Residential heat pump application in Amsterdam A research report
Professor Dr. A. Huygen Group D - coordinator A. Ruiter Case 9: smart energy cities Interdisciplinary project
Abe van der Woude 10808094 - Business Studies Flip van de Westeringh 10735127- Business Studies Min Zhu Debets: 10692215 - Earth Sciences
Waas Thissen 10722203 - Earth Sciences
Energylabels in Amsterdam (Energielabelatlas, 2016) Date: 12/12/2016
1 Content Introduction……… 2 Methods……….. 4 Theoretical framework……… 5 Results……….. 9 - 22 Chapter 1: the (dis)advantages of heating residential areas with heat pumps ……… 10
Chapter 2: the technical possibilities for integrating heat pumps in residential areas 15 Chapter 3: the marketing processes for integrating heat pumps in residential areas.. 19
Chapter 4: the transition management possibilities for heat pumps……… 21
Recommendations for stakeholders……….. 22
Conclusion………. 23 Discussion………..……… 23 Recommendations……….………. 24 Literature……… 25 Appendix………..……….. 28 - 30 1……….. 28 2……….. 28
3: commercial marketing plan based on the adjusted 4 P’s method……….. 28
2 1.0 Abstract
This research report will inquire into whether the application of heat pumps in residential areas in Amsterdam is feasible. The possibilities of employing heat pumps as a renewable energy technology for substituting conventional non-sustainable heating and cooling techniques will be examined. For this research an extensive literature review is conducted, focusing on integrating disciplines within both beta and gamma sciences. From a socioeconomic perspective the managerial and governmental influences were analyzed. It was inferred that local government should play an inclusive role and can largely influence actors of interest. In addition, a mainly commercial marketing strategy, rather than a social marketing strategy, should be adapted to increase the application of heat pumps. From a technical point of view it is shown that on the short run, small scale (hybrid) air/water heat pumps can be applied best in renovated clustered houses in Amsterdam New West. On the long run, the
employment of heat pumps will only be viable in the city center if the municipality of Amsterdam implements a city heating network. In conclusion, it can be determined that the application of heat pumps in residential areas has a lot of possible potential depending on the type of heat pump, whether the government fosters the application of heat pumps and the either social, -and/or commercial orientation of the market plan. Further research could assay the improvement points of heat pumps. This could be achieved by executing interactive tests with heat pumps within a smart grid jointly with residents and the grid administrators.
2.0 Introduction
In 2011, 83 percent of the World’s energy use was generated by fossil fuels (WER, 2013). Fossil fuels are a nonrenewable energy source and a finite resource that will eventually become too expensive or too environmentally damaging to retrieve. The extensive use of fossil fuels is not sustainable. Renewable energy technologies should substitute conventional energy resources to protect the environment, mitigate climate change, and manage the diminishing fossil fuel reserves. The
importance of an energy transition in Europe is acknowledged and supported by the renewable energy directive established in 2009 (Directive 2009/28/EC, 2009). This directive requires the European Union to realize at least 20 percent of its total energy needs with renewables by 2020. The application of heat pumps is recognized as a great opportunity to reach the European Union’s target for an
affordable, consistent and sustainable energy supply. Heat pumps are used to heat or cool spaces using a small amount of electricity to extract heat from one place and transfer is to another. Heat pumps can be applied in a wide variety of scales, from domestic buildings to commercial buildings, greenhouses and industry.
In the Netherland gas is becoming an increasingly less desirable fuel within the political arena (NOS, 2016). Therefore, the application of heat pumps has a lot of potential, especially as demand for
3 heat covers 40 percent of the national energy output (Kerr, 2006). . However, the market share of heat pumps is still small, especially for the domestic sector. In 2011, 10 percent of the market was captured by domestic buildings (Sepemo, 2011). In this report the potential and the possibilities for heat pump application in residential areas in Amsterdam will be examined. The focus is on residential areas as this sector is a major consumer of heat and cooling demand. In addition, heat pumps appear an energy- and cost-efficient system for small-scale use and provide flexibility to the power system. However, the local energy distribution network in residential areas is still deficient with regard to implementing heat pumps. This is due to both a fluctuating heat and cooling demand and electricity supply (DECC, 2016).
This research regards an interdisciplinary approach as multiple aspects need to be examined when researching the feasibility of applying heat pumps. The technical possibilities of the application, the many stakeholders, the implementation management and the social marketing of heat pumps are all very important factors when looking at the domestic energy demand and supply. The application of heat pumps in residential areas in Amsterdam should increase social resilience, and should generate both economic and ecological benefits when establishing a good integration of the different
disciplines.
To form a well-founded answer to the main question several important insights should be acquired. Firstly, the advantages and disadvantages of applying residential heat pumps need to be considered. This strongly influences people’s choice to choose for applying heat pumps. Secondly, the technical possibilities for integrating heat pumps in residential areas in Amsterdam needs to be analyzed. In order to locate an area in Amsterdam suitable for the application of heat pumps, spatial planning and the power grid compatibility with heat pumps should be taken into account. Thirdly, it should be examined whether the marketing of heat pumps should have a commercial marketing or a social marketing orientation. This is important for finding the best fit with the ‘needs and wants’ of the targeted residents. Lastly, the transition management possibilities for heat pump need to be inquired into. This gives more insight in which way management strategy regarding the different stakeholders needs to be carried out to make the application of heat pumps efficient.
3.0 Methods
Two scientific perspective are of great importance when inquiring into whether the application of heat pumps for residential use in Amsterdam is feasible. These are the technological domain and the business domain. Subsequently, the business domain is divided into two subdomains; that of managerial activities and that of marketing.
