Without investments there will be no change. Except climate change.

Heating of buildings accounts for a significant proportion of carbon dioxide emissions as fossil fuels presently provide the vast majority of heating. To reduce CO2 emissions, we have to stop burning fossil fuels and, in the longer term, biofuels. Heating must be electrified. Heat pump technology offers a highly competitive way to abandon burning. Heat pump investments are still virtually at the starting post but rapidly increasing, at least in areas where the conditions for investment are favourable.

Investments will not occur without an appropriate investment climate

Conditions for heat pump investments are favourable in Europe’s northernmost regions. In these contexts, Sweden, Finland and Norway could be called no-gas-infrastructure countries instead of Scandinavia. Proportionally the highest heat pump investments in the world have been made in these countries, a fact which is mainly explained by the lack of a distribution system of low-cost gas. Other factors behind this success are cheap and clean electricity, high demand for energy due to the northern climate, good drilling conditions, high quality of buildings, housing and building services engineering, as well as high living standards. In this Nordic region with a population of about 20 million, over EUR 20 billion has been invested in heat pumps. For the entire building stock in these countries, heat pumps already provide about 20 % of heating.

In countries where cheap gas or fossil energy is readily available, subsidies for cleaner technology have been the quickest approach to improve investment climate. However, a longer term solution is to set the fossil energy prices right so that they fully reflect fossil energy’s contribution to pollution. Although raising fossil energy prices has proven to be extremely difficult and slow politically, emission-based fuel pricing is the only realistic and sustainable long-term solution to reduce CO2 emissions.

Who is investing?

Out of the investment of approximately EUR 20 billion made in the Nordics, the majority consisted of investments made by consumers using their own money, as the conditions for investment have been in order, i.e., their investments have been worthwhile. Generally, these investments have also been made without subsidies. Investments have gradually shifted from single-family houses to larger units and areas such as apartment buildings, commercial and service buildings, industry, recovery of waste heat, and production of district heating. This has also widened the spectrum of investors.

Energy service companies have entered the arena offering heating and cooling as a service using waste heat and through the ground and air around buildings. Investors also include developers and owners who use the life-cycle concept. Many large companies owning real estate are systematically cleaning up their real estate properties together with expert companies to get their investment programme up and running. The objective, of course, is to own a more cost-effective, low-emission and sustainable building stock that is more attractive to customers.

The Heat as a Service model is likely to gradually spread even to traditional heating energy companies that suffer from old investment stock and rigidity. Instead of maximizing sales volumes, energy sellers just have to find business models where centralized supply as well as energy conservation and the use of local, building-specific community energy can be applied.

Heat pump investments are a way to combat climate change.

Jussi Hirvonen
Executive Director
Finnish Heat Pump Association SULPU ry
Delegate of Finland in IEA TCP HPT

This article is Foreword in HPT Magazine 3, 2021 in this link