Heat pumps

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Heat pumps deliver heating, cooling and hot water to buildings in the domestic, public and industrial sectors and can be located anywhere in the world as they utilise the constant temperature of the earth, the air temperature or water source. Heat pumps can also be reversed and function as space coolers. Most heat pumps operate on a vapour-compression cycle and are driven by an electric motor. Some heat pumps use the absorption principle, with gas or waste heat as the driving energy. This means that heat rather than mechanical energy is supplied to drive the cycle. Absorption heat pumps for space air conditioning can be gas-fired, while industrial installations are usually driven by high-pressure steam or waste heat. Heat pumps are most suitable for use in cooling, space heating, hot water, and industrial heat.


There are three main types of heat pumps: ground source heat pumps, ground water source heat pumps, and air source heat pumps. Heat pumps have been mainly used for space heating but an exchanger can be installed for domestic hot water heating and they can also be used in summer for cooling. In ‘heating mode’ a heat pump operates as a refrigerator in reverse where the constant temperature of the ground (or air) is used as the hot reservoir in winter. For a ground source heat pump a closed loop system is used. A solution with antifreeze is circulated through pipes laid in the ground below the frost line (about 10 0C) in either a horizontal (with shallow coils) or vertical (borehole heat exchanger) configuration to extract heat or reject heat to the ground. The heat is used to expand the refrigerant gas that is sent to the compressor. Compressing the vapourised gas produces heat that is distributed round the house. The technology uses refrigerants, compressor and pump and runs on electricity. For the water system, availability of a nearby lake or well is required as the system is based on a closed loop.

As their name implies, air source heat pumps extract heat from the air rather then the ground but are not as efficient as ground source pumps and use twice as much refrigerant (HCFC-22 which depletes ozone if there is a leak). Air source heat pumps tend to be used in warm climates.

In ‘cooling mode’, a heat pump can operate by rejecting heat into the ground from the building and operates as a refrigerator.

Ground source heat pumps are extremely energy efficient. The coefficient of performance (COP=ratio of output energy divided by input energy) is 3 to 6. They are thus very cost effective with pay back in 2 to 10 years. Ground source heat pumps have no visible features outside the building and are low maintenance with few moving parts so that they are also quiet. Piping underground lasts for 40-50 years. The fire hazard is also very low (Chiras, 2006). Compressors pumps and valves are well known technology and there are many suppliers.

Feasibility of technology and operational necessities

The type of heat pump chosen depends on the soil or rock type, land availability and if a water well can be drilled economically. They can be used in any climate but the configuration of this technology depends on local conditions. For example, in Germany for summer cooling the humidity allows cooling using cooled beams without chillers or dehumidification.

Heat pumps can be applied in the following places:

  • Swimming pools and other large-scale low-temperature uses, e.g. greenhouses,
  • Hotels,
  • Schools,
  • Government buildings,
  • Commercial buildings,
  • Apartment buildings,
  • For domestic space and water heating, space cooling/air conditioning and refrigeration, and
    • District Heating combined with solar and thermal storage (Philibert, 2005).

Other applications are for industrial processes, particularly:

  • Process applications, such as drying in the food industry, and
  • Dehumidification of resources/material for storage or processing.

According to the UK Heat Pump network, “the best seller is the dehumidifier/dryer for batch drying ovens, e.g. for textiles or wood, where duties of a few kW are typical. In Japan, Sweden and the Netherlands, multi-MW heat transformers operating on the absorption cycle are used for waste heat recovery in petrochemical and steel works.”

Although all of the above applications apply to developing countries, there will be limitations with regard to urban and rural poor because the heat pump technology is usually applied to buildings built to a good standard with good insulation levels, piped water and heat/cooling distribution systems. This requirement would preclude applicability to many dwellings, particularly for the rural poor. It may be more suitable for urban areas, hotels and industry. Nevertheless, it could have an important role in decreasing demand for electricity for cooling and could supply refrigeration technology for rural health centres and other uses. In some developing countries, such as China, the demand for heat is high and heat pumps could function in both heat and cooling modes. Industrial applications are a potential source of growth in developing countries for process, dehumidification and other applications.

In addition, energy supply infrastructure for households is very expensive and electricity is the preferred energy carrier. Heat pump technology avoids the cost of gas distribution for example. This makes space and water heating and cooling with heat pumps the only efficient system for using electricity for these services, according to the IEA Heat Pump Centre (2006). So far, there seems to have been relatively little uptake in developing countries especially in the residential sector. Turkey installed its first residential heat pump in 1998 from a Swedish supplier (Hepbasli et al., 2001).

