing shares for sanitary heat pumps are expected for some countries, assumptions are made, see Table 17. The table illustrates the distribution of domestic hot water (DHW) systems dependent on the heating system for the scenario calculations. Some DHW systems have solar thermal systems (ST) included.

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Table 17: Hot water systems per heating system

Heating system With

Heating System

With Heating

System and ST for DHW

Sanitary HP Sanitary HP and ST for

DHW Electricity

Gas, c 80% 20% - - -

Gas, nc 80% 20% - - -

Oil, c 80% 20% - - -

Oil, nc 80% 20% - - -

DH 100% - - - -

Wood, nc 70% 30% - - -

EL 50% - 50% - -

HP(b-w), el 80% 20% - - - HP(w-w), el 80% 20% - - -

HP(a-w), el - - 80% 20% -

HP(a-a), el - - 80% 20%

HP(a-w), gas 100% - - - -

CHP, gas 100% - - - -

If the implementation numbers for heat pumps as primary heating systems are increasing, the share of sanitary heat pumps is growing proportionally. As there is no detailed information on the application of sanitary heat pumps, this assumption seems reasonable. 5.2 Scenario Results and Interpretation

The following paragraphs give the main results and conclusions from the heat pump implementation scenarios. It is based on the building stock analysis from section 3, the results of the in-depth analysis of heat pump technologies from section 4 and the assumptions and boundary conditions for the scenario calculation from the scenario definition in section 5.1. Based on the methodology for the forecast on heat pump implementation and scenario modelling from section 1.6, the main results are the heat pump implementations, the floor area development, the final and primary energy, CO2-eq emissions, energy costs, investment costs, total yearly costs and the usage of F-gases. 5.2.1 Heat Pump Implementation Development

This section provides an overview of the results for the expected development of heat pump technologies and implementations per scenario. The data is shown in aggregated figures for all key markets, while results on country level are given in Appendix C.2.

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The following Table 18 gives an overview of transferring the policy analysis for current and planned policies (see Tables 6-8) into parameters for the scenario calculations.

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Table 18: Transfer of policy analysis into scenario assumptions

Country Historic yearly growth rates

in sales

Position on

S-curve

Impact of

current policies

Impact of

planned policies

Leverage factor

scenario “CPI”

Yearly growth rate scenario “CPI”

until 2030

Share from competing

technologies in scenario “HP+”

in 2030

Share from competing

technologies in scenario “HP++”

in 2030

Austria

Average +11% between 2001-

2011

Growing market

(lower end of S-curve)

Low Low

1.1 for retrofits

and 1.2 for new

buildings

9.9% for retrofits and 2.6% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for

new buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 50% of heat pump sales in retrofits, 50% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 45% brine-water, 8% water-water, 42.5% air-water, 4% air-air,

0.5% gas air- water. All other retrofits are covered by 50% biomass boilers, 30% gas-condensing boilers and 20% district heat.

Belgium

Average 51% between 2009

and 2011

Strongly growing market

(lower end of S-curve)

Low Low

1.1 for retrofits

and 1.2 for new

buildings

17.0% for retrofits and 3.5% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 1/3 of heat pump sales in retrofits, 2/3 of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 10% brine-water, 13% water-water, 66% air-water, 10% air-air, 1%

gas air-water. All other retrofits are covered by 60% gas-condensing boilers and 40% oil-condensing boilers.

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Country Historic yearly growth rates

in sales

Position on

S-curve

Impact of

current policies

Impact of

planned policies

Leverage factor

scenario “CPI”

Yearly growth rate scenario “CPI”

until 2030

Share from competing

technologies in scenario “HP+”

in 2030

Share from competing

technologies in scenario “HP++”

in 2030

France

Average 0.2% between 2007

and 2011

Growing market

(lower end of S-curve)

Medium Medium

1.25 for retrofits

and 1.5 for new

buildings

3.8% for retrofits and 4.5% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 25% of heat pump sales in retrofits, 75% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 16% brine-water, 10% water-water, 58% air-water, 15% air-air, 1%

gas air-water. All other retrofits are covered by 50% gas-condensing boilers, 30% oil-condensing boilers and 20% biomass boilers.

Germany

Average 4.7% between 2007

and 2011

Growing and

promising market

(lower end of S-curve)

Medium Medium

1.25 for retrofits

and 1.5 for new

buildings

3.8% for retrofits and 4.5% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 50% of heat pump sales in retrofits, 50% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 30% brine-water, 5% water-water, 59% air-water, 5% air-air, 1%

gas air-water. All other retrofits are covered by 60% gas-condensing boilers, 30% oil-condensing boilers and 10% biomass boilers.

