Ground Source Heat Pump Systems Analysis

This assignment delves into the analysis of ground source heat pump (GSHP) systems. It examines various aspects of GSHPs, including their operational principles, efficiency enhancements through solar thermal integration, barriers to adoption, public perception, environmental policy implications, and hybrid system designs incorporating exergy analysis. The provided research papers offer insights into these diverse facets of GSHP technology.

Running head: FINANCE AND MARKETING
Finance and Marketing
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Table of Contents
Introduction................................................................................................................................2
Ground Source Heat Pump.........................................................................................................2
A global overview into the GSHP industry................................................................................2
The current market persisting in UK..........................................................................................3
Why UK is a suitable market?...................................................................................................4
Initiatives taken by the Government in UK...............................................................................5
Barriers to the market and the potential solutions......................................................................6
Conclusion..................................................................................................................................7
References and Bibliography.....................................................................................................8

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Introduction
The use of the heat pumps including the air source and the ground source for heating
and hot water household consumption has been properly established all over United Kingdom
including Northern and Central Europe as well as in Canada and United States. This
particular study aims to provide an overview into the Group Source Heat Pump market in
United Kingdom. The system stock related to heating in the UK relies on gas systems. One of
the recent surveys conducted state that 85% of the total heating systems that have been
operating in UK are gas boilers. Furthermore, around 1.5 million gas boilers are installed in
the household systems in UK each year. On the other hand, renewable heating accounts for
only 2% of the heating systems in the UK (Sarbu & Sebarchievici, 2014).
This particular study aims to provide an overview into the Ground Source Heat Pump
market in the UK. The market has been further analyzed to ensure that the chosen market
would be the best-suited choice for establishing business in that particular market.
Ground Source Heat Pump
The Ground source heat pump makes use of pipes that are usually buried in the
garden for the purpose of extracting heat from the ground. The heat is then used for heating
the radiators or warm air heating systems that are used in the households (Esen, Esen &
Ozsolak, 2017).
A global overview into the GSHP industry
The implementation of the GSHP technology is going up the ladder on a fast pace.
The percentage by which the implementation has increased in comparison to the last ten years
is around 10%. Furthermore, approximately 30 countries all over the world have been
experiencing similar trends of rates of growth (Sivasakthivel, Murugesan & Thomas, 2014).
The following table represents the ranking of the various nations in regards to the heat
pump utilization.

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Figure: GSHP Market Ranking
Source: (Sivasakthivel, Murugesan & Thomas, 2014)
It can be further concluded from the table that the European markets have been the
top performers in regards to infiltration to per capita and area. The table further suggests that
Sweden and Switzerland has reflected commendable performance in terms of energy use,
capacity per area and capacity per capita. In case of China and USA, the performance in
regards to GSHP has not been as satisfactory as in the case of other European nations. In spite
of this fact, both USA and is not ignorable.
The market chosen for the establishment of GHSP ventures for start up businesses is
the UK market. This is because according to (Spitler & Gehlin, 2015) the potential for open
loop heat pump systems in UK is huge. Further research has also revealed that the achievable
sales target has been assumed to be 15,000 heat pumps per year.
The current market persisting in UK
The heat pump market persisting in UK is presently small. This means that there is
enough scope for the new entrants for penetrating the market due to the fact that the there is
less competition in the market in terms of peers or fellow firms.
To conclude the data in terms of the total numbers of units installed the present
market has been installed with approximately around 17000 units in the year of 2012. In the
recent years, the ground source heat pump market in UK has fallen in spite of the initiatives
taken like the Renewable Heat Incentive. The major cause for the decline in the market has
been the uncertainty revolving around the Renewal Heat Incentive policy and the hiatus that
has been persisting in the gap between the announcement of the particular policy and its
delivery. It is the strong belief of the industry that the potential projects have been postponed
at the time when potential investors have been standing in line for the achievement of a

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certainty in regards to the eligibility criteria and tariffs. In spite of the fact that the industry of
ground source heat pumps have been supported by the non-domestic RHI, the tariffs related
have not been sufficient at all. However given all the constraints there have been actual
forecasts and findings that suggest that the GSHP market in UK is to expand in huge leaps
and bounds, if the industry receives a boost as an external stimuli. The focus has also been on
the on the properties in UK that are connected to the main network of gas distribution for the
heat pump systems. This is because it has been evidently estimated that there is
approximately 4.42 million houses in UK that has a demand of 18MWh per year. Now, out of
all these houses if the electric heating in around 1.3 million of them is in the requirement of
replacement in every 20 years then it will open the pathway for a potential GSHP market in
UK with a demand of 65000 heat pumps per year (Burnside caes et al., 2016).
To top this analysis, the houses in UK that have been newly built can be counted
down to 400,000 per year. Among these 400,000 newly built houses, 80,000 have been off
the gas network. This again has paved the pathway for the establishment of a potential GSHP
market in UK. The new entrants can potentially target these for GHSP system installations.
The major area of concern for the new entrants in the market is essentially the
penetration of the market. The adoption of the particular method for penetrating the market
has to be identified by the new business houses. This will open the door to widespread
acceptance and applicability of GSHP systems. The following table shows that the potential
applicability of the GHSP systems in UK is substantial if the new entrants can penetrate the
market (Revesz, 2016).
Figure: Potential GGSHP market
Source: (Revesz, 2016)
Why UK is a suitable market?
UK is a suitable market for the establishment of a GHSP industry. The penetration in
the heating market of UK by the heating pumps is a potential occurrence in the future. This is

