grant scheme

For several years the market for heat pumps has been booming in Europe, but the most recent figures show a significant slowdown of heat pump deployment across Europe. However, Ireland seems to be bucking that trend with increased sales numbers across 2023. Building Services Engineering recently spoke with Enrique Vilamitjana (left), Managing Director at Panasonic Heating, Ventilation and Air-conditioning and a Board member at the European Heat Pump Association (EHPA), about these trends. Here he gives his perspectives, with more than 30 years of experience in this sector.

Q:The scale and rate of heat pump installations have been slowing down across Europe, what measures can be taken to turn this around?

EHPA has been advocating for a robust policy framework that allows stable growth in the heat pump market. The direction that the European Union wants to take is clear –to reach climate neutrality by 2050, become more energy independent and develop its industrial leadership on clean technologies. However, while ambitions are there, practical actions and concrete implementation plans to achieve those are not sufficient for the moment, both at European level and national level in the EU countries. The European Union has been dealing with tremendous difficulties in the past years, such as Covid, the Russia-Ukraine conflict, inflation, etc. However, without decisive actions to deploy heat pumps, we will fail to decarbonise our buildings and enhance their comfort. EHPA estimates that to achieve the REPowerEU1 targets, 60 million more heat pumps (of all types) need to be installed by 20302

The Heat Pump Action Plan, initially planned for 2023, has been postponed to the next term of the EU institutions that starts this year. EHPA has urged that it be published as soon as possible to ensure policy clarity and stability. EHPA recommends a level playing field between heating technologies that is supported by a more coherent policy and legislative framework. For instance, by a shift of taxes and levies away from electricity to lower the prices, while strengthening the grids across Europe. Electricity prices are over 2.5 times more than gas in many European countries3. EHPA estimates that the electricity to gas price ratio should not be higher than two to see favourable returns on investments. The EU Energy Taxation Directive could enable a more harmonised approach on taxing electricity, but negotiations did not progress over the last three years.

Q:Is the shortage of skilled workers sufficiently recognised as a problem that needs to be addressed? Is the current training sufficient to address the skills shortage in the heat pump industry, or is there a need for improvement?

It is certainly recognised as a bottleneck within the industry and seen as one of the biggest challenges to solve in the short term. EHPA calculated at the beginning of 20234 that there were around 117,000 skilled employees in the heat pump sector in Europe, and that this should be a minimum of 500,000 by 2030. This implies the heat pump industry has great potential for local job creation in the coming years, but this requires a proper framework that enables this growth to occur in a qualitative and timely way. Supporting electrification of heating and cooling and sending a clear signal for the urgent need of re-skilling in the short term is essential. The challenge is twofold: increasing the number of training centres across Europe, including in Ireland; supporting the transition of installers to be more confident in installing and commissioning heat pumps.

Access to training for heat pump installers needs to be made as simple as possible and incentivised by local and national authorities.

At Panasonic we currently have more than 40 training centres in Europe and aim to have 50 by 2025, including seven (one by Panasonic and six by our partners) in Ireland5. In 2023, Panasonic and our partners trained approximately 400 installers in Ireland.

To make the profession of heat pump installer appealing, it is necessary to develop partnerships with schools and training centres, while ensuring a steady heat pump demand growth. This transition can only be wholly successful if the entire value chain collaborates together. It must also include professional industry associations, vocational schools, training and certification centres, and local authorities in incentivising the skills transition.

Quality of installation is a key priority for the sector and various tools are available to achieve it, such as training in schools, training by manufacturers, software tools for selection, dimensioning and design, remote maintenance and digital tools, information tailored to the installers’ level of experience, and so on.

Digitalisation is also becoming an increasingly important element for access to training as it allows for both on-site and remote training or, for example, moveable training centres on the road. As manufacturers our role is to facilitate the access to information and tools.

Q:Are the heat pump targets that are set for Europe, and specifically for Ireland, realistic?

Both the technology and production capacity are more than ready to meet the needed numbers for 2030. Heat pump manufacturers, including Panasonic, have planned investments worth €7 billion in total until 2027 in Europe. Europe has the production capacity to reach the targets6 Demand needs to follow, however, and this has been slowing down in 2023 and 2024. Ireland is among the countries with ambitious national targets of 680,000 heat pumps by 2030. Reaching this target will depend on multiple factors. First there is the electricity to gas price ratio that was mentioned earlier. Electricity is still more than two times more expensive than gas in Ireland. This needs to decrease. Second, stable and predictable support measures need to be in place over an extended number of years. Third, accessibility and quality of training for installers needs to continue to improve. Fourth, and last but not least, to boost the retrofit market in

Ireland a more streamlined and accessible grant scheme needs to be implemented.