4 apply since this theory is highly applicable on the transition from conventional heating methods to new technologies for heating. Secondly, the domain of marketing is covered. By means of a semi-structured interview with Cees Mager1 information is gathered on whether social of commercial marketing of heat pumps is best suited for residential buildings in Amsterdam.
For this research, a literature review covering the different aspects of this topic was
conducted as main source of information. The existing literature on heat pumps is very extensive and sufficient enough to answer the main question. However, literature on marketing applied on heat pumps is scarce. To cover this research domain general theories of social marketing that are specified to this case and an interview with an expert in the field of heat pumps were used. For the
technological domain, scientific literature covering performance aspects of heat pumps in residential areas was consulted. Information from these domains was integrated to come to the results and recommendations on where heat pumps could be most feasible in Amsterdam. Using scientific literature, reports and governmental information the sub questions in this research were answered sufficiently.
The interdisciplinarity in this research is the fact that political/management, technical and marketing aspects are closely intertwined to make a transition to new methods possible. The subjects of sustainability and renewable energy form the common ground of the research domains used. Through extension ideas within domains are expanded to another (Pers. comm. C Rammelt). For example aggregating the social attractiveness and the socio-economic consequences of applying a new heating technology. This type of integration is of great importance for establishing a wellfound answer to the main question of this research. The complexity of the subject requires extension of concepts between domains to form a holistic view.
4.0 Theoretical framework
The application of heat pumps in residential areas in Amsterdam may contribute to sustainable energy use and can provide many socioeconomic benefits. However, the transitioning process of shifting from a conventional cooling and heating system to a renewable energy technology that phases out gas is strongly influenced by technological, political and socioeconomic considerations. To gain a better understanding of the possibilities of applying heat pumps in residential areas the overarching theories relevant to these facets need to be comprehended.
A theory related to the integration of the different disciplines applied in this study is the ‘dimensions of sustainability’ theory. In this theory the pillars of sustainability are described. By integrating these pillars the sustainability of implementing an energy method can be comprehended. When one of the
5 pillars is weak, the system becomes unsustainable. The three pillars are economic viability,
environment and social welfare, see figure 2.
Figure 2: Pillars of sustainability (Twhink, 2014).
The importance of sustainability and renewable energy within the different pillars form the common ground of this study. Often the pillars are evaluated separately, the economic pillar receiving most interest as many stakeholders consider economic benefit most important. In addition, results from these different domains can contradict each other as what is economically best might not lead to a socially optimal situation. In this research interdisciplinarity is important as tuning the interests and choices of the concerning stakeholders requires a holistic view.
A theory related to the adoption rate of people towards an innovation is the ‘characteristics of innovation’ theory. Between 49 to 87 percent of the variance in the rate of adoption can be explained by five attributes (Rogers, 1995). These attributes are described in the following table
Relative advantage the degree to which a heat pump is more advantageous to users than competing conventional heating and cooling devices
Compatibility the degree to which a heat pump is perceived as consistent with the values, experiences and needs of users (Limthongchai, 2003)
Complexity the degree to which the principle of a heat pump is difficult to understand and use (Adams et al., 1992). Systems that are considered less complex and easier to use have a higher likelihood of being employed (Agarwal and Prasad, 1997)
6 Trialability2 the degree to which a heat pump can be experimented with before
application (Rogers, 1995). People who have an opportunity to experiment with an innovative technique before committing to the application are more likely to adopt it (Tan & Teo, 2000
Observability the degree to which the results of applying a heat pump are visible to others (Rogers, 1995). It is important to establish observability in a new application of a technology before attempting to challenge the dominant technology in its native market and application (Weiss and Dale, 1998)
This theory is a well-known and established theory in the technical innovation field. The essence of the five principles remains the same in papers consulted on this theory. However, adoptions and different denotations of the principles exist. Moore and Benbasat (1991) used ‘ease of use, image, and voluntariness’ instead of the complexity principle of Rogers (1995) and Limthongchai (2003) changed trialability for ‘security and confidentiality’.
Theories supporting a thorough and accelerated promotion and implementation of the heat pumps concern marketing and social marketing. Marketing and social marketing are highly related but aim at different purposes. The goal of marketing is to find the best fit between the needs and wants of customers and the offer made by the supplier (Kotler, 2000). The theory of social marketing is based on commercial marketing theories (Dann, 2010). A fundamental principle of social marketing is that when the conditions of a social campaign resemble that of a commercial product campaign the effects are significantly higher compared to other types of campaigns (Wiebe, 1952; Kotler, & Zaltman, 1971). Application of social marketing is expected to be relevant because of the social aspect of heat pumps: by increasing the demand and supply for renewable energy, heat pumps help decrease carbon dioxide emissions and their ballast on the environment.
A key concept in commercial marketing is McCarthy’s (1960) elaboration on the concept of the marketing mix which resulted in the 4 P’s concept. The 4 P’s method is an instrument to help managers create a successful marketing strategy as it tries to cover all aspects of the marketing environment. Because social marketing relies heavily on commercial marketing this concept is also a key feature of social marketing (Gordon, 2012). To depend less on commercial marketing Peattie & Peattie (2003) suggested to create SM’s owns theoretical base. The adjusted and extended 4 P’s
7 concept are described in the following table.