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because the measures taken by the government and the positive trends that this particular
market demonstrates support the same (Menberg caes at al., 2017).
 Incentive related to renewable heat: The major initiative taken by the Department of
Energy and Climate Change promoting the utilization of renewable energy via the
financial incentives plays a very important role in enhancing the market suitability.
This has also influenced the usage of heat pumps in case of both domestic and non-
domestic installations.
 Running costs in case of reduction: Though, the market is currently dominated by the
gas boilers, the implementation of the improvement in the technology in regards to the
heat pumps, in all probabilities will increase the competitiveness of the product in the
market.
 Engagement of the utilities’ in case of the heat pumps: In case of the heating market
in the UK, the utilities suppliers serve the majority of the customers. The fact that
some of the chief operating utilities have opted to deal in heat pump installations is
evident enough to ascertain that the market in UK is gradually becoming the most
suitable for heating pumps.
 Building of regulation: The “Zero Carbon Homes” initiative taken by the government
essentially has been devised for the installation of the heat pumps in the residential
buildings.
Initiatives taken by the Government in UK
The installation of the heat pumps in order to adhere to the Climate Change Act has
been a major tool in the hands of the government. This has been one of the main heating
technologies used within the UK buildings. A specific disclosure by the government has been
that the obligations under the Climate Change Act can only be met by the large-scale
implementation of the heat pump technology. This particularly is good news for the new
entrants as they will receive the fullest support of the government in their ventures. The
Energy Performance in Building Directive also emphasizes on the fact that the buildings need
to be energy efficient. The heat pumps also have been included under the Energy Efficient
Commitment Targets and the Low Carbon Buildings Programme (Sivasakthivel, Murugesan
& Sahoo, 2014).

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The programme that has been designed for the achievement of the target is the
Renewable Heat Incentive. The initial results obtained by such a program have not been
satisfactory due to the availability of higher amounts of incentives.
Therefore, in spite of the mentioned limitations and constraints, the market in UK has
been chosen for the purpose of targeting and growing the potential GSHP market for the new
entrants. However, there are certain points that should be strictly complied with, while setting
up the business in this particular industry. Non-adherence to such measures can get the firm
marked as a bad company (Karytsas & Theodoropoulou, 2014).
Barriers to the market and the potential solutions
The following points that have been listed down depict the unique features that should
be potentially provided by business (Mehrpooya, Hemmatabady & Ahmadi, 2015). A good
company should by all means focus on these factors:
 Suitability – the suitability of the ground source heat pumps essentially depend on the
type of property in which it is installed. Moreover, the other factors that matter is that
how well insulated the product is and how the available space has been utilized to fit
the heating pump. The common assumption by the market entrants that the suitability
of the ground source installations matches with the rural settings or the off gas
properties is not correct. This is because as reported by the manufacturers 50% of the
ground source installations have been in Central London (Majuri, 2016).
 Compatibility – the compatibility factor of the ground source heat pumps may require
the essential replacement of the emitters such as the installation of the under floor
systems or the low temperature radiators. However, this should be noted by the new
entrants that the requirement to replace an emitter in not always necessary. This is
because the existing radiators systems have been frequently oversized. Therefore, it
should be decided by the firm whether to undertake the replacement process or to
continue with the existing system (Majuri, 2016).
 Costs related to installation and other associated issues – the installation costs are a
major barrier to the successful implementation of a heat pump market. The cost of
installing a ground source heat pump is substantively high. However, there is enough
scope for the new business firms to prosper and incur subsequent revenues (Karytsas
& Choropanitis, 2017).