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Country Historic yearly growth rates

in sales

Position on

S-curve

Impact of

current policies

Impact of

planned policies

Leverage factor

scenario “CPI”

Yearly growth rate scenario “CPI”

until 2030

Share from competing

technologies in scenario “HP+”

in 2030

Share from competing

technologies in scenario “HP++”

in 2030

Italy

Average -5% between 2007

and 2011

Market stabilizing (middle of S-curve)

Low Low

1.1 for retrofits

and 1.2 for new

buildings

0.2% for retrofits and 0.5% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 75% of heat pump sales in retrofits, 25% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 10% brine-water, 10% water-water, 10% air-water, 68% air-air, 2%

gas air-water. All other retrofits are covered by 80% gas-condensing boilers and 20% biomass boilers.

Spain

No historic market data =>

same assumptions as

for Italy

Market stabilizing (middle of S-curve)

Low Low

1.1 for retrofits

and 1.2 for new

buildings

0.2% for retrofits and 0.4% for new

buildings

30% sales shares gained from competing

technologies for retrofits, 50% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions:

- 75% of heat pump sales in retrofits, 25% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 10% brine-water, 10% water-water, 15% air-water, 65% air-air, 0%

gas air-water. All other retrofits are covered by 70% gas-condensing boilers, 20% oil-condensing boilers and 10% biomass boilers.

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Country Historic yearly growth rates

in sales

Position on

S-curve

Impact of

current policies

Impact of

planned policies

Leverage factor

scenario “CPI”

Yearly growth rate scenario “CPI”

until 2030

Share from competing

technologies in scenario “HP+”

in 2030

Share from competing

technologies in scenario “HP++”

in 2030

Sweden

Average 2.6% between 2007

and 2011

Mature market (higher

end of S-curve)

Low Low

1.1 for retrofits

and 1.2 for new

buildings

0.0% for retrofits and 0.5% for new

buildings

0% sales shares gained from competing technologies for

retrofits, 50% for new buildings

The retrofit market is considered as fully

saturated

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings

Additional assumptions: - 95% of heat pump sales in retrofits, 5% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 15% brine-water, 10% water-water, 40% air-water18, 34.5% air-air,

0.5% gas air-water. All other retrofits are covered by 70% district heat and 30% biomass boilers.

United Kingdom

Average 36% between 2007

and 2011

Strongly growing market

(lower end of S-curve)

Medium Medium

1.25 for retrofits

and 1.5 for new

buildings

17.0% for retrofits and 6.5% for new

buildings

15% sales shares gained from competing

technologies for retrofits, 15% for new

buildings

50% sales shares gained from competing

technologies for retrofits, 100% for

new buildings Additional assumptions

- 50% of heat pump sales in retrofits, 50% of heat pump sales in new buildings - Total heat pump sales are split to the following technologies: 16% brine-water, 10% water-water, 57% air-water, 15% air-air, 2%

gas air-water. All other retrofits are covered by 100% gas-condensing boilers.

18 In the meantime there might be new market data available for heat pump technology share in Sweden. However, this analysis is based on the data that was available for the scenario calculation.

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Table 19 gives an overview of the market growth parameters for all three heat pump implementation scenarios per key market, based on the information from Table 18. The main driver for the “CPI” scenario is the average market growth per year. For the “HP+” and “HP++” scenarios the limitation is the “Implementations gained from competing technologies in 2030”, see methodology section 1.6.1.

Table 19: Overview on market growth for heat pumps in the key markets per scenario

Austria Belgium France Germany Italy Spain Sweden UK

Scenario - CPI

Implementations shares gained from competing technologies in 2030Retrofits 30% 30% 2% 3% 1% 1% 0% 15%

New Buildings 50% 50% 47% 21% 3% 2% 5% 15%

Factor of market share growth 2012-2030Retrofits 5,4 17,0 2,0 2,0 1,0 1,0 1,0 16,9

New Buildings 1,6 1,8 2,2 2,2 1,1 1,1 1,1 3,1Total 3,5 6,8 2,2 2,1 1,1 1,0 1,0 10,0

Average market growth per yearRetrofits 9,9% 17,0% 3,8% 3,8% 0,2% 0,2% 0,0% 17,0%