In Switzerland the popularity of heat pumps is attributed to several factors, of which individual household uptake rather than district heating with costly heat distribution system was a major one. In addition, there is no need for thermal recharge of the ground as this is automatic in summer when the system is not in use. Coupled with these factors are the attractions of low environmental risks and GHG emissions, low operating costs and comparable costs to oil fired systems.

The requirements for implementation are common to many energy systems and include the following:

  • Installers and training courses,
  • Sales expertise,
  • Financial expertise,
  • Manufacturing capacity,
  • Technical guidelines,
  • Certification of contractors,
  • Quality awards and quality control,
  • Government subsidies/programmes, and
  • Information availability

Ground-source heat pumps still face some technical barriers, even though many technologies are available on the market. There is a lack of confidence in the technology, which has resulted in a low deployment rate. This is often a result of inadequate information about the costs and benefits and because of the absence of a well established supply and service industry. Uncertainty over the relationship between actual average efficiency and published coefficients of performance (COPs) also have an impact (IEA 2008).

Status of the technology and its future market potential

Heat pumps have had more than 20 years of research and development in Europe. Systems are available in about 30 countries. The concept was developed by Lord Kelvin in 1852 and the first heat pump was built in the 1940s. Commercial heat pumps have been available since 1960s and 70s. Modern commercially available units place the emphasis on optimised design. Reliability of the technology is proven.

Currently, there is around 12,000 MW thermal installed capacity worldwide (Lund et al., 2004). Sweden, Austria, Germany, Switzerland are leading countries in Europe. Sweden in particular has 230,000 installations equivalent to 9200 GWh/y from 2300 MWt capacity. In comparison, the UK has a very low take up rate due to dominance of gas supply, but it is now increasing with a domestic size range of 25 kW to 2.5 kW. There are currently around 250 ground-source heat pumps installed in the UK every year. Since 1992 around 3,000 heat pumps have been installed in single-family homes. It has also been estimated that there are 1,550 large industrial sites in the UK where heat-pump systems could be installed, with an average size of 800 kilowatts of thermal power. USA and Canada have wide usage of heat pumps.

There is scope for much higher penetration of the market. A study undertaken by the IEA in the UK indicates that the office and retail sectors are key areas for growth and should be the focus of further development (IEA Heat Pump Centre, 2002).

The IEA Heat Pump Centre website has many examples of domestic, commercial and industrial applications of heat pumps in a range of sectors. One example from the UK with details of costs and performance is attached in Appendix 2. In the USA, at the Galt House East Hotel in Louisville Kentucky, ground-source heat pumps provide heat and air conditioning for 600 rooms, 100 apartments and 89,000 m2 office space. The total area is 161,650 m2 using 15.8 MW cooling and 19.6 MW heating capacity. Energy cost savings are 53%.

A Norwegian example at Nydalen in Oslo is the largest project in Europe providing heating and cooling for 200,000 m2 building area. 180 hard rock wells provide 9 MW heat and 7.5 MW cooling reducing annual energy bills by 60-70% compared to oil, gas or electricity.

According to Lund et al. (2004), “ground source heat pumps are one of the fastest growing applications of renewable energy in the world with annual increases of 10% in 30 countries in the last 10 years”. The main countries using ground source heat pumps are Sweden, USA, Germany , Switzerland, Canada and Austria with USA installations the highest in number (600,000) but Sweden leading in terms of GWh/y produced (9,200). The Netherlands, France, UK, Turkey, and Japan also have heat pumps on a smaller scale. The 2004 installed capacity worldwide was estimated at 12,000 MWth and annual energy use 72,000 TJ (20,000 GWh).

There appear to be real gains to be made in energy efficiency and GHG emission reductions in promoting heat pumps for heating and cooling in all countries, especially if they are linked to a renewable electricity source. The technology is not complex and requires little maintenance. Costs should come down with market penetration. However, for developing countries innovative applications and configurations will be needed to reach the very poor. At the moment, for developing countries there seems to be insufficient awareness and experience with heat pumps, as illustrated in Turkey where there is slow growth with only 800 kW capacity in 2002 compared to 527 kW capacity in 2001 (Gokcen et al., 2002).