4 P’s concept adjusted to Social Marketing (Peattie & Peattie, 2003)
4 P’s concept (MacCarthy, 1960)
products Social propositions
price Costs of involvement
place Accessibility
promotion Social communication
Extension (Peattie & Peattie, 2003)
exchange Interaction
Competition Competition framed in terms of competing ideas, and the need to win the battle for attention and acceptance to secure behavior adoption
To efficiently manage the energy transition, the theory of transition management is applied. Transition management exists of a forward-looking and adaptive way of ultimately achieving sustainability benefits (Kemp, 2009). This theory of management is based on a combination of tight scheduled planning and experiential learning with the goal of leading to different dynamics between actors. Which therefore leads to an easier environment for social innovations to mature (Kemp, 2009). For transitions in energy and heating supply it is necessary for governments to firstly apply the model of transition management whereby three levels are applied. These three levels are: a strategic, tactical and operational level (Loorbach, as cited in Kemp (2009)).
Another issue is that of market drivers within the transition. According to Dieperink et al., (2014) these drivers can be divided in structural, technological, social and political market drivers (figure.1). Structural drivers are for example energy prices and the energy network. Since the use of heat pumps demands a lot of energy at the same time the electricity networks should be resistant in times of high demand (pers. comm. Dr A. Huygen). Secondly, technological factors play a significant role in securing a feasible transition towards heat pumps. Performance factors are hereby of
importance since these new technologies should be able to compete with existing ones. Pricing of new methods is also of importance since heat pump prices are three to four times higher than those of
8 conventional gas boilers (DHPA, 2013). The role governments can take on in pricing will be
discussed in the results section. Thirdly, there is the social market driver, which implies whether consumers chose for a heat pump or not, which has to do with social marketing as is discussed before. Another major actor with an overarching function is the government. Political institutions are able to change the first three market drivers by implementing certain measures. The way government’s policies should be implemented and maintained in order to let heat pumps flourish will be discussed in the results section.
Figure 1: Market drivers in energy transition (Dieperink et al., 2015).
5.0 Results
The results from chapter 1 of this section are that the main advantages of the application of residential heat pumps comprehend the reduction of carbon dioxide emission, the reduction of heating costs, a relatively fast return on investment and a possible increase in social resilience. The main
disadvantages are high initial costs, grid problems with large-scale application, and possible negative environmental effects of geothermal heat pumps. From chapter 2, the results show that when
Amsterdam will transfer to applying city heating, the application of hybrid heat pumps will only be efficient in the city center as city heating is difficult to implement there. However, when Amsterdam will use more electric heating, Amsterdam New West will be a good area to implement hybrid air/water heat pumps as in this area houses are well renovated and both incentives and facilities for applying a smart grid are present. The results of chapter 3 are that the both methods of social and commercial marketing plans add value when offering heat pumps. Depending on the demographic
9 characteristics of the targeted area one method is more relevant than the other. Lastly, the results of chapter 4 are that local government should play an inclusive role and can largely influence actors of interest. The implementation of heat pumps can be fostered by employing a structured marketing plan in which the government implements tax regulations on both energy prices and the actual heat pumps.
5.1 The advantages and disadvantages of heating residential areas with heat pumps
Heat pumps can be used for a wide variety of heating and cooling purposes; from heating a single home to upcycling industrial waste heat. Heat sources can include the atmosphere and exhaust heat, water bodies3 or soil (milieucentraal, 2016). These are respectively categorized as aerothermal4, hydrothermal 5 and geothermal heat pumps. There are different utilization purposes for heat pumps: 1) ‘heat only’ heat pumps for heating spaces and/or water
2) ‘heating and cooling’ heat pumps, used for heating and cooling spaces
3) ‘integrated systems’, that heat and cool spaces, heat water and sometimes reclaim heat from exhausts.
4) heat pump ‘water heaters’ for heating water only (Sarkar, Bhattacharyya, & Gopal, 2006; cited in Chua, Chou & Yang, 2010).
When using a heat pump to heat water, water that is not used directly can be stored in an insulated buffer where it can be saved for later usage. Heat pumps can run completely on electricity
(monovalent), but can also be hybrid (bivalent) using a backup. The most common backup is a gas-fired boiler (Thorne et al., 2013). Using a relatively small amount of electricity to extract low-value heat from a substrate and upgrading to high-value heat make heat pumps are an energy-efficient technology (Chua et al., 2010).
There are always trade-offs when applying a certain technology. Likewise, heat pump technologies have certain advantages and disadvantages compared to other heating technologies, that can affect different stakeholders. This will be discussed in the following section.
5.1.1 Advantages of heat pump technology for heating residential areas
Reduced carbon dioxide emissions
Carbon dioxide (CO2) emissions can decrease by more than 50 percent when switching from a traditionally gas-fired boiler to a hybrid heat pump (milieucentraal, 2016). Similar reduction of
3 In this context the term ‘water bodies’ include groundwater and surface water 4 An aerothermal heat pump transfers heat from air to water or air to air 5 A hydrothermal heat pump transfers heat from water to water
10 emissions was also found when comparing geothermal heat pump technology to gas-fired boilers (Nagano, Katsura, & Takeda, 2006; cited in Chua, et al., 2010). The reason being that the net efficiency of a heat pump is much higher than for gas-fired boilers, sometimes almost twice as high (Milieucentraal, 2016). Monovalent heat pumps will reduce CO2 emissions more than bivalent pumps. Moreover, when monovalent pumps run on renewable energy, the amount of CO2 emissions from electricity generation will be reduced even more (milieucentraal, 2016). Heat pumps are most efficient in combination with low-temperature heating systems (e.g. floor heating) and in combination with good insulation (milieucentraal, 2016).
