What can the UK learn from countries like Sweden, Switzerland, France and Germany, which have been developing their markets for low-carbon heat for decades?
By Anna Peran
As the UK works towards developing a mass heat pump market in order to reduce buildings’ carbon emissions and meet Net Zero targets, lessons can be learnt from other countries in Europe with more mature heat pump markets. Countries like Sweden, Switzerland, France and Germany have been developing their markets for low-carbon heat for decades and, despite their different contexts, identifying the key actions that led to their success can help us inform UK policy.
It is worth noting that countries with a more advanced heat pump market today, generally began their transitions to electrified heat in the aftermath of the 1970s oil and gas crisis, in a bid to regain sovereignty over energy policy.
So what worked?
BUILDING CONSUMER AWARENESS & TRUST
Building consumer awareness and ensuring consumer trust are essential to heat pumps’ deployment. The clean heat transition cannot take place without households being informed. However, research from BEIS in the UK has found that 20% of the UK population have never heard of low carbon heating systems, 39% were aware of them without really knowing or understanding much about it, and only 5% knew a lot.
As the UK Energy Research Centre has highlighted, public understanding and promotion of heat pumps can be carried out by several actors, including by central and local government, energy utilities, industry associations, manufacturers and by installers and plumbers themselves. And we can see a range of these actors being harnessed when we look at several European countries with more developed heat pump markets than the UK’s.
For example, in the 1990s, Switzerland paired new policies to incentivise the installation of heat pumps with a national awareness campaign, which took adopted a regional approach. Information, advice and support on heat pump technology and installation were shared at community events, in which municipal utilities, installers and manufacturers all took part. Taking a local helps those who have already made the switch to heat pumps talk to those considering it, and discuss their own experience of heat pumps, which can help reassure future consumers. In parallel, advertising on national television helped to foster public interest and drive attendance at local events. National accreditation schemes were implemented in parallel, again in order to bolster trust in a technology that was novel at the time.
Similarly, at the end of the 2000s in Germany, trusted utilities and energy agencies conducted awareness campaigns on heat pumps. NRW Energy Agency both placed radio ads and engaged with the population at local level, by setting information centres in town halls and attending local trade fairs. In parallel, RWE Utility also established both an online consumer forum to easily access information and a national database on which consumers could find installers via their postcode in order to facilitate the installation process. In 2008, Germany saw an increase of 70,000 annual compared to 2000’s numbers, when merely 10,000 were sold.
REBALANCING THE ECONOMICS OF HEAT
Currently around 25% of a UK electricity bill consist of eco-levies and legacy costs in the UK (compared to just 2% on gas bills) – which can make electrify a more expensive option to heat a home – even despite the huge efficiencies heat pump technologies bring.
According to Eunomia, in Sweden, Germany, Denmark and Austria, the widespread uptake of heat pumps is a direct result of substantial fossil fuel taxes, more so than investment subsidies. Sweden notably benefits from cheaper electricity while also having the highest carbon tax in Europe. Between 1991 (when the carbon tax was introduced in Sweden) and 2005, annual heat pump sales increased by 100,000 units per year.
More widely, analysis from the UK Energy Research Centre suggests that while heat pumps are likely to be more attractive to households in countries which do not have extensive natural gas connections, other factors play a key role. In countries where on-grid households prevail, the presence of strong policies in the form of carbon/energy taxes, effective regulation and planning appear to have played a more central role in creating a diversified heating mix, hence the need for a whole market approach, as discussed in this report by the Regulatory Assistance Project.
As such, if the price to purchase a heat pump in these countries was higher at first, the substantial financial return consumers obtained on their energy bills made the product more attractive, reducing the initial purchase price over time. In fact, in Sweden, between 1985 and 2008, the purchase price of ground source heat pumps halved. Between 2010 and 2013, 18,185 heat pumps were sold per year in the UK, representing less than one heat pump sale for every 1,000 households – in Sweden and Finland, more than 20 heat pumps were sold for every 1000 households over the same period of time.
Overall then, the successful deployment of heat pumps across Europe has resulted from both policy continuity and effective policy packages involving government, industry and consumers. It is important to note that policies need to combine quality assurance and information dissemination in order to be effective. Grants and other investment subsidies have proved to be helpful when trying to scale up the heat pump market when paired with robust policies to ensure the stability and independence of the heat pump market in the long run. In addition, fiscal policies and incentives have helped increase sustained heat pump installations by reducing electricity prices in numerous countries, making electricity more affordable than fossil fuels.
Anna Peran is researcher in Clean Economy at E3G