However, there is now proliferation of subsidiaries of international heat pump companies round the world such as Mammoth and Carrier who market air conditioning and heating heat pumps worldwide including Africa, such as Central African Republic, Chad, Dijibouti, Eritrea, Congo, Ethiopia, Kenya, Rwanda, Somalia, Sudan, Tanzania, Uganda, and countries within the Commonwealth of Independent States, such as in Armenia, Azerbaijan, Belarus, Georgia, Kazakstan, Moldova, Russian Federation, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, and Kyrgystan. There are also developments in China, Korea, Hong Kong, Mexico in terms of exports of heat pumps to these countries. An important trait is that the learning rates for heat pumps are substantially ranging from 24 to 30% (e.g. Switzerland and Germany respectively), which can render them accessible to the market.

Concerning the technology's developments,the IEA Heat Pump Centre propose that a greater than 30% market penetration of existing heating markets is possible providing large GHG reductions. To increase the renewable energy component of heat pumps, all the electricity requirements should come from a renewable source such as PV or wind.

Developments include replacement of piston compressors with scroll compressors which are quieter and more compact. Variable capacity control so that hot water can be produced without space heating in summer. Pumps using a low volume of refrigerant are also being developed and some reuse of hot exhaust air to preheat the fluid from the ground or to recharge the ground heat sink is being marketed.

Technical developments include a thermal response test for designing systems, thermally conducting grout and heat pumps with higher supply temperatures. Researchers at the US Rensselaer Polytechnic Institute are developing thin-film technology that adheres both solar cells and heat pumps onto surfaces which could have applications in converting walls windows and any appropriate surface into climate control systems. Recently, a prototype Active Building Envelope system has been demonstrated (Rensselaer Polytechnic Institute, 2006). The system includes solar panels, solid-state thermoelectric heat pumps and a storage device for cooling and heating. It is silent as it has no moving parts.

In Denmark, a recent study explored the benefits of integrated energy systems and local energy markets. They found that there were major advantages in coupling CHP with heat pumps. This configuration allowed an increase in wind power from 20 to 40% without problems of imbalance between consumption and production (Lund and Munster, 2006).

In Japan, a study by Nakata et al. (2005) showed that in rural areas where grid connection was expensive local renewables were economic. A combination of petroleum, LPG and heat pumps were used for the heating service and wind, PV and biomass for electricity. Wind generation increased market penetration in the optimising model and had a knock-on effect on GHP penetration. There were overall system cost savings of 31% and GHG reductions of 50%. In Japan, the main type of heat pump used is a gas engine heat pump where instead of electricity to drive the compressor, a gas engine is used.

Thus the existing technology and the technical developments already in the pipeline indicate that this technology has the ability to make a large and constructive contribution to heat and cooling services as well as energy efficiency in industrial processes and in buildings.

How the technology could contribute to socio-economic development and environmental protection

The old technology of air sourced heat pumps suffered from the problem of no net gain in energy output and was seen purely in terms of energy efficiency. However, the increased efficiency of new power plants and performance of ground source heat pumps means 70% of the final energy is coming from the ground and there is a 40% excess of renewable energy over and above the original energy consumed in generating the electricity to drive the pump. If a renewable source was used for the electricity production, then all the delivered energy is renewable.

Furthermore, heat pumps reduce dependency on fuel imports by using electricity efficiently for heating or cooling in household or industrial applications. They also reduce the need for additional infrastructure such as gas pipes or district heating pipes. The technology can provide savings in the long term over conventional systems. Potentially, it could provide refrigeration for hospitals and health clinics and provide cooling for schools and minimise energy use in industrial processes. All of these can impact on the poor. Jobs will be generated in the manufacturing, servicing, quality control, accreditation and other services required and capacity building through training would be improve the social benefits.

Contribution of the technology to economic development (including energy market support)

Heat pumps can improve security of energy supply by reducing energy demand and the small amount of electricity used can also be supplied by renewable energy generation. There are large savings in operating costs compared to conventional heating or cooling systems, although the up front capital costs are higher. Subsidies can make the capital costs more affordable such as the UK low carbon buildings initiative. The technology is mature and requires standard components.

Electric heat pumps typically use about 20% to 50% of the electricity used by electric resistance heaters for space and water heating. They can reduce primary energy consumption for heating by as much as 50% compared to fossil-fuel-fired boilers. Ground-source heat pumps are more efficient than air-sourced systems in cold conditions, but have higher initial capital costs. According to the United States Environmental Protection Agency, ground-source heat pumps can reduce energy consumption up to 44% compared to an air-source heat pump. However, significant improvements in air-to-air heat pumps have been made in recent years and they can\ now operate down to temperatures of -20°C. They are less efficient than ground-source heat pumps, but avoid the substantial capital costs involved in the ground loops. Heat pumps have been gaining market share in some OECD countries. For example, in Sweden, about 48% of all electrically heated homes have heat pumps. There are many reversible heating/cooling systems that are particularly attractive, where heating loads are moderate and there is a significant summer cooling load. Heating-only heat pumps have a significant market share in a number of countries, notably Sweden, Switzerland, the United States, Germany, France, Austria and Canada (IEA 2008).