Harmsen, Planje, Breevoort, Bakker & Wagener, (2009) have calculated that by substituting traditional gas-fired boilers in the Netherlands for hybrid air/water heat pumps, the total CO2
emissions could be reduced by as much as 0.7 - 1.3 Mton of CO2/year in 2020 and 1.6 -3.4 Mton CO2/year in 2030. In this scenario both a low substitution level and a high substitution level were taken into account. When comparing these reductions to expected status-quo emissions, these emissions would account for a 4 -7% and a 9 - 19% reduction of CO2 respectively (Harmsen et al., 2009). As stated previously, using renewable energy for generating the electricity the heat pump uses would further decrease CO2 emissions. In the calculations by Harmsen et al., electricity supply was modelled to be derived from a gas-fired power plant. When they submitted this for a coal plant with a carbon capture and storage system, 2030 high-scenario emission reduction could be as large as 5.4 Mton. The effect of renewable energy such as solar and wind is not discussed in their research and is a point for further research.
Lower energy bill
The transition from a gas-fired boiler to a heat pumps for heating homes could result in a lower energy bill, as less energy is required (Chua et al., 2010). However, whether the energy bill is lowered depends strongly on the ratio between the price of gas and the price of electricity (Harmsen, Planje, Breevoort, Bakker & Wagener, (2009). A high gas price and low electricity price is requisite for the energy bill to become lower. Harmsen et al., (2009) used data available in 2009 that estimated that between 2010 and 2030 the average gas price will increase less than the electricity price. This relatively higher increase in the electricity price would be a result of electricity producers passing on the price of CO2. This also means heat pumps will become less economically profitable. Using the most efficient heat pumps would then be the best strategy to combat low profitability as they use the least electricity/kWh of heat produced. However, when using gas and electricity prices for the years 2016 and 2017, a more optimistic image arises. As a result of national policy, tax on gas has increased (CBS, 2016) while electricity prices in the Netherlands were lowered (milieucentraal, 2016).
Compared to the European average, Dutch gas prices have been high and electricity prices somewhat low for many years (CBS, 2016).
11 Relatively fast return on investment
Milieucentraal, (2016) estimates that hybrid heat pumps plus a boiler costs on average about € 3.600 - 5.500 excl. VAT6. Buyers of a heat pump can apply for a subsidy that can save them € 1000 - 1500. When using hybrid heat pumps, installing a low temperature heating system is not necessary
(Harmsen et al., 2009). Therefore, installation costs of a low temperature heating system are not taken into account here.7
They then estimate that, according to the prices for gas and electricity in 2016/2017, approximately €300 per year can be saved by installing a 5 kWh hybrid heat pump. This is based on a 1 person household that uses 1400 m3 gas in the business-as-usual scenario (gas heating only), compared to the heat pump integrated-scenario where a 1 person household uses 2900 kWh and 40 m3 of gas per year. With a simple calculation, it can be estimated that in the low-costs low-subsidy scenario, return on investment would occur around 8.7 years, and in the high-costs high-subsidy scenario around 13.3 years. This calculation can be found in the appendix [2]. Furthermore, heat pumps have a lifespan comparable to that of gas boilers but require less maintenance (milieucentraal, 2016).
Business opportunities
Increased attention for heat pump technology means that opportunities for creating new businesses arises. Grid managers and housing corporations are potential ‘aggregators’ (Houwing, 2010) of virtual power plants (VPP) in which heat pump systems can be integrated. New business models can be created regarding the service of providing a stable supply of energy.
Possibilities for increased social resilience
Keck & Sakdapolrak, (2013) define actor’s social resilience as comprised of three dimensions: (1) The coping capacities of actors - the ability to withstand immediate shocks
(2) The adapting capacities of actors - the ability to actively learn from past shocks and adjust to new shocks
(3) The transformative capacities - the ability to create institutions that foster individual welfare and social robustness.
From this it becomes clear that increasing social resilience is a way to strengthen the pillars of social- and economic sustainability. In a decentralized VVP system, consumers can potentially become ‘prosumers’ as they could control the production (Newman, 2010). When in control of the production,
6 Aerothermal fully-electric heat pumps are more expensive than hybrids (€6.500 - 14.500 excl. VAT with a subsidy of €2.150 - 3.400), and geothermal fully-electric ones are even more expensive €12.000 - 21.000 with a subsidy of 2.800 - 4.000) (milieucentraal, 2016).
7 With monovalent heat pumps, initial costs can be higher due to the necessity of installation of low temperature heating. However, with new built houses these installation costs will be relatively small as this system is accounted for when the house was designed.
12 these actors have a higher reliability of delivered electricity (Chambers et al., 2010; cited in Houwing, 2010; Jenkins et al., 2000; cited in Houwing, 2010; Peças Lopes et al., 2007; cited in Houwing, 2010). This higher reliability creates that they are less vulnerable to high- or volatile energy prices. In terms of resilience, this means that these actors can be said to have high coping capacities (Keck &
Sakdapolrak, 2013). Moreover, VPPs can learn to adapt to energy scarcity by smart distribution and to adapt to ‘real-time’ market prices and sell and buy energy to/from the grid at the most lucrative moment (Houwing, 2010). Actors using a VPP can thus be said to have high adapting capacities (Keck & Sakdapolrak, 2013). Furthermore, prosumers could trade energy amongst each other in micro grids (e.g. Alibhai et al., 2004; cited in Houwing, 2010). This implies transformative capacity (Keck & Sakdapolrak, 2013) as prosumers have the possibility to set up a new mini-energy market bypasses the existing system of generation companies, markets, retail companies, etc. leading to a very high level of autonomy. More information on resilience theory can be found in the appendix [1].
5.1.2 Disadvantages
High initial costs
Since heat pumps are generally more expensive than traditional gas-fired boilers, this is a negative incentive for consumers (Chou & Yang, 2010).
