CCN presents this special two-part report which provides a global perspective on the challenges of heat pump deployment.
The roundtable report was jointly sponsored by Refrigerant Reclaim Australia and Refrigerants Australia. Participants represented the major HVACR markets around the world and included Russell Patten, director general of the European Partnership for Energy and the Environment (EPEE), and Steve Yurek, president of the Air-Conditioning, Heating and Refrigeration Institute (AHRI) in the United States.
Local representation was provided by Stuart Kirkwood, ANZ district leader for Trane Technologies and current president of the Air-Conditioning and Refrigeration Equipment Manufacturers of Australia (AREMA) and Mark Padwick, general manager of Wilson Heat Pumps and chair of AREMA’s heat pump group.
Participants tackled a broad range of topics from the adoption of different heat pump technologies, trends in the marketplace, rebate schemes, standards, training, safety and the refrigerant transition to net zero.
Roundtable moderator and CCN editor, Sandra Rossi, asked participants to provide an overview of their markets and to define the technologies being adopted in their region and their different applications.
Mark Padwick: For Australia, its predominantly heat pump hot water systems that are being installed. The Australian market is currently sitting at around 170,000 units. The government’s goal is to reach 400,000 units by 2037. Ours is a heavily subsidised market, which brings its own set of challenges.
Russell Patten: The European Union (EU) is made up of over 50 different countries with a strong north/south, east/west divide, which is creating a patchwork situation. We have air to air which works well in the Scandanavian countries. Otherwise its air to water or ground as well. It’s very fragmented. We’re looking at 60 million heat pumps by 2030 and another 60 million by 2040.
Steve Yurek: The United States market is similar to Australia. Air to air heat pumps are used for cooling and account for more than 4 million units per year. The big challenge is air to water. Hot water heating is relatively small compared to furnace heating. The domestic hot water market is split in half between gas and electricity. There is a lot of opportunity but also a lot of questions about how we move forward.
Sandra Rossi: Where is the market heading, what will be the main technologies moving forward over the next decade?
Stuart Kirkwood: I work mostly in the commercial market which is predominantly gas boilers moving to heat pump technology. We are seeing a shift, particularly around refrigerants. The new HFOs are delivering hotter temperatures. The other area is low pressure refrigerants largely used in large chillers for industrial type applications. In the area of smaller refrigerant charges we’re seeing a move to hydrocarbons. Compressor technologies are pretty similar but the way we apply them with new refrigerants is changing and we’re seeing new opportunities.
Mark Padwick: In the residential market for hot water systems in Australia the market is 50 per cent gas, 50 per cent electric.
Steve Yurek: This technology is not new in the US it is just being applied in new areas and at much larger scale. Another factor is the cost of energy. Gas is cheaper than electricity by about a third.
Russell Patten: The problems in the EU are accentuated by legislation. At the moment we have F-Gas legislation which is banning all HFCs between now and the year 2035. So what are we left with? We are left with HFOs, but we have another piece of legislation called PFAS that is aiming to ban HFOs. We have a couple of HFOs that will probably sneak through that are low GWP and not a PFAS, which is also known as forever chemicals. Moving forward it is clearly hydrocarbons that will be adopted. We don’t like calling them natural refrigerants because they are not really. The word on the street is propane, propane, propane. However, apart from the safety issues, our building codes in Europe won’t accept propane. In large buildings they will look at you as if you are crazy if you come along with your propane. So we don’t have an answer yet. But at a trade show in Europe recently we saw all the Chinese manufacturers with the biggest stands, all with their propane monoblocks. These are fine for homes because you can stick them outside and for this type of application they are fine because they have a low charge. But then what? We’re really at a crossroads where the manufacturers themselves are asking: What will I produce over the next five to 10 years? On the other side of the coin there’s legislation and policies saying try and get these heat pump technologies out as quickly as possible so we are competing with the gas boiler manufacturers and they are trying to corner the market until the perfect heat pump solution is out there. There is talk of banning gas boilers but is that a good thing or not? If you are in Slovakia you don’t want a ban because then what will they turn to? Another key issue is the price of heat pumps in Europe. The price is massive.
Mark Padwick: Australians have moved from the quarter acre block to apartments and we can’t stick R290 on every floor of an apartment block there’s the challenge for us.
