The economics of heat pumps and the (un)intended consequences of government policy

Barnes, Jake; Bhagavathy, Sivapriya Mothilal

doi:10.1016/j.enpol.2019.111198

Cited by 33 publications

(16 citation statements)

References 18 publications

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“…They showed that GSHP may be a cost optimal solution for most of the UK in the future with increased ambient temperatures [29]. Similar results were obtained by Barnes et al [30] by comparing the net present values (NPV) of six heating systems (i.e. gas boilers, ASHP, GSHP, hybrid HP, direct electric heating and storage-based heating) in a predefined heating system that represented a typical semi-detached house.…”

Section: Literature Review Of Techno-economic Analysis Of Heatsupporting

confidence: 67%

Temporospatial techno-economic analysis of heat pumps for decarbonising heating in Great Britain

Wang

2021

Energy and Buildings

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Section: Literature Review Of Techno-economic Analysis Of Heatsupporting

confidence: 67%

Temporospatial techno-economic analysis of heat pumps for decarbonising heating in Great Britain

Wang

2021

Energy and Buildings

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“…Moreover, retail prices include taxes, levies, and grid charges. Not only may these mark-ups act as a disadvantage to electric heating as opposed to non-electric options (Barnes and Bhagavathy, 2020), but they also penalize thermal losses, potentially impeding an economically efficient flexible heat pump operation.…”

Section: Discussion and Limitationsmentioning

confidence: 99%

Heating with wind: Economics of heat pumps and variable renewables

2020

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With the growth of wind and solar energy in electricity supply, the electrification of space heating is becoming a promising decarbonization option. In turn, such electrification may help the power system integration of variable renewables, for two reasons: thermal storage could provide low-cost flexibility and heat demand is seasonally correlated with wind power. However, temporal fluctuations in heat demand may also imply new challenges for the power system. This study assesses the economic characteristics of electric heat pumps and wind energy and studies their interaction on wholesale electricity markets. Using a numerical electricity market model, we estimate the economic value of wind energy and the economic cost of powering heat pumps. We find that, just as expanding wind energy depresses its €/MWhel value, adopting heat pumps increases their €/MWhel cost. This rise can be mitigated by synergistic effects with wind power, "system-friendly" heat pump technology, and thermal storage. Furthermore, heat pumps raise the wind market value, but this effect vanishes if accounting for the additional wind energy needed to serve the heat pump load. Thermal storage facilitates the system integration of wind power but competes with other flexibility options. For an efficient adoption of heat pumps and thermal storage, we argued that retail tariffs for heat pump customers should reflect their underlying economic cost.

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“…Another factor that has been shown to negatively impact the deployment of heat pumps in the UK is the current balance of tax and regulatory costs through the fuel costs, i.e. electricity and natural gas (Barnes and Bhagavathy, 2020).…”

Section: Air-and Ground-source Heat Pumpsmentioning

confidence: 99%

Experience rates of low-carbon domestic heating technologies in the United Kingdom

Renaldi¹,

Hall²,

Jamasb³

et al. 2021

Energy Policy

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This paper presents the experience curves of low-carbon domestic heating technologies in the United Kingdom between 2010 and 2019. The deployment of these technologies has been acknowledged as one of the main actions toward decarbonising the heating sector. In the UK, several deployment oriented policies have been implemented, such as the Renewable Heat Incentive (RHI). In this study, we focus on the following domestic heating technologies: air-source heat pumps, ground-source heat pumps, solar thermal collectors, and biomass boilers. Condensing combination gas boilers are also included to act as the baseline/incumbent technology. Using UK installation cost data for 2010 to 2019, we found that low-carbon heating technologies had experience rates of; air source heat pumps -2.3± 5%, ground source heat pumps -0.8±4%, biomass boilers 0.1±2%, and solar thermal 13±5%, all significantly lower than the reported learning rates of similar technologies in the literature. Furthermore, we found that gas boilers have reached the floor price at approximately £30/kW. The resulting experience rates can be used in energy economics models and to inform policymakers in developing further deployment programs.

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The economics of heat pumps and the (un)intended consequences of government policy

Cited by 33 publications

References 18 publications

Temporospatial techno-economic analysis of heat pumps for decarbonising heating in Great Britain

Temporospatial techno-economic analysis of heat pumps for decarbonising heating in Great Britain

Heating with wind: Economics of heat pumps and variable renewables

Experience rates of low-carbon domestic heating technologies in the United Kingdom

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