Grid problems with large scale application
When applying heat pump technology to heat residential areas at a large scale, peaks loads in the grid are expected. Large, simultaneous demand for heat (consumers all demand heat at the same time) leads to a large simultaneous demand for electricity (van Pruissen & Kamphuis, (2010). These peak loads could potentially cause blackouts (DHPA, 2015) and damage the grid’s low- and medium voltage transmission cables (Pruissen & Kamphuis, 2010, DHPA, 2015), leading to dissatisfaction with consumers and high costs for grid administrators (DHPA, 2015). Without influencing demand, this problem could only be overcome by substantial investment to reinforce the grid, as grid would have to be reinforced by a factor of 3 to 10 (DHPA, 2015). In chapter 5.2 there will be further elaborated on this issue.
Long term environmental effects of geothermal heat pump unclear
Geothermal heat pumps use water as a medium to inject or extract heat. This influences biological, chemical, and physical characteristics of the groundwater and subsurface, but what the long-term environmental effects are still unclear (Hähnlein, Bayer, Ferguson & Blum, 2013). Energy policy is needed to prevent possible negative externalities on e.g. freshwater quality (Hähnlein et al., 2013).
13 5.1.3 (dis)advantages of different heat sources
The source of heat for a heat pump that can be used best in residential areas depends on two factors: firstly, the demand for electricity and heating and cooling. Secondly, the incentives for the potential user. For residential areas this might be either micro-scale for single houses or small-scale for clustered houses, apartments and flats. Currently, there are two relatively common types of electrical heat pumps used for heating residential areas: air/water heat pumps and ground source heat pumps.
For existing homes, the use of air/water heat pumps is the most common practice as they are relatively cheap and easy to install compared to other techniques.
With newly built homes, geothermal heat is often chosen as a heat source (milieucentraal, 2016), as this is the most efficient source for heat pumps (DHPA, 2015). This is because temperatures in the earth are steady leading to an energy efficiency that is much higher than when using other heat sources. Moreover, it is a more durable and low-maintenance system (Chua et al., 2010). Because geothermal heat pumps work optimally when used on small-scale (a whole neighborhood) and not micro-scale (a single house) this often leads to large initial costs for geothermal heat pumps. The expected number of heat pumps in housing in 2020, categorized according to both the heat pump and housing types is represented in figure 3.
Figure 3: Domestic usage of heat pumps, according to heat pump type and housing segment (DHPA & BDH, 2015)
14 There are three types of integration possibilities for heat pumps in residential areas: 1) realizing an area with new buildings. 2) Large scale renovation of existing buildings. 3) Fragmented small scale renovation of existing buildings. For the application of heat pumps integration possibility number 1 is most feasible. New houses are often energy efficient and well insulated. In addition, control strategies regarding heat and cooling demand and electricity supply can be included most efficiently in a newly constructed power grid.
Currently, an important problem with large scale implementation of heat pumps is that the use of heat pumps doubles a household’s electricity demand8. When a large amount of heat pumps is included into the power grid peaks and fluctuation in the system can occur. The energy supply of the power grid cannot always sufficiently meet the demand, leading to distribution problems, price volatility and even blackouts
5.2.1 Fluctuations in the system
The electricity supply and heating and cooling demand naturally fluctuate. The supply of electricity fluctuates due to the implementation of more renewable energy resources depended on the weather, from which electricity is not available on demand. Because the storage of electricity is currently only possible at the expense of a considerable loss of efficiency and high cost, it is economically more viable to use electricity at the time of production.
The demand of cooling and heating also fluctuates based on the consumer’s behavior and the weather conditions. Peaks in heat demand in domestic houses in the Netherland in 2003 are shown in figure 4.
15 Figure 4: Domestic heat demand in the Netherlands in 2003 (Kamphuis, 2011).On the x-axis the hours are represented and on the y-axis the days of the year. The scale from 0 to 7 indicates the heat demand in MJ/h, 0 representing a low heat demand and 7 a high heat demand.
As can be seen in the figure the heating demand is strongly influenced by the time of the day and the season. In general heating demand is highest in the winter and during the afternoon.
5.2.2 Flexibility of the power grid
The flexibility of the power grid is of great importance for creating a sustainable energy system in which heat pumps are included. The flexibility of the energy system is determined by the degree to which producers and consumers are able to react to the fluctuating supply on the electricity market. In the current power grid where electricity is not always available on demand, the demand should be geared to the supply (pers. comm. Dr A. Huygen). If consumers can adjust their use of electricity over time shortages and surpluses of electricity can be balanced and the total system will require less back up capacity. When supply and demand cannot be tuned and peaks cannot be tempered the producer and consumers will both encounter negative effects. Peak demand can cause congestion in the power grid. The power of the heat pump becomes inadequate to keep the temperature sufficiently high for the user’s comfort when electricity supply does not meet heating demand. This occurs when ‘…the peak power exceeds the design connection power of 1.1 kVA. The power of the heat pump is typically 2.2 kW and the power of the electric resistance heating, which is available as a backup for cold days, is 6 kW’ (cited from Kamphuis, 2011, p50). This can even cause a blackout during a prolonged cold period where all heat pumps come in at the same time with full power requirements.
In addition, when supply largely exceeds demand the electricity prices will drop below the marginal costs of the producer, leading to the producer encountering economic losses. When demand exceeds supply electricity prices can rise. This will cause a large price volatility during the day and also during the year. The development of electricity prices in the Netherlands in 2003 on the APX market is shown in figure 5. In general electricity prices are higher in the morning and evening.
16 Figure 5: Price volatility in Euros per MWh (Kamphuis, 2011). On the x-axis the hours are
represented and on the y-axis the days of the year. The color scale indicates the electricity prices in Euro/Mwh, purple representing a low electricity price and purple a high electricity price.
