Reducing heat pump installed costs: Reviewing historic trends and assessing future prospects
Mark Winskel, Philip Heptonstall, Robert Gross
Abstract
Residential heat pumps are a critical energy transition technology, but their installed costs are often much higher than incumbent technologies – imposing a policy imperative, in the UK and elsewhere, to reduce deployment costs. Here, we systematically review historic and forecast UK and international data on heat pump installed costs. Installed costs are reported using three main metrics: Single Point Cost, Experience Rates and Percentage Cost Reduction. Experience Rates offer the highest quality metric, but there are few available studies, particularly for non-equipment costs. Single Point Cost is the most widely reported metric, but conflates diverse technologies and contexts. Percentage Cost Reduction is a relatively common forecasting metric, but may lack rigour. Historic data suggests that there has been no significant reduction in the average installed cost of heat pumps over the past decade in the UK, while modest cost reductions were seen internationally. At times, particular countries have aligned deployment growth with significant cost reduction. Forecast data suggests reductions in installed costs of 20–25 % between 2020 and 2030 in the UK – significant, but relatively modest compared to current UK policy goals. We conclude that heat pump deployment policy support should be resilient to fluctuations in installed costs, as the market grows. • We systematically review historic and forecast domestic heat pump installed costs. • High quality installed cost data is scarce, both in the UK and internationally. • No reduction found in average installed costs over the past decade in the UK. • Forecasts suggest significant but relatively moderate cost reductions by 2030. • Policy support should be resilient to fluctuations in installed costs over time.