Q:What is the role for grants and monetary incentives in the transition, and how can they be made more accessible?

Heat pumps can have higher upfront costs so monetary incentives to distribute costs can alleviate this barrier, especially for lower income households. Consumer predictability is the key message here. In recent years we have seen multiple EU governments introduce strong monetary incentives on a very short term, and then cut them again or change the schemes every year without coherence. This confuses consumers and the market in general, and can trigger negative effects such as volatility of demand, unstable prices and opportunistic effects.

To stimulate demand, consumers need stable and consistent support programs that do not make them doubt when to invest in heat pumps. The format, quantity and duration of such schemes need to be determined based on a thorough assessment and understanding of national consumer needs, focusing on low-income households and rewarding replacement of heating systems.

Today, we often hear that application procedures for grants are challenging. Onestop-shops, as is the case in Ireland, could be a potential solution here. An entity under the regional or national government is where consumers can find all information regarding the process of buying and installing a heat pump, as well as how to apply for grants. Here consumers should be able to easily find all the information they need and get support from experts.

The scope of the one-stop-shops could be broader than just heating technologies. They could look at the whole building level and provide advice on renovations and how to access renovation grants. They could follow up on how the grants are used in a timely manner, to ensure they have an immediate effect to alleviate the upfront costs and support the deployment.

The establishment of those entities are on the way, where the recently revised Energy Performance of Buildings Directive mandates EU Countries to set up such entities per 80,000 inhabitants to provide households with technical assistance for the renovation of their homes. It would only be logical that in addition they also provide support with the application of heat pump grants.

Q:How do you see Ireland’s new low-rate green loan scheme benefitting consumers?

The low-rate green loan schemes are meant to be used for energy upgrades that aim to improve the energy performance of buildings and reduce operating costs. If used correctly, such loans can create potential for lower-income households in order to spread out the financing over several years at lower green rates (while rates are currently higher) to undertake works that reduce their energy bills. They can then use the reduced bills to pay back the loan and enjoy improved living conditions in the long term. However, it is true that this does not alleviate all upfront costs.

Therefore, we should think beyond and possibly consider coupling different tools, such as grants, green loans or service contracts, so that households can find the best suited support system for them. This again depends on having easy access to the right information on what type of renovation and heating technology is best suited for your home.

Q:

Last but not least, the new EU F-Gas regulation came into force in March 2024. Is this regulation compatible with the much-publicised aspiration figures for heat pumps?

The EU has set ambitious provisions in place within the new F-Gas Regulation but the industry has been preparing for this change for several years and already has the capacity to continue to provide the needed equipment to the EU market. It will certainly trigger changes in those refrigerants that are used in heat pumps, using lower GWP fluorinated refrigerants and nonfluorinated refrigerants. This also means that installation and maintenance operations will need to account for the use of those new refrigerants, including the more flammable ones. During the revision and negotiations on this particular Regulation, much of the focus was on heat pumps due to their expected growth in the coming years. Moreover, ambitious provisions for heat pumps were discussed without sometimes fully considering technology improvements, latest standards and installation needs.

An assessment report of the main market prohibitions on heat pumps that are part of the F-Gas Regulation is planned for 2030. This report will assess the impact on the market, heat pump deployment, and whether the prohibitions are still fit for purpose.

References

1. REPowerEU (europa.eu)0012.

2. European Commission – Impact Assessment –Europe’s 2040 climate targets – part 3 (europa.eu).

3.In which countries does the electricity price work for heat pumps? – European Heat Pump Association (ehpa.org).

4. Wanted: half a million heat pump workers –European Heat Pump Association (ehpa.org).

5. Panasonic Europe – Heating and Cooling.

6. Driving competitive clean tech in Europe –infographic – European Heat Pump Association (ehpa.org).

In 1989, the word“Eco-Friendly” was used for the first time. We were already there.

For 35 years, Clivet has been synonymous with heat pumps. An efficient and sustainable technology in which we continue to invest for a maximum performance in all sectors, from residential to commercial and industrial.

Thunder

Reversible heat pump with a power range from 40 to 85 kW

• Scroll compressors and full inverter fans

• Hot water production up to 75°C

• Modularity up to 16 units

• Operational range for heating from -20°C to +42°C

For enquiries, design information and quotations please contact: Muirfield Drive, Naas Road, Dublin 12 - Tel: +353 (0)1 419 1919 Unit L, Furry Park Industrial Estate, Santry, Dublin 9 - Tel: +353 (0)1 842 7037 South Ring West Business Park, Tramore Road, Cork - Tel: +353 (0)21 432 1066 Paul Devereux, Specification Manager, Hevac paul.devereux@hevac.ie | www.hevac.ie Quotation Enquiries: tender.enquiries@hevac.ie