5.2.3 Achieving a sustainable implementation of heat pumps
There are several solution towards achieving a sufficient and efficient distribution of electricity and heat and cooling power. Firstly, a thermal buffer tank could be installed. The storage can be used for peak shaving of the electricity consumption of the heat pump as well as shifting the demand to times with a favorable coefficient of performance9 (Fischer et al., 2013). Secondly, hybrid heat pumps bring more resilience to the power grid than all electrical heat pumps (Thorne et al., 2013). The gas boiler can be employed for additional heat peak production10, tempering either peaks in electricity demand or shortages in electricity supply. Thirdly, implementing smart grids can contribute to a more efficient functioning of the power grid. New techniques can be integrated through demand management, increasing efficiency and stability through automatic (re)-configuration of grids etc. In addition, VPPs can be included in the smart grid for intelligently managing distributed facilities for energy production and consumption. Lastly, heat pumps can be combined with other energy or heating and cooling techniques, such as micro- CHP and solar PV. A micro-CHP produces heat and electricity11, both of which can be used to balance the grid. Combining micro-CHPs and heat pumps would be a good technique for the grid administrator to enhance grid capacity with decentralized production rather than grid reinforcement (DHPA, 2015). Furthermore, it is estimated that solar PVs can complement about
9Ratio of useful heating/cooling output to the amount of energy input
10 In addition, the establishment costs for hybrid heat pumps is lower than for electrical heat pumps. Reason being that converting to an all-electric grid would require an extensive grid-reinforcement (DHPA, 2015)
.
11 1 part electricity to 7 parts heat (DHPA, 2015)17 35 percent of the annual electric consumption of the heat pump (Wirth, 2016), stabilizing heat peak demand and electricity supply deficits.
5.2.4 Possible areas for implementing residential heat pumps
Short term implementation
City-Zen, a European funded Smart Cities and Communities, intends to implement a smart grid in Amsterdam New-West in the course of 2016 and 2017. This smart grid should support future installations of solar PV panels, electrical cars, variety of all-electric households, Vehicle2Grid and VPPs. The project should contribute to an energy transition towards renewable energy technologies. City- Zen provides opportunities for a feasible application of (hybrid) air/water heat pumps in Amsterdam West. During the renovation of the power grid and implementation of a smart grid, heat pumps could be implemented as well. These could aswell be combined with anticipated VPP and solar PV panels.
Long term implementation
The integration of heat pumps is not very feasible when looking at the target of the municipality of Amsterdam of achieve a natural gas free city by 2050. The municipality of Amsterdam considers city heating as the most viable alternative to using natural gas for heating purposes. Expanding the heating networks for residual heat of the industry is cheaper than the electricity grid reinforcement required for large scale electrical heating. It is anticipated that on the long run heat pumps will only be
employed in the city center as installing a city heating network within these archaic houses and canals will be too difficult (NOS, 2016).
5.3 The marketing processes for integrating heat pumps in residential areas
The chapter inquires into what type of marketing is most relevant when the goal is to increase the use of heat pumps in Amsterdam. Firstly, a succinct social and commercial marketing plan have been drafted for both the commercial and social marketing using the 4 P’s marketing mix and its adjusted ‘social’ form. Those marketing plans have been drafted to gain insight on the possibilities and to prepare questions for the interview with Cees Mager. Both marketing plans are attached in Appendix 3 and 4. The main part of this chapter concerns the results of the interview with expert Cees Mager on his marketing experiences concerning heat pumps.
18 Cees Mager is owner of Triple Solar, a Amsterdam based company selling heat pumps combined with PVT (photovoltaic and thermal) solar panels.
Mager describes several different clients of his which are divided in three major groups:
1. Governmental and related institutions managing governmental buildings, residential care homes, housing corporation’s stock.
2. Commercial apartment developers or renovators. 3. Individuals.
Governamental (and related) institutions have the obligation to achieve sustainable goals. They focus on sustainability rather than on costs. These institution have an internal drive to strive for sustainability. Besides, Mager mentioned that housing corporations install heat pumps to lower operating costs of the apartment buildings, resulting in lower rent for the residents.
Secondly, the government has imposed mandatory targets in the construction sector on reaching certain levels of energy efficiency. According to Mager it is almost impossible to reach those targets without the use of energy efficient systems like heat pumps. Mager expects that, due to the imposed regulations, in 20 to 30 years all residential houses are equipped with heat pumps. The clients (housing developers) in this sector are mainly interested in reaching the criteria of the regulations. They want to spend as less money as possible on heat pumps.
Thirdly, individuals investing in heat pumps are motivated by both sustainable reasons and financial reasons. Mager argues that those people often do not want to save money as the interest rates of the bank are low, giving very little return. Investing in energy saving systems has in the long term a higher rate of return and also appeals to those clients because of the sustainability it provides. A small part of the individuals invest in heat pumps (among other systems) because of idealistic reasons such as being fully independent of energy corporations.
Mager focusses his marketing on both the benefits of heat pumps: sustainability and energy cost reduction. He argues that it is the most viable option to reach the criteria of the regulations set by the government. However, the need for social marketing (that is stressing the need for sustainable energy solutions such as heat pumps) is less urgent because the governmental regulations already require certain levels of sustainability regarding the construction and renovation of houses. Mager argues that there are a lot of developments going on in sustainable energy systems, and no distinct solution has outcompeted the others in the eyes of customers. That is why Magers marketing strategy focusses mainly on the competition with other solutions in being most reliable, easy to install, having the highest energy efficiency and having the highest return on investment.