New Buildings 2,6% 3,5% 4,5% 4,5% 0,5% 0,4% 0,5% 6,5%Total 7,2% 11,3% 4,4% 4,2% 0,3% 0,3% 0,0% 13,6%

Scenario - HP+

Implementations shares gained from competing technologies in 2030Retrofits 30% 30% 30% 30% 30% 30% 0% 15%

New Buildings 50% 50% 50% 50% 50% 50% 50% 15%

Factor of market share growth 2012-2030Retrofits 5,4 17,0 13,2 12,1 2,6 2,9 1,0 16,9

New Buildings 1,6 1,8 2,3 3,9 2,4 2,7 2,0 3,1Total 3,5 6,8 5,0 8,0 2,6 2,8 1,1 10,0

Average market growth per yearRetrofits 9,9% 17,0% 15,4% 14,9% 5,5% 6,0% 0,0% 17,0%

New Buildings 2,6% 3,5% 4,8% 7,8% 5,1% 5,8% 4,0% 6,5%Total 7,2% 11,3% 9,4% 12,2% 5,4% 6,0% 0,3% 13,6%

Scenario - HP++

Implementations shares gained from competing technologies in 2030Retrofits 50% 50% 50% 50% 50% 50% 50% 50%

New Buildings 100% 100% 100% 100% 100% 100% 100% 100%

Factor of market share growth 2012-2030Retrofits 8,4 27,6 21,4 19,5 3,7 4,1 1,0 53,8

New Buildings 2,2 2,7 3,6 6,7 3,9 4,5 3,0 14,9Total 5,3 10,9 8,1 13,1 3,8 4,2 1,1 34,4

Average market growth per yearRetrofits 12,6% 20,3% 18,6% 17,9% 7,6% 8,2% 0,0% 24,8%

New Buildings 4,4% 5,7% 7,4% 11,2% 7,8% 8,7% 6,4% 16,2%Total 9,7% 14,2% 12,3% 15,4% 7,6% 8,3% 0,5% 21,7%

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It becomes obvious that the United Kingdom and Belgium in particular have a high implementation potential in the “CPI” scenario already. The biggest differences between the scenarios “CPI” and “HP+” are observed in Spain, Italy, Germany and France.

Figure 13: Heat pump implementations per scenario for all countries

Figure 14: Relation of heat pump implementations per scenario in 2020 to 2011 for all countries

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The expected implementation numbers for all countries are shown in Figure 13, starting at approx. 451,000 units per year in 2012. In the “CPI” scenario they increase by 106% up to 931,000 units by 2030. The different approach in the “HP+” and “HP++” scenarios (see methodology in section 1.6.1) leads to a higher implementation potential, which increases up to 1,864,000 units by 2030 in the “HP+” scenario (increase of 313%) and up to 3,249,000 units by 2030 in the “HP++” scenario (increase of 620%). A comparison between the scenarios is given in Figure 14. 5.2.2 Floor Area Development

While in 2012, 8.0% of all floor area is equipped with a heat pump, this share increases by 2030 up to 17.3% in the “CPI” scenario, 24.8% in the “HP+” scenario and 35.2% in the “HP++” scenario. As this technology has very low shares in the building stock of some countries, this is a significant increase in market penetration (see corresponding implementation numbers from above). Detailed numbers of floor area development per country can be found in Appendix C.2. 5.2.3 Final Energy

The final energy for space heating varies significantly between the scenarios, see Figure 15. While it decreases by 22% from 2,364 TWh/a in 2012 to 1,837 TWh/a by 2030 in the “CPI” scenario, the final energy for space heating decreases by 29% in the “HP+” scenario by 2030. The highest reduction of 35% can be achieved in the “HP++” scenario with final energy of 1,548 TWh/a by 2030.

Figure 15: Final energy for space heating for all countries

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All three scenario calculations (CPI, HP+ and HP++) comprise the same development of space heating demand until 2030. The only difference between them is the heating system mix (and yearly implementations of heating systems to the market). The assumptions on the hot water demand are also the same per scenario. Figure 16 shows the development of final energy for hot water purposes by scenario. It is obvious that the final energy is increasing by 2030 after achieving some efficiency gains in conventional technologies due to increasing floor area in the scenarios “CPI” and “HP+”. In contrast to that, the energy saving effect is much more significant in the scenario “HP++”. Here final energy reductions of about 8% can be achieved due to high shares of heat pumps for space heating purposes, which have again higher shares for sanitary hot water, see section 5.1.6.

