Heat Pumps ‘Key to Built Environment Decarbonisation Goals’

The deployment of low-emissions technologies will be critical to making built environment heating systems more sustainable, a new McKinsey report says.

The report – The hard stuff: Navigating the physical realities of the energy transition – stresses how the move to cleaner energy in its early stages, with only an estimated 10% of required deployment of low-emissions technologies by 2050 achieved in most areas.

As part of the report, McKinsey details how buildings' heating and cooling systems cause 75% of emissions, and reveals that on-site fossil fuel combustion, through gas boilers, generates most building emissions. The remainder comes from electricity used for lighting, appliances and cooking functions. It also examines the transition path to low-emission technologies.

Heat pumps, it says, represent the central technology in this transition. Current global installations total 200 million units, yet this number needs to increase nine-fold to 1.8 billion by 2050 to meet climate targets, McKinsey points out. 

Such technology can be either retrofitted in existing buildings, or be part of the design of new buildings.

McKinsey continues: "The share of electrically-heated households must rise from 15% to 65% by 2050. This represents a significant shift in building services infrastructure."

The report examines heat pump functionality in detail. Air-source heat pumps extract heat from outside air and transfer it indoors. Ground-source systems draw heat from underground, McKinsey points out.

Heat pump efficiency is measured through the coefficient of performance (COP), the report explains. This metric typically ranges from two to five, meaning each unit of electrical energy produces two to five units of heat output.

McKinsey's analysis shows that regions with winter temperatures below freezing consume 60% of residential heating energy, despite housing only 40% of the population.

International Energy Agency: heat pump rollout strategy

The report identifies performance challenges in cold climates. Standard air-source heat pumps operate at reduced capacity below freezing temperatures, potentially failing to meet heating requirements.

McKinsey states that 1.2 billion people live in regions experiencing minimum temperatures below minus 10 degrees Celsius. This represents 15% of the global population requiring specialised cold-climate heat pump systems.

The US Department of Energy, a federal agency responsible for energy policy, has launched initiatives to improve heat pump performance. Their Cold Climate Heat Pump Technology Challenge sets operational targets at minus 26 degrees Celsius.

Ground-source heat pumps maintain efficiency at low temperatures, the report notes. However, installation requires more space, specialised labour and longer installation times compared to air-source units.

Power grid capacity shapes winter demand forecasts

McKinsey examines power infrastructure requirements. In the US, 30% of space heating uses electricity. This, it says, could increase to 50% without exceeding current grid capacity.

It also projects that full building heat electrification would increase peak power demand to 1.7 times current levels, with cold regions, such as New England, potentially seeing demand triple.

The report's authors state: "The world needs a larger power system not only to support the electrification of heating in buildings and other domains but also because it needs to have flexibility built in for these peaks."

The McKinsey report offers a four-point plan of action plan to help adoption rates of heat pump technology in the built environment 

• Continuing to innovate technology of heat pumps  Improving heat pump COP, particularly at lower temperatures, would reduce power needs, especially in cold climates.
  Research suggests that meeting US Department of Energy targets for heat pump performance could enable the US to electrify up to 75% of heating without increasing current peak power capacity.
  Some manufacturers have already prototyped models meeting these targets.
• Creating efficiency and flexibility in managing demand  More-efficient buildings would reduce overall heating demand through improved insulation and reduced window energy loss.
  Smart thermostats help manage heating demand, but the potential extends further. Demand-management strategies could reduce peak load by nearly 40%.
  ​​​​​​​Thermal energy storage (TES) is particularly promising, allowing heat pumps to generate and store heat during warmer periods when COPs are higher and power demand is lower, for use during peak times.
  One major manufacturer has announced a system combining an air-to-water heat pump with water-based TES, though widespread deployment still faces challenges.
• Deploying alternative low-emissions heating solutions  Options like district heating and solar thermal could meet some demand, though these solutions have geographical limitations.
  District heating requires a central heating source, while solar thermal may be inefficient in areas with low solar irradiance.
• Backing up heat pumps with dual-fuel systems  Using dual-fuel systems for the coldest days would lower electricity requirements while still reducing emissions compared to existing fossil-fuel furnaces.
  Some utilities are already promoting these systems, such as in Quebec, where utilities plan to use heat pumps for over 70% of heating needs by 2030.
  Research suggests that combining top-performing heat pumps with minimal fossil-fuel use (1-3% of annual heating energy) could avoid growth in peak power demand.
  However, while beneficial, dual-fuel systems require maintaining fossil-fuel infrastructure despite limited use.
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