McKinsey: Heat Pumps Key to Decarbonising Built Environment

A report from global consultancy firm McKinsey says low-emissions technologies will be critical in transforming the built environment's heating systems. 

The report, titled "The Hard Stuff: Navigating the Physical Realities of the Energy Transition", says that only an estimated 10% of the required deployment of low-emissions technologies by 2050 has been achieved in most areas.

McKinsey also says that heating and cooling systems in buildings are responsible for a staggering 75% of emissions. 

Most of these emissions stem from on-site fossil fuel combustion, primarily through gas boilers, with the remainder attributed to electricity used for lighting, appliances and cooking functions.

How heat pumps can help

Currently, there are approximately 200 million heat pump units installed globally. 

However, to meet climate targets, this number needs to increase nine-fold to 1.8 billion by 2050, according to McKinsey's projections.

"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 says.

Heat pumps, which can be retrofitted in existing buildings or incorporated into new designs, operate by extracting heat from outside air or underground sources and transferring it indoors. 

Their efficiency is measured through the coefficient of performance (COP), typically ranging from two to five, meaning each unit of electrical energy produces two to five units of heat output.

Challenges in cold climates

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

This presents a challenge for heat pump technology, as standard air-source heat pumps operate at reduced capacity below freezing temperatures.

The report says that 1.2 billion people, or 15% of the global population, live in regions experiencing minimum temperatures below minus 10 degrees Celsius, necessitating specialised cold-climate heat pump systems.

In response to this challenge, the US Department of Energy has launched initiatives to improve heat pump performance. 

Its Cold Climate Heat Pump Technology Challenge sets ambitious operational targets at minus 26 degrees Celsius.

How heat pumps will affect power infrastructure

The transition to electric heating systems will have significant implications for power infrastructure. 

McKinsey projects that full building heat electrification would increase peak power demand to 1.7 times current levels, with cold regions potentially seeing demand triple.

"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 report's authors state.

McKinsey’s recommendations for heat pumps

To accelerate the adoption of heat pump technology in the built environment, McKinsey proposes a four-point action plan:

1. Continuing to innovate heat pump technology: Improving heat pump COP, particularly at lower temperatures, could significantly reduce power needs, especially in cold climates. Some manufacturers have already prototyped models meeting the US Department of Energy's ambitious performance targets.
2. Creating efficiency and flexibility in managing demand: More-efficient buildings, improved insulation, and smart thermostats could help manage heating demand. Demand-management strategies could potentially reduce peak load by nearly 40%.
3. Deploying alternative low-emissions heating solutions: Options like district heating and solar thermal could meet some demand, though these solutions have geographical limitations.
4. 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.

Thermal energy storage (TES) allows heat pumps to generate and store heat during warmer periods when COPs are higher and power demand is lower, for use during peak times. This could help to support flexibility.

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