Large heat pumps: Market ramp up and costs in Germany

Large heat pumps are currently experiencing rapid and widespread market growth. Based on publicly announced projects, installed capacity could increase almost sixfold, from 200 MW today to just under 1150 MW, by 2030. Investment costs vary greatly and are primarily determined by project-specific factors. At the same time, there is only a weak correlation between heat pump capacity and investment costs. In this analysis, large heat pumps are defined as those with a thermal capacity exceeding 500 kW. Large heat pumps are suitable for supplying industrial plants, large buildings, or even entire neighborhoods via a heating network.

This is shown by the analysis “Large Heat Pumps: Market Ramp-up and Costs in Germany” by the Institute of Energy Economics at the University of Cologne (EWI), which collects and evaluates primary data on publicly announced large heat pump projects in Germany. The analysis was funded by the “Heat transition funding initiative” from the Society of Benefactors to the EWI (Gesellschaft zur Förderung des EWI e.V.)

Up-to-date primary data is important for realistic cost estimates

An investment cost analysis of existing projects shows that project-specific factors strongly dominate costs and that the correlation between output and costs is low. Economies of scale occur primarily in the form of fixed costs that are independent of capacity. In contrast, planned projects exhibit significantly lower cost variance and a stronger capacity dependency of the investment costs.

“The fact that the cost range for completed projects is greater than for planned projects could indicate high unforeseen and project-specific costs in the construction”, says Dr.-Ing. Ann-Kathrin Klaas, Head of Research Area Energy Commodities at EWI, who authored the analysis together with Tobias Leibfritz and Michael Moritz. The data also shows that the investment costs of projects in Germany are mostly higher than cost estimates from secondary literature. Primary data is therefore essential for realistic cost estimates.

Primary data analysis includes data from 75 projects in Germany

Primary data analysis of 75 publicly announced existing and planned projects in Germany shows that the market for large heat pumps is on the verge of a dynamic growth phase and that the installed capacity could increase sixfold by 2030. This widespread market ramp-up is reflected in the growing number of projects and in increasing project-specific capacity. Large heat pumps are mainly used for heating grids with supply temperatures of 80°C and above. Industrial applications often require higher temperatures, for which the technological readiness is not yet as high as for low-temperature applications.

As the market ramps up, there is a shift in the heat sources used: while existing projects primarily use waste heat, new projects increasingly focus on water and wastewater as heat sources. Around 90 % of the existing and planned large heat pump capacity is used to supply heating grids.

Compressors and refrigerants are the core components of a heat pump.

A key component of a large heat pump is the compressor, the type of which is selected depending on the specific area of application and represents a significant cost driver. Another critical selection criterion is the refrigerant used, where factors such as the required temperature difference between the heat source and heat sink, the safety status, and the global warming potential are decisive. Refrigerant emissions have so far contributed only to a small extent to global warming, but have increased significantly since 1990. Due to regulatory measures and the increasing use of refrigerants with low global warming potential in new installations, this trend may not continue despite the further expansion of heat pumps.