Figure 16: Final energy for hot water purposes for all countries

The final energy demand for cooling purposes accounts for approx. 85 TWh/a in 2012 and increases by 18% up to 99 TWh/a by 2030 in all scenarios.

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Figure 17: Final energy for cooling purposes for all countries

The overall final energy for space heating, hot water, cooling and auxiliary purposes is shown in Figure 18. It is decreasing by 17% in the scenario “CPI” from 2,752 TWh/a in 2012 down to approx. 2,272 TWh/a by 2030, while a reduction of 23% down to 2,112 TWh/a can be achieved in the “HP+” scenario and a reduction of 29% down to 1,951 TWh/a in the “HP++” scenario.

Figure 18: Total final energy (heating, hot water, cooling and auxiliary energy) for all countries

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5.2.4 Primary Energy

The decrease in primary energy is higher than for final energy for all energy carriers, as decreasing primary energy factors are assumed for electricity and district heat, see Appendix C.1.2. Figure 19 shows an overall drop in primary energy for space heating from 2,520 TWh/a in 2012 of approx. 32% in the scenarios “CPI” down to 1,720 TWh/a by 2030, while a reduction by 37% down to 1,599 TWh/a by 2030 can be reached in the scenario “HP+” and a reduction by 41% down to 1,477 TWh/a by 2030 in the scenario “HP++”.

Figure 19: Primary energy for space heating for all countries

The primary energy for hot water purposes decreases between 33% and 36% in the scenarios from 2012 until 2030.

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Figure 20: Primary energy for hot water purposes for all countries

For cooling purposes the primary energy reductions are the same, with 34% which are achieved by a drop from 191 TWh/a in 2012 down to 127 TWh/a by 2030, see figure Figure 21.

Figure 21: Primary energy for cooling purposes for all countries

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The overall primary energy for space heating, hot water, cooling and auxiliary purposes is shown in Figure 22. It is decreasing by 31% in the scenarios “CPI” from 3,203 TWh/a in 2012 down to 2,197 TWh/a by 2030, while a reduction of 35% down to 2,074 TWh/a can be achieved in the “HP+” scenario and a reduction of 39% down to 1,945 TWh/a at the same time in the “HP++” scenario.

Figure 22: Total primary energy (heating, hot water, cooling and auxiliary energy) for all countries

5.2.5 CO2-eqEmissions

The GHG emissions are calculated as CO2-equivalent emissions for all purposes, taking into account the CO2-eq emissions factors from Appendix C.1.2. The CO2-eq emissions for space heating are shown in Figure 23. They vary significantly between the scenarios, where a reduction of approx. 35% from 530 Mt/a in 2012 to 343 Mt/a by 2030 can be achieved in the “CPI” scenario, a reduction of 42% in the scenario “HP+” and a reduction of 49% down to 269 Mt/a in the scenario “HP++” by 2030.

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Figure 23: CO2-equivalent emissions for space heating for all countries

For water heating purposes reductions between 19% and 32% can be achieved in the scenarios, see Figure 24. The CO2-eq emissions can be brought down from 68 Mt/a in 2012 to 55 Mt/a – 46 Mt/a by 2030.

Figure 24: CO2-eqivalent emissions for hot water purposes for all countries

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The CO2-eq emissions for cooling decrease by 40% from 24.5 Mt/a in 2012 to 14.6 Mt/a by 2030, as the final energy is the same per scenario, see section 5.2.3 and Figure 25.

Figure 25: CO2-eqivalent emissions for cooling purposes for all countries

Together with the emissions from auxiliary energy the total CO2-eq emissions are shown in Figure 26. They drop by 34% in the scenarios “CPI”, by 40% in the scenario “HP+” and by 46% in the scenario “HP++” by 2030. This is an overall reduction down to 54% in the “HP++” scenario.

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Figure 26: Total CO2-eqivalent emissions (heating, hot water, cooling and auxiliary energy)

for all countries

For a better understanding and interpretation, these CO2-eq emission reductions are put in context to the existing buildings sector specific GHG reduction targets for 2030 and 2050 from the “EU Roadmap for moving to a competitive low carbon economy in 2050” (COM2011-112). Hereby the CO2-emissions should be reduced by 37% to 53% by 2030 (based on 1990 numbers) and by 88% to 91% by 2050. From this target corridor in Figure 26 it becomes obvious that the targets are becoming more ambitious in the period 2030-2050. With all 3 scenarios staying within this GHG target corridor until 2030, the HP+ and HP++ scenarios can also pave the way towards 2050 targets. Furthermore Figure 26 gives the greenhouse gas emissions for F-gas leakages, see section 5.2.9 for more information. 5.2.6 Energy Costs

The yearly energy costs for space heating are calculated based on the final energy for space heating and the assumed energy prices, see Figure 27. In 2012 the energy costs for space heating account for 165 billion €2012 while they increase to approx. 226 billion €2012 by 2030 in the scenario “CPI”. As a consequence of high efficient heat pumps and consequently lower final energy in the “HP+” scenario the energy costs are significantly lower, with 216 billion €2012 by 2030 and even lower in the “HP++” scenario, with 208 billion €2012.