19 For heat pumps to become feasible in the city of Amsterdam, certain managerial measures must be taken in order to achieve transition in an efficient way. As described in the theoretical framework the theory of transition management is of big importance in this research. In this theory three levels are applied; a strategic, tactical and operational one (Loorbach as cited in Kemp, 2009). The first, strategic level, means that governments should take on an inclusive role in the transition to heat pumps. Hereby a clear, long-term goal must be set, which the municipality of Amsterdam has already done by wanting to achieve a natural gas free city by 2050. The goal is to achieve this through using excess heat from industries in certain areas. These areas are already disconnected from the gas network and could also be heated with heat pumps instead of excess heat. As this is done, the market actors included in this system should work together in agenda-building. Owners of electricity grids, such as NUON or Liander, should work together with heat pump suppliers to make sure peak demand is in line with the capabilities of the electricity network. Whereas heat pump suppliers and producers, such as Nefit, should work together with the municipality of Amsterdam, to achieve a reasonable price of the pumps and making them more attractive. To achieve more social attractiveness, the national government can lower energy taxes, since energy demand increases with the rise of heat pumps (DHPA, 2013). Taxes on natural gas have already been increased while those on electricity have been lowered (Belastingplan, 2016). Another thing the government could do is lowering the taxes on heat pumps themselves from twenty-one to six percent, through which prices of the pumps become significantly lower and more attractive (DHPA, 2013). Subsidies by the municipality of Amsterdam are also provided to make implementation of heat pumps cheaper for people who are not located in social housing (Gemeente Amsterdam, 2016). However, the social housing sector might be another sector to focus on. Social marketing, as explained above, will also play an abundant role in letting people consider their incentives for choosing a heat pump. When this agenda-building and interaction between actors has happened, the third level in transition management can be applied. This is the operational level that has already taken place at small scale in Amsterdam-West. At this level a breakthrough of contemporary methods is achieved and in the future heat pumps will flourish in Amsterdam to achieve a gas free, and low-emission city by 2050. In this case multi-level governance is achieved where multiple actors on different levels work together in achieving the set goal
(Loorbach and Kemp, 2005).
Recommendations for stakeholders
As mentioned before, the municipality of Amsterdam only subsidizes house owners in the free sector and not in social housing. This might be an important sector to consider to subsidize for the
municipality of Amsterdam since this makes up 57% of total housing (Gemeente Amsterdam, 2016). However, they do subsidize the social housing corporations when energy saving measures are taken.
20 Some of further recommendations might be that non-financial motives may also lead to consumer incentives to buy heat pumps. Research on these incentives may be needed to find out how the government can jump in on non-financial incentives rather than tax-savings. What also may be needed is doing market research on people who are extra susceptible to energy and cost savings, if a certain target group is found, marketing may be adapted to these groups.
Conclusions
The main goal of this research was to obtain insight into the possibilities of applying heat pumps in residential areas in Amsterdam. Based on the different sub questions it can be concluded that the application of heat pumps can be both socio-economically and technically feasible. However, several considerations need to be taken into account to achieve an overall feasible implementation.
(Hybrid) air/water heat pumps can be implemented best in combination with a smart grid, VPPs and other electricity generating or heating and cooling techniques. This will lead to more resilience of the power grid and an efficient electricity and heat distribution for both consumer and producer. Therefore, increasing supply and price security. To increase the attractiveness and implementation rate of heat pumps under consumers, the local government should levy certain tax regulations on both energy prices and the actual heat pumps. The national government already increased the need for, among others, heat pumps by levying strict regulations on newly built and renovated houses regarding energy efficiency. Because of this obligation to build energy efficient houses, increasing the application of heat pumps is most successful when following a structured commercial marketing plan. The focus should be on the distinct qualities of heat pumps in being the most viable option compared to other energy saving solutions. The need for a social marketing plan is less urgent because housing developers are already obliged to build energy efficient houses. Also, marketing on the target group of individuals requires a commercial marketing method, though be it with an emphasis on both financial and sustainable benefits. Individuals with adequate savings tend to consider heat pumps as a viable investment with sustainability as extra benefit. Without the financial benefit this group would hardly invest in heat pumps. Only a few individuals invest in heat pumps because of sustainability or other idealistic reasons.
Because of Dutch governmental regulations the need for energy efficient systems such as heat pumps is evident. However, the possibilities of applying heat pumps are strongly limited by the long term targets of the municipality of Amsterdam. As the municipality of Amsterdam aims to install a large scale city heating network the application of heat pumps becomes solely viable in areas where the instalment of a city heating network is not possible.
21 The literature consulted for this research remained quite generic. For example, there was no scientific literature on the topic of heat pumps or related sustainable applications in combination with marketing theory. Next to the use of literature, models concerning the effects of integrating heat pumps in Amsterdam and interviews with the cities’ municipality and grid-administrators could have supplied additional information to support the research. However, comprehensive models were not available. A simple model, the ‘BDH ScenarioTool’ (BDH, 2016) was found, but detailed input for the model was unavailable. Attempts for interviews were carried out several times but were unsuccessful.
Furthermore, some information retrieved from literature reviews may be outdated, which could lead to a slight misinterpretation of the current situation. In addition, some important variables in the transition towards heat pumps might have been omitted which could have influenced the conclusion. This due to lack of a completely holistic view, as an economic insight and insights from a spatial planning an urban design point of view are missing. Additionally, technical innovation, and socio-economic changes in the society significantly influence the implementation possibilities of heat pumps. These changes cannot be anticipated. Therefore, no exact conclusion for future
implementation possibilities can be given.