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 Potential solution for reducing the costs – the potential solution for reducing the costs
has been difficult to arrive at. A general assumption in regards to cost reduction has
been that there is limited scope for cost reduction in regards to the expenses incurred
as equipment costs. Approximately more than half of the upfront costs account for
installation charges. Therefore, it may be rightly assumed that with the market
maturing gradually, the heating engineers will become familiar with the installation of
the pumps leading to innovation and techniques that will ultimately save the cost
without reducing the quality of the product (Girard caes et al., 2015).
 Supply chain issues – the new entrants should also consider the potential supply chain
issues that arise with the gradually maturing market (Girard caes et al., 2015).
 Automated systems - in order to combat with the above mentioned and other
associated barriers, the existing base of manufacturers have come up with the facility
of automated control systems. The manufacturers have even considered improving the
electricity distribution network for assessing how the heat pumps affect the
distribution network (Spitler & Gehlin, 2015).
 Heat pump associations – the certain advantages and facilities provided by the heat
pump associations also help by taking the required measures needed to ensure the
growth of the industry (Spitler & Gehlin, 2015).
Conclusion
Thus as it can be concluded from the above literature, the future of the heat pumps in
UK is secured. The experts belonging to this field have agreed to the fact that by 2020, the
heat pumps will experience a rapid and unprecedented growth. This will be majorly driven by
RHI tariffs who have been pitting a continuous effort in broadening the scope of the industry.
Thus, the question around which this particular study revolves, that is whether the UK
Ground Source Heat Pump market is the suitable for promoting the new entrants in the
market should be answered affirmatively. In spite of the discussed limitations, the new
businesses can potentially incur revenue from this market.

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References and Bibliography
Burnside, N. M., Banks, D., Boyce, A. J., & Athresh, A. (2016). Hydrochemistry and stable
isotopes as tools for understanding the sustainability of minewater geothermal energy
production from a ‘standing column’heat pump system: Markham Colliery, Bolsover,
Derbyshire, UK. International Journal of Coal Geology, 165, 223-230.
Esen, H., Esen, M., & Ozsolak, O. (2017). Modelling and experimental performance analysis
of solar-assisted ground source heat pump system. Journal of Experimental &
Theoretical Artificial Intelligence, 29(1), 1-17.
Girard, A., Gago, E. J., Muneer, T., & Caceres, G. (2015). Higher ground source heat pump
COP in a residential building through the use of solar thermal collectors. Renewable
energy, 80, 26-39.
Karytsas, S., & Choropanitis, I. (2017). Barriers against and actions towards renewable
energy technologies diffusion: A Principal Component Analysis for residential ground
source heat pump (GSHP) systems. Renewable and Sustainable Energy Reviews, 78,
252-271.
Karytsas, S., & Theodoropoulou, H. (2014). Public awareness and willingness to adopt
ground source heat pumps for domestic heating and cooling. Renewable and
Sustainable Energy Reviews, 34, 49-57.
Karytsas, S., & Theodoropoulou, H. (2014). Public awareness and willingness to adopt
ground source heat pumps for domestic heating and cooling. Renewable and
Sustainable Energy Reviews, 34, 49-57.
Majuri, P. (2016). Ground source heat pumps and environmental policy–The Finnish
practitioner's point of view. Journal of Cleaner Production, 139, 740-749.
Mehrpooya, M., Hemmatabady, H., & Ahmadi, M. H. (2015). Optimization of performance
of combined solar collector-geothermal heat pump systems to supply thermal load
needed for heating greenhouses. Energy Conversion and Management, 97, 382-392.
Menberg, K., Heo, Y., Choi, W., Ooka, R., Choudhary, R., & Shukuya, M. (2017). Exergy
analysis of a hybrid ground-source heat pump system. Applied Energy, 204, 31-46.

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Menberg, K., Heo, Y., Choi, W., Ooka, R., Choudhary, R., & Shukuya, M. (2017). Exergy
analysis of a hybrid ground-source heat pump system. Applied Energy, 204, 31-46.
Revesz, A., Chaer, I., Thompson, J., Mavroulidou, M., Gunn, M., & Maidment, G. (2016).
Ground source heat pumps and their interactions with underground railway tunnels in
an urban environment: A review. Applied Thermal Engineering, 93, 147-154.
Sarbu, I., & Sebarchievici, C. (2014). General review of ground-source heat pump systems
for heating and cooling of buildings. Energy and buildings, 70, 441-454.
Sivasakthivel, T., Murugesan, K., & Sahoo, P. K. (2014). Optimization of ground heat
exchanger parameters of ground source heat pump system for space heating
applications. Energy, 78, 573-586.
Sivasakthivel, T., Murugesan, K., & Thomas, H. R. (2014). Optimization of operating
parameters of ground source heat pump system for space heating and cooling by
Taguchi method and utility concept. Applied Energy, 116, 76-85.
Spitler, J. D., & Gehlin, S. E. (2015). Thermal response testing for ground source heat pump
systems—An historical review. Renewable and Sustainable Energy Reviews, 50,
1125-1137.