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Figure 27: Energy costs for space heating for all countries

The total energy costs in 2012 for space heating, hot water, cooling and auxiliary energy, amount to 217 billion €2012 in 2012. By 2030 they increase by 42%, up to 309 billion €2012, in the scenario “CPI”, by 38%, up to 300 billion €2012, in the scenario “HP+” and by 34%, up to 290 billion €2012, in the scenario “HP++”, see Figure 28.

Figure 28: Total energy costs (heating, hot water, cooling and auxiliary energy) for all countries

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5.2.7 Investment Costs

Figure 29 shows the annualised investment costs (annuities of investment costs) for all measures, which are heating systems, solar thermal systems, hot water systems, ventilations systems, insulation of building shell and windows.

Figure 29: Annualised investment costs (annuities) for all measures

(heating, solar thermal systems, hot water, ventilation, insulation and windows)

They start at 31 billion €2012 in 2012 and increase up to 409 billion €2012 in the “CPI” scenario by 2030, 424 billion €2012 in the “HP+” scenario and 444 billion €2012 in the “HP++” scenario. The biggest share of these costs is related to insulation measures of the building shell, followed by heating systems and replacement of windows. 5.2.8 Total Yearly Costs

The overall indicator for economic evaluation is the total yearly costs, which are including the annualised investment costs and the energy costs from above. Figure 30 shows the overall numbers. Total costs start in 2012 at 248 billion €2012 and increase by 190% up to approx. 718 billion €2012 by 2030 in the scenario “CPI”, by 191% up to approx. 723 billion €2012 by 2030 in the scenario “HP+” and by 197% up to approx. 734 billion €2012 by 2030 in the scenario “HP++”. Due to lower energy costs in the scenarios “HP+” and especially “HP++” in comparison to the scenario “CPI”, the difference in total yearly costs between the scenarios is smaller than the difference in the annualised investment costs only.

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Figure 30: Total yearly costs (annuities of investments and energy costs)

5.2.9 F-Gases

The impact of greenhouse gas emissions from F-gases has been considered as well, see Figure 31. Based on the study by SKM Enviros (2012), the leakages during manufacturing and installation as well as during operation of the heat pumps are taken into account.

Figure 31: GHG-emissions from F-gases

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Therefore different power ranges and types (block 1: air-water(split), air-air and block 2: ground source, air-water(non-split)) are considered. From the current level of 4.7 Mt/a GHG-emissions in 2012 they grow by 274% in the “CPI” scenario, by 468% in the “HP+” scenario and by 736% in the “HP++” scenario by 2030 in an exponential way due to a linear increase of systems in the market. This information is also included in Figure 26 together with the overall greenhouse gas emissions. Furthermore Figure 32 gives an overview of the total amount of F-gas charges per scenario. Higher heat pumps shares in the built environment do lead to higher amounts of F-gases.

Figure 32: Total F-gas charges per scenario

5.3 Summary and overall Scenario Interpretation

Heat Pump Implementations In the “CPI” scenario the implementation numbers (starting at approx. 451,000 units per year in 2012) increase by 106% up to 931,000 units in 2030 while the “HP+” scenario presumes implementations of 1,864,000 units by 2030 which is equal to an increase of 313%. The “HP++” scenario leads to even higher implementation potential which increases with 3,249,000 systems by 620% by 2020. Heat Pumps in Stock (Floor Area) The overall floor area development shows the share of the heat pump technology. While 2012 8.0% of all floor area is equipped with a heat pump, this share increases by 2030 up to 17.3% in the “CPI” scenario, 24.8% in the “HP+” scenario and 35.2% in the “HP++” scenario. As this technology has