Further recommendations for research
Specific literature focused on management and marketing of heat pumps is not available as
implementation of heat pumps is relatively new to many stakeholders. Therefore, further research on the perfect marketing mix and strategic management of heat pumps is needed. Furthermore, generic literature on the planned future energy mix of Amsterdam is available, but detailed technical and management plans on how the city aims to realize this future scenario is absent. Models like the BDH ScenarioTool are potentially useful, but a prerequisite is that inputs for the model are easily accessible through public databases. The type of housing in specific neighborhoods in Amsterdam was
information that was needed as input in the model, but this information appeared absent in national or municipal databases. For further research, input for models should be accessible so simulations are specific and meaningful.
22 Literature
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Laboratory, U.S. Department of Energy, Oak Ridge, Tenn., U.S.A. doi 10.3334/CDIAC/00001_V2015
3. Chua, K. J., Chou, S., & Yang, W. M. (2010). Advances in heat pump systems: A review.
Applied energy, 87(12), 3611-3624.
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https://www.amsterdam.nl/bestuur-organisatie/college/individuele-paginas/lau-rens/persberichten/persberichten-2016/wonen-amsterdam/
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23 16. Peattie, S., & Peattie, K. (2003). Ready to fly solo? Reducing social marketing’s dependence
on commercial marketing theory. Marketing theory, 3(3), 365-385.
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18. CBS, Eurostat (2016), Retrieved on 11-12-16, from: https://www.cbs.nl/nl-nl/nieuws/2016/21/gas-duurder-elektriciteit-goedkoper-dan-eu-gemiddelde’ 19. NOS (2016), Retrieved on 8-12-16, from:
20. http://nos.nl/artikel/2143523-amsterdam-wordt-aardgasloze-stad.html
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24 Appendix
[1]
‘Resilience’ is a concept originating from the discipline of ecology, where it is a widely used but debated concept (Adger, 2000). Ecologists like Holling applied the idea of resilience on the
persistence of ecosystems, focusing the ability of ecosystems to tolerate disturbance and maintain a stable state (Keck & Sakdapolrak, 2013). Through time, resilience theory evolved and was used outside of ecology; resilience was adopted in the social sciences. Adger, (2000, p. 361) giving the first definition of social resilience, defines it as “the ability of communities to withstand external shocks to their social infrastructure.” Since this first definition of social resilience, there has been a growing bulk of literature on the subject (Keck & Sakdapolrak, 2013). Added stepwise were the importance of adaptability of coupled socio-ecological systems, and the transformability of society in the face of global change (Keck & Sakdapolrak, 2013).
[2]
Lower price hybrid heat pump + boiler = € 3600 Lower subsidy = €1000
€300 per year saving
--- 3600 - 1000 = 2600
2600/300 is ≈ 8.7 years ---
Higher price hybrid heat pump = €5500 Higher subsidy = €1500
€300 per year savings
--- 5500 - 1500 = 4000
4000/300 ≈ 13.3 years
[3] Commercial marketing plan based on the 4 P’s method
General explanation of the ‘P’ Elaboration on the ‘P’ concerning heat pumps
Product refers to the features of quality, the design and branding, warranties and guarantees.
- The heat pump fits with the capacity requirements of the targeted residents.
- It fits smoothly in small and old apartments as well as in new buildings.
25 Price refers to the positioning of
the price relative to competitors’ prices, the relative return consumers experience from buying the product, and the type of strategy the supplier chooses (competing on price or on product differentiation)
- The return on investment is attractive and does not take an unattractive long period of time before the
investment has been payed off.
- The price / quality ratio is competitive.
- The price is less than the total of costs (including time spend on purchase, maintenance appointments, etcetera) experienced by the buyer.
Promotion refers to creating awareness among the target group on the offer which leads to an increased demand for the product. This includes
advertisements and commercials, public relations, sales promotions and direct selling.
- Door to door promotion targets solely the targeted residents and has the ability to provide information in a direct way. Also local initiatives like informational meetings an advertising in a local newspaper can reach the targeted residents.
- Communication should focus on the benefits: reduced energy costs and reduced carbon emissions due to reduced energy use.
Place (or distribution) refers to the accessibility of the product. It is about how much effort
residents have to make to get in touch with the heat pump and obtain it.
- There is no need for a showroom.
- A website with all information clearly explaining the value of the heat pump is sufficient.
- Service at home for project specific questions and for application is a necessity.
[4] Social marketing plan based on the adjusted 4 P’s method
In social marketing the goal is not to market a product but to create a social change in behavior. Regarding heat pumps the social goal is that residents act on the threats of climate change by reducing energy use through the application of heat pumps.
Social propositions - A household with less fossil energy consumption contributes to less carbon emission.
- Heat pumps contribute to a sustainable world. Costs of involvement - Time spent on investigation of climate change.
- Time spent on possibilities reducing residents’ contribution to climate change.
- Financial costs involved in buying heat pumps. - Financial benefits of reduced energy consumption. Accessibility - Information on the possibilities to act on reducing
energy consumption is easily accessible through internet and direct contact with experts through informational meetings.
- The heat pump is a realizable solution in the resident’s household. Otherwise the accessibility to this solution is ‘low’.
26 Social communication - Central in communication is the urge to act on climate
change. Individual responsibility has to be stressed. - The heat pump is a good solution for every household
to reduce energy consumption
Interaction - The message of the threats of climate change is best spread through word of mouth communication. - Thus, a lively debate among resident on climate
change has to be facilitated.
- A demonstration to curious residents of a well-functioning heat pump in one of the resident’s homes is a valuable interaction.
Competition - The social goal of reducing energy consumption by implementing heat pumps has to compete with commercial offerings like cheap natural gas or cheap non-renewable electricity.
