Geothermal heat pumps are a proven technology to deliver renewable heating and cooling. A recent IEA study also highlight their cost-competitiveness compared to fossil gas boilers, mainstreaming an argument long put forward by the geothermal industry that on a life cycle basis they are an extremely cost-efficient solution.
The IEA analysis shows that geothermal heat pumps are – on a life cycle cost of heat basis – the most competitive renewable technology with fossil gas boilers in Sweden, France, Denmark, Germany, the UK and Canada. The analysis does not even account for the tremendous spike in gas prices of the recent months, as it uses 2019 data. Moreover, the study does not account for the additional benefits of using geothermal heat pumps for cooling as well as for heating.
The IEA synthetises an ongoing debate about the competitiveness of geothermal heat pumps and other renewable heating and cooling technologies with fossil equipment by proposing a metric that allows for comparison. The lower investment costs and higher running costs of fossil boilers create distortions in the real-world markets where renewable solutions appear less competitive than they actually are.
For the geothermal industry, the mainstreaming of such analysis and data is crucial in terms of increased visibility in energy system decarbonisation pathways powered by economic modelling. The mainstreaming of a discourse that highlights the existing competition between fossil fuels for heating and renewable heating and cooling technologies also contributes to the reinforcement of the understanding of the heating and cooling sector as a “heat market” that is not separate to the “gas market”.
In light of this study, EGEC issues again its call to the European Commission to have the right priorities in its upcoming bundle of legislations on gas and to tackle high energy prices: renewable heating and cooling technologies such as geothermal heat pumps and district heating and cooling must be mainstream. Market barriers must be removed to allow consumers to benefit from the more competitive renewable technologies and be freed from dependency on costly fossil gas. Other European policies must also be refocused to be aligned with the long-term priorities of the EU on renewables in heating and cooling (c.f. Renewable Energy Directive Article 15 and 23), and reflect the reality of the competition of gas with renewable solutions. This typically entails the inclusion of renewable heating and cooling in energy infrastructure programmes such as TEN-E or Connecting Europe Facility.