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very low shares in the building stock of some countries, this is a significant increase in market penetration. Final Energy The overall final energy for space heating, hot water, cooling and auxiliary purposes is decreasing by 17% in the scenario “CPI” from 2,752 TWh/a in 2012 down to 2,272 TWh/a by 2030, by 23% in the scenario “HP+” down to 2,112 TWh/a and by 29% down to 1,951 TWh/a the “HP++” scenario. Primary Energy The overall primary energy for space heating, hot water, cooling and auxiliary purposes is decreasing by 31% in the scenario “CPI” from 3,203 TWh/a in 2012 down to 2,197 TWh/a by 2030, while a reduction of 35% down to 2,074 TWh/a can be achieved in the “HP++” scenario and a reduction of 39% down to 1,945 TWh/a can be achieved in the “HP++” scenario at the same time. GHG Emissions The total CO2-eq emissions drop by 34% in the scenario “CPI” by 2030, by 40% in the scenario “HP+” and by 46% in the scenario “HP++”. This is an overall reduction down to 54% in the scenario “HP++”. For a better understanding and interpretation these CO2-eq emission reductions are put in context to the existing buildings sector specific GHG reduction targets for 2030 and 2050 from the “EU Roadmap for moving to a competitive low carbon economy in 2050” (COM2011-112). Hereby the CO2-eq emissions should be reduced by 37% to 53% by 2030 (based on 1990 numbers) and by 88% to 91% by 2050. From this target corridor in Figure 26 it becomes obvious, that the targets are becoming more ambitious in the period 2030-2050. With all 3 scenarios staying within this GHG target corridor until 2030, the “HP+” and “HP++” scenarios in particular can also pave the way towards 2050 targets. A prerequisite for increasing heat pump shares is the availability of F-gases for the production of heat pumps. The yearly amount of F-gases rises from 5,000 t/a in 2012 up to 8,600 t/a by 2030 in the “CPI” scenario, up to 18,100 t/a in the “HP+” scenario and up to 31,300 t/a in the “HP++” scenario. At the same time the CO2-eq emissions from F-gas leakages are growing over time, they account for up to 17 Mt/a by 2030 in the “CPI” scenario, for 26 Mt/a in the “HP+” scenario and for 39 Mt/a in the “HP++” scenario (not included in scenarios, but shown separately at the bottom of the graph). As an average in the assessed scenarios, 3.7 tons of CO2-equivalents are saved per 1 tonne “invested” CO2-equivalent emissions from F-gas leakages of the applied heat pumps systems. Total Yearly Costs Total yearly energy costs for the purposes of space heating, hot water, cooling and auxiliary energy amount in 2012 to 271 billion €2012 in 2012. By 2030 they increase by 42% up to 309 billion €2012 in the scenario “CPI”, by 38% up to 299 billion €2012 in the scenario “HP+” and by 34% up to 290 billion €2012 in the scenario “HP++”. The total yearly costs (which are annualised investment costs and yearly energy costs) are used as the indicator for economic evaluation. Total costs start in 2012 at 248 billion €2012 and increase by

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2030 by 190% up to 718 billion €2012 in the scenario “CPI”, by 191% up to 723 billion €2012 in the scenario “HP+” and by 197% up to 734 billion €2012 in the scenario “HP++”.

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5.4 Outlook on Heat Pump Technology Development

As in most markets, the growing share of heat pumps is observed and at the same time the technology is rather young compared to traditional equipment like gas and oil boilers. The following outlook on the technology development should help to better understand the future role that heat pumps can take in the built environment. In case of replacing old gas or oil boilers by heat pumps, not only the conversion efficiency is increasing, but at the same time the fuel type. This can lead to significant substitution effects in terms of greenhouse gas emission savings. Furthermore heat pumps can actively contribute to a smart grid function, which will be increasingly important with the shift of the electricity system to higher renewable energy shares, e.g. by producing heat and storing it in thermal buffers during peak-production of renewable electricity in the grid. Apart from using heat pumps for space heating purposes, they can also be used for sanitary hot water production, either combined in one system (space heating and hot water) or as stand-alone sanitary hot water systems. As a technology with growing market shares, scale effects in production if production numbers are increased, are likely to bring investment costs down, while further research will probably reveal possibilities for further improvement of the efficiency of the systems. In combination, this can lead in the future to further improved systems at same or similar costs compared to today. Increasing shares of renewable electricity generation will lead to decreased greenhouse gas emissions by the increased substitution of fossil boilers by electric heat pumps. This is of particular importance, as installed systems in stock are also profiting from lower emissions in electricity generation. Particularly in combination with biomass fuelled CHP-systems, heat pumps can play an increasingly important role in the future development towards a carbon neutral heat supply.

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References

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