Heat pumps can also be used for hot-water production. Their efficiency has improved considerably in recent years. The performance coefficient of the ECO Cute heat pump hot-water system increased from around 3.5 in 2001 to around 4.9 in 2006. The ECO Cute heat pump for residential hot water provision is highly efficient, but currently has a capital cost around two to two-and-a-half times more expensive than conventional options. This is declining over time. Such pumps could in time present a significant CO2 abatement opportunity.


Worldwide, for the currently estimated installed capacity of ground source heat pumps the savings are in the region of 16 MtCO2. This assumes 65,000 TJ annual ground source energy use and is compared to electricity generated by fuel oil at 30% efficiency. This is purely in the heating mode. If we assume equivalent savings in cooling mode then this figure would double (Lund et al., 2004).

According to IEA Heat Pump Centre (February 2006), a 30% market penetration of heat pumps into existing heating markets would reduce global CO2 emissions by 6%. This is equivalent to 1,500 Mt per annum of CO2 (IEA Heat Pump Centre, 1997 and 2006). The cost of these reductions can be modest.

There are no pollution emissions at the heat pump, although the generation of the electricity needed for the pump could cause CO2 emissions (depending on whether the generation takes place with or without fossil fuels), and the heat produced will reduce the need to produce heat by burning fossil fuels, which will reduce CO2 emissions. Heat pumps by reducing the need for fossil fuelled generating plants can consequently improve local and regional air quality. There are also consequent benefits in resource use as these systems are relatively simple and there is little above ground land take. Closed-loop ground source systems do not affect ground water supplies but there is little information on the possible environmental effects of water sourced heat pumps.

Heat pumps represent expensive CO2 abatement options for space or water heating in developing countries. For example, in China, the average gas hotwater heater has a tank storage size of eight to ten litres and a capital cost of around USD 100. The equivalent of the Japanese ECO Cute heat pumps have much greater capacities and capital costs that would be as much as USD 5 000 in China. However, high-efficiency reversible heat pumps for cooling and space heating are potentially an important abatement option in China and other developing countries or regions with moderate heating loads and significant cooling loads over summer.

Split system heat pump type air conditioning systems could potentially reduce China’s air conditioner electricity consumption by 27% at a cost of USD –20/t CO2 saved (IEA analysis).

Heat pumps are considerably more expensive than boilers, although running costs are much lower. While a typical condensing gas boiler may cost USD 1 500, a heat pump will cost about USD 5 000. The gas boiler would use about 50 GJ gas per year, while the heat pump would use 15 GJ electricity per year. Replacing a gas boiler with a heat pump would result in a reduction in CO2 emissions of 2.8 tonnes per year (provided the electricity was CO2-free) at a lifetime cost of around USD 160/t CO2 saved. In the United Kingdom, ground-source heat pumps currently have a CO2 abatement cost of around USD 100 to USD 200/t CO2 saved for existing residential dwellings, although this rises to between USD 380 to USD 900/t CO2 saved for buildings meeting the recent 2000 building codes. In the service sector, the CO2 abatement cost of heat pumps for space heating is around USD 200/t CO2 saved. In Canada, heat pumps for space heating might yield CO2 savings at a cost of between USD 143 to 432/t CO2 saved, although, in some regions and cases the abatement costs would be negative with current energy prices (Hanova et al., 2007). In the United States, abatement costs for heat pump hot water systems that replace electric resistance systems would be high, at around USD 400/t CO2 saved, even after extensive deployment (Sachs, 2004 and IEA analysis). For large service sector buildings, ground source heat pump systems are likely to be economic and have negative abatement costs where they provide, space and water heating, as well as cooling in summer (Sachs, 2004).

Financial requirements and costs

Payback times for the heat pumps are normally two to ten years depending on the installation. The technology costs need to be considered in terms of overall total energy costs for both capital and maintenance costs and will vary depending on the local installation configuration. In the example from Norway described above, the total cost is NOK 60 million (or € 7.5 million) which is NOK 17 million greater than a conventional system (Lund et al., 2004). The energy cost savings are expected to be NOK 4 million annually, so that the payback period will be fifteen years, but within only four years of operation it will save money compared to a conventional system. The project received a subsidy of NOK 11 million.

