Not Just Hot Air; Let’s Talk Air Source Heat Pumps

Flat World Partners
5 min readJul 25, 2022

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Air Source Heat Pumps (ASHPs) are touted as a current and viable solution to our domestic and commercial reliance on fossil fuels for the heating of buildings. Originally for the more eco-conscious consumer, this technology has now been widely adopted by governments around the world as a possible solution to their quandary of achieving Net-Zero by 2050.

As far back as March of 2021, the Air Source Heat Pump Act of 2021 was passed in the Senate of the U.S. in order to establish a refundable tax credit on the installation on ASHPs. The intention thereof is to encourage this method of heating and cooling within U.S. households for those who are considering installing new systems in their homes. Whilst the tax credit in itself will only cover 20% of qualified expenditures on approved installations (up to $800 in total), it is to be considered in combination with the future cost savings of heating one’s home with this more energy efficient technology.

In a similar fashion, the U.K. government has more recently unveiled plans to allow a more comprehensive £5,000 grant to encourage homeowners to install ASHPs (referred to as the Boiler Upgrade Scheme or ‘BUS’) as part of their net-zero strategy. This effort was announced a few days before the COP26 climate summit in Glasgow, and has subsequently, with surprising accuracy, premeditated the current inflationary prices of natural gas and oil experienced as a result of the terrible conflict in the Ukraine. The ‘BUS’ was launched on 23rd May 2022.

The reason why ASHPs are deemed as a viable replacement to conventional gas-fired boilers and direct electric heaters is due to their efficiency in producing heat. The best way to understand how these units manage to extract higher temperatures from the ambient air is to think of them as refrigerators in reverse: within a closed loop cycle, refrigerant is heated via the warmer ambient air and changes state from liquid to gas, the gaseous refrigerant is compressed which adds more heat, the hot gaseous refrigerant passes through a heat exchanger to heat either cool air or water which is then circulated throughout the property. The cooled refrigerant then returns to begin the process again. Because of this process, ASHPs are deemed to be 320% efficient — for every 1kWh of electricity used, 3.2kWh of heat is produced (dependent on ambient temperatures).

Whilst the ASHPs appears to be the current golden egg in governments’ fight to achieve Net-Zero by 2050, it is important to ensure that the application of these new heating systems is supported by an adequate national grid infrastructure. The grid needs to accommodate the extra electrical load, as well as to ensure that the electricity comes from renewable sources in order to realize the carbon reduction objectives.

Peter Chippendale, Summer Associate

The Climate Change Committee (CCC) have concluded that greater progress is needed on installations of ASHPs in the UK as approximately 54,000 units were installed in the last year which falls far short of the 600,000 units per year target set by the government.

Just as the transition to ASHPs would reduce individual households’ reliance on gas and their individual production of GHGs, it is important to ensure that the electricity required for the ASHPs is from renewable sources, and not from other heavily polluting power generation methods such as fossil-fuel powered generators.

In addition to ensuring cleaner sources of heat, it is just as important to ensure that any heat produced is preserved as effectively as possible. This can be achieved with intelligent heating schedules for one’s household as well as improving a building’s insulation to conserve and distribute the heat produced.

With various governments incentivizing the use of ASHPs to households and commercial property-owners alike, it would be useful to better understand the technology to see if it is something which can provide benefit to you. It would be worth getting up to speed on how the units operate as well as the various pros and cons which are associated with the units, specifically due to the type of building one might be living in or any restrictions one might face.

This newsletter is intended solely for informational purposes, and should not be construed as investment/trading advice and are not meant to be a solicitation or recommendation to buy, sell, or hold any securities mentioned. Any reproduction or distribution of this document, in whole or in part, or the disclosure of its contents, without the prior written consent of Flat World Partners is prohibited

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