Sandra Rossi: Let’s move on to standards, energy efficiency and government rebates. There has been controversy locally about the poor quality of some imported heat pumps and the misuse of government rebates.
Mark Padwick: Government incentives do get misused but there are some really good imported products on the market. We do have a standard here in Australia but we don’t have a good compliance regime. The ability to test check is almost zero. We have products that have resistant coils in them pretending to be heat pumps. We’ve got some real challenges in the market and we need to make sure the standards we are looking at support good consumer outcomes. Then there is training. Consumers need to be trained, the plumbers need to be trained. We’re trying to blend the refrigeration trade with the plumbing trade which has never gone well. We’ve got some massive challenges ahead we really have.
Russell Patten: From a European perspective, the average punter in the street isn’t familiar with heat pumps he or she still thinks of gas boilers. Plus, the price difference between the two is considerable, it costs about 3000 Euros more to buy a heat pump. Whether its poor product or the use of flammables, our fear is that a few of these heat pumps blow up, which would kill the market. At the same time we’re on the road to electrification and decarbonising and we’re really stretched here. On the subject of energy efficiency: Is propane more energy efficient? I haven’t gotten to the bottom of that one but there are many different views. Coming back to training, under EU law certification will become mandatory, but we won’t have enough people to get good installations and good equipment in. Lastly, we are concerned about the market being flooded because they know there is money to be made. If a couple of heat pumps blow up it will hurt the whole market.
Sandra Rossi: Do you think Industry has a role to play in educating consumers and end users?
Mark Padwick: Yes we all have a role to play. It’s clear there is a massive void in the market.
Steve Yurek: It’s fine to be aspirational and the governments think that by issuing targets like net zero by a specific date that it’s done, and really the hardest part is educating the market. We saw that going through the refrigerant transition moving from ozone depleting to non-ozone depleting. Heat pumps are not new technology. They’ve been around a long time and there have been a lot of lessons learned, but we do need to take steps to educate the market as well as contractors. The role of incentives is good but they do cause market distortion. In the US, AHRI has a certification program which is voluntary. We don’t rely on government, we self-regulate. As part of that, we do the reporting for all our participants to the US Department of Energy and other regulatory authorities. In 2022, we passed the Inflation Reduction Act which created huge tax incentives for heat pumps and other technology. In 2022, we submitted just under 3000 products that met the tax credits. In 2023, that went up to almost two million. We check and do random testing. Looking at the Australian situation, not all products will comply – some are good, some are bad. If it sounds too good to be true, its too good. If its cheap, you’re probably going to get what you paid for.
Sandra Rossi: Are there any other solutions participants would like to address?
Steve Yurek: One solution is to have government step in but mandates without enforcement just isn’t a solution. In the US, industry decided they would self-regulate. This began more than 50 years ago, well before my time. Industry decided we can’t rely on governments or others so let’s do it ourselves.
Selecting a standard is the first thing, then setting up some sort of compliance for verification. If you wait for the government, they talk about it but never get to it.
We do minimum efficiency in all these different product ranges. They do less than 200 tests a year which is hard for market surveillance. We do 5 or 6000 tests. Industry needs to decide if they want to rely on government.
Mark Padwick: I think from an Australian perspective if you look at the air-conditioning market we have a very good energy efficiency star rating system with good compliance. It was an industry driven initiative hand-in-hand with government and it worked really well. We’ve had a 60 per cent improvement in energy efficiency in the last 10 years. It works. The challenge with domestic hot water heating is trying to compare three different types of technology that delivers the same outcome – you’ve got gas, electric and heat pump. How do you compare those three products and how do you put in a star rating system? Hopefully together we can come up with those answers over the next week while we are all here in Sydney.
Russell Patten: In Europe, whether we like it or not, we’re being led by governments in the EU setting. In the EU we’ve got rules, regardless of whether their good or not. The issue is compliance and it is the member states that just don’t have the manpower or know-how. In Europe, we have the Eco-Design rules to set up standards. We have faith in that but sometimes they’re pushing us so far. Can we get there? The decision-makers still aren’t very realistic. So our problem is we’re happy to go down that route but give us time. On the other side of the coin, who’s responsible? There are subsidy schemes across Europe but it feels like a yo-yo. A country comes up with 100 per cent, then that figure disappears because a new government comes in with new policy. When it comes to environmental law, some countries will struggle while others might go even further than the target. We’ve got a long way to go. ✹