From the present applications, a cost figure per tC reduced can be calculated, which is similar to wind or biomass technology, at the lower end of social cost estimates from USD 60-250/tC (IEA Heat Pump Centre, 2005; Clarkson and Deyes, 2002).

Some indicative prices of heat pumps (source: http://www.costhelper.com/cost/home-garden/heat-pump.html) demonstrate that:

  • Installing a small through-the-wall or window unit air-source heat pump to cool and heat a single room runs about $500 -$1,500.
  • For a whole house system with existing ductwork, a typical split system (one unit inside, one outside) air-source heat pump runs $2,000 - $5,000 for an average home (3 ton capacity). For homes without existing ducting, professional installation of a ductless mini-split electric air-source heat pump can run $4,500-$6,000 or more, depending on the number of indoor units (zones).
  • For less moderate climates, installing a dual-fuel air source heat pump that works with a natural gas or propane furnace under a single control system can run $2,500 - $5,500 to install just the heat pump, or $5,000 - $10,000 or more for a complete system that includes both the electric heat pump and a fossil-fuel furnace.
  • Complete installation of a geothermal heat pump (ground-source or water-source) runs $10,000 - $25,000 or more, depending on the length and depth of the underground pipes, soil conditions and other excavation and installation factors. More expensive systems may include options such as a two-stage compressor or a hot water heater.
  • The technology is still evolving for residential use of absorption heat pumps, which are air-source heat pumps driven by natural gas, propane or solar-heated or geothermal-heated water. Also called gas-fired heat pumps, most current absorption heat pumps are sized for industrial or commercial use, or for residences of 4,000 square feet or larger (and usually without an outside electricity source)
  • Based on the learning rates in the US (15%), the actual cost of a geothermal heat pump is 15,000 $ and the cost target to reach commercialisation is 7,000 $ (IEA 2008)

In terms of financing possibilities, the EU programme ‘Intelligent Energy Europe’ (IEE 2003-6) has been responsible for promoting and implementing smart energy use and more renewables through projects across Europe, one-off events and local/regional energy agencies. The total budget is € 250 million, covering up to 50% of the costs. Currently, there are more than 200 international projects, 30+ local/regional energy management agencies, and almost 40 European events.

A new Intelligent Energy Europe II programme runs from 2007-13 with a budget of € 730 million. This programme include activities in all areas including heat pumps. Under IEE the SAVE programme is concerned with buildings including industry. The UK Low Carbon Buildings programme supports heat pumps with a grants scheme and PowerGen utility has launched a 1000 house programme. In the USA, heat pumps are given the Energy Star label of the Environment Protection Agency that facilitates special Energy Star loans from banks and other financial organisations.

The EU programme COOPENER under Intelligent Energy Europe looks to support projects on energy policies and market conditions in developing countries and strengthening local energy expertise to alleviate poverty.

In general, there are more opportunities for funding renewable energy investments from both public and private sources. Banks such as Morgan Stanley or Royal bank of Canada are increasing investments as are utility companies such as Electricité de France. The European Investment bank is also active as is the EBRD and the Asian development Bank.

Worldwide the largest source of funds are from the World bank, the Global Environment Facility and the the German development finance group (KfW) (Martinot, 2005). Bilateral national aid agencies are also important in this context as well as new initiatives such as Renewable Energy and Energy efficiency Partnership (REEEP) and the Global Village Energy Partnership (GVEP).


  • Chiras, D., 2006. The Homeowner’s Guide to Renewable Energy, New Society Publishers, Canada.
  • Clarkson, R. and Deyes, K., 2002. Estimating the Social Cost of Carbon emissions, UK government Economic Services Working Paper 140. Available at: [[1]]
  • Hanova, J., Dowlatabadi, H. and Mueller, L., 2007. Ground Source Heat Pump Systems in Canada – Economics and GHG Reduction Potential. Available at: [[2]]
  • Hepbasli, A., Eltez, M. and Duran, H., 2001. Current Status and Future Directions of Heat pumps in Turkey, GHC Bulletin.
  • Gokcen, G., Kocar, G. and Hepbasli, A., 2003. Year-end Geothermal development status of Turkey 2002, International Geothermal Conference, Reykjavik.
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  • Nakata, T., Kubo, K. and Lamont, A., 2005. Design for renewable energy systems with application to rural areas in Japan. Energy Policy, 33, pp. 209-219.
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