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Geothermal Heat Pump Market to Triple by 2020

There has been an uptick of interest in renewable energy heating and cooling in the past year, with several U.S. states and other countries establishing favorable incentives. After a two-year slump due to the global economic downturn, Navigant Research predicts that the geothermal heat pump market (GHP) will nearly triple to $17.2 billion by 2020, which is a “slow but steady growth” for the industry, according to Navigant analyst Mackinnon Lawrence.

Find the report, Geothermal Heat Pumps, here.

Among favorable policies cropping up globally, the UK recently announced renewable heat tariffs (which were set at 18.8 pence/€0.22 for ground-source heat pumps), and a coalition has formed in Massachusetts to include renewable heating and cooling technologies in the state renewable portfolio standard (RPS).

But GHPs are still considered a technology that “falls through the cracks” in most policy scenarios, according to Lawrence. Many countries aren’t sure where GHPs fit — are they more a renewable energy or energy efficiency technology? In effect, GHPs “fall down the list behind other less-complex energy efficiency efforts,” he added. Instead of installing a GHP system, many people will focus on less-expensive fixes first, like insulation.

The upfront cost for GHP systems is another major factor that has held back the industry. While in the U.S., for example, there is a 30 percent tax credit towards a new residential system (10 percent for a commercial system), many homeowners simply cannot afford GHPs that can cost up to $25,000. And there are no major technology improvements that can be done to drive down these upfront costs, said Lawrence.

Despite these barriers, GHPs have taken off in countries like Denmark, where laws stipulate that new homes cannot be built with fossil fuel systems. And according to Chris Williams of the HeatSpring Learning Institute and member of the Coalition for Renewable Heating and Cooling in Massachusetts, GHPs can be a perfect weapon to fight rising oil prices, which heats a majority of the homes in the Northeastern U.S.

Overall, the GHP industry needs more consumer awareness. “While solar is becoming more well-known, consumers aren't sure how to access GHPs, and even regional distributors aren’t up to speed yet,” noted Lawrence. 

Read more geothermal energy news here.

Lead image: GHP, Iceland via Shutterstock

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