WEBVTT 1 00:00:04.080 --> 00:00:07.639 With Laurent segle And from London and Gerard Read from Berlin. 2 00:00:08.119 --> 00:00:13.199 This is redefining energy. Today. On redefining Energy, we're going 3 00:00:13.279 --> 00:00:15.640 to talk about our rise of heat pumps. 4 00:00:15.400 --> 00:00:20.399 Or yeah, heat pumps they rise again. But first award 5 00:00:20.440 --> 00:00:24.519 from our partner. We are excited to be partner with 6 00:00:24.679 --> 00:00:28.160 the International Energy Week, where some of the biggest names 7 00:00:28.199 --> 00:00:32.399 in global energy come together for a packagender tackling ideas, 8 00:00:32.439 --> 00:00:37.200 technology and policy shaping the futures. Thousands of attendees. It's 9 00:00:37.240 --> 00:00:41.439 in London the week of the ten to the twelfth 10 00:00:41.439 --> 00:00:45.159 of February, and we have a special promotion called for 11 00:00:45.240 --> 00:00:47.679 our listeners and it's going to be INDO show Notes. 12 00:00:48.159 --> 00:00:50.200 But let's go back to heat pumps. 13 00:00:50.399 --> 00:00:53.920 Well, look, if we talk about the electrification of our 14 00:00:53.960 --> 00:00:56.759 world to one area of whether the challenge is here 15 00:00:57.240 --> 00:01:00.439 it's just retrofitting heat. But the good news is we 16 00:01:00.479 --> 00:01:03.840 do have something called heat pumps and they're incredibly. 17 00:01:03.320 --> 00:01:06.400 Efficient and from a fuel point of view, very low cost. 18 00:01:06.959 --> 00:01:11.359 It's really part of the European strategy to decarbonize. There 19 00:01:11.439 --> 00:01:13.439 is one of the EU plan. I mean they'll get 20 00:01:13.480 --> 00:01:17.239 so much plan, but basically they wanted to have sixty 21 00:01:17.439 --> 00:01:22.319 million heat pumps installed by two thirty and at the 22 00:01:22.400 --> 00:01:25.280 end of two twenty five we were at thirty million, 23 00:01:25.840 --> 00:01:27.040 so that's pretty good. 24 00:01:27.680 --> 00:01:29.879 But there's a long way to goo, my friend, thirty 25 00:01:29.920 --> 00:01:33.599 million over the next four or five years. That's a lot, right, Yeah, 26 00:01:33.680 --> 00:01:36.719 that's a lot. In order to talk about heat pumps, 27 00:01:37.040 --> 00:01:40.640 how the market is going, the innovation, we brought somebody 28 00:01:40.840 --> 00:01:44.040 who really know something about it. Yeah. So Paul Kenny 29 00:01:44.359 --> 00:01:47.480 is the Director General of the European Heat Pump Association. 30 00:01:47.920 --> 00:01:51.120 Obviously that's the representative body of those involved in heat 31 00:01:51.120 --> 00:01:55.719 pop manufacturing, installing, etcetera, etcetera, right across Europe. And it's 32 00:01:55.760 --> 00:01:58.239 another irish Man, so we have a lot of Irish 33 00:01:58.319 --> 00:02:03.640 Man always invited. Chardy, is there any connection, There's no connections. 34 00:02:04.079 --> 00:02:06.200 It's just potluck, just pot luck. 35 00:02:07.879 --> 00:02:09.680 So let's bring Paul on the show. 36 00:02:10.360 --> 00:02:12.560 Paul really looking forward to this podcast. 37 00:02:12.719 --> 00:02:15.000 Thanks for coming on, Thanks very much for having me. 38 00:02:15.439 --> 00:02:20.120 Paul. First question, very simple, your association. What does he do? 39 00:02:20.599 --> 00:02:24.599 So the European Heap and Association is a sexual association, 40 00:02:24.719 --> 00:02:27.759 so it represents the full value chain R and D 41 00:02:28.240 --> 00:02:33.400 test centers, component manufacturers, heap manufacturers, so that the full 42 00:02:33.439 --> 00:02:37.639 supply chain, even utilities as well. The idea is behind 43 00:02:37.639 --> 00:02:41.639 that wider than just a manufacturers association. It represents enough 44 00:02:41.680 --> 00:02:44.800 of the industry that has a stake in seeing heat 45 00:02:44.800 --> 00:02:47.199 pumps roll out across Europe, and we advocate for our 46 00:02:47.199 --> 00:02:50.000 policies that support the deployment of heat pumps, whether that's 47 00:02:50.280 --> 00:02:54.280 product policy, energy policy, taxation policy. 48 00:02:54.439 --> 00:02:59.080 To drive the market must have been very recent. Busiers 49 00:02:59.199 --> 00:03:02.520 you are increa to twenty two to twenty three to 50 00:03:02.599 --> 00:03:07.240 twenty four were weaker, but scenes that to twenty five 51 00:03:07.560 --> 00:03:10.719 you'll get a significant rebound. So how do you explain 52 00:03:10.960 --> 00:03:11.840 what was up in the. 53 00:03:11.800 --> 00:03:15.280 Bus three four years twenty ten to twenty twenty one 54 00:03:15.639 --> 00:03:19.199 sixteen percent compound annual growth rate. That's a reasonably good 55 00:03:19.199 --> 00:03:21.960 growth rate, nice and stable, nice and predictable and good 56 00:03:22.000 --> 00:03:25.360 to expand production. So on twenty two is the war 57 00:03:25.400 --> 00:03:28.759 in Ukraine. Gas prices went bananas. A lot of electricity 58 00:03:28.759 --> 00:03:31.719 prices were hedged, so they didn't quite follow as quickly. 59 00:03:31.840 --> 00:03:35.159 So electricity companies, by their gas won two years in advance. 60 00:03:35.919 --> 00:03:38.800 So what we saw in twenty two was this really 61 00:03:39.400 --> 00:03:42.000 strong narrative to say get off gas as quickly as 62 00:03:42.000 --> 00:03:44.520 you can. We mightn't have enough gas in Europe, and 63 00:03:44.560 --> 00:03:47.800 we saw a huge increase in the orders for heat 64 00:03:47.840 --> 00:03:50.919 pumps the installations in Europe back half of twenty three. 65 00:03:51.319 --> 00:03:53.800 The electricity price started to go up with all of 66 00:03:53.800 --> 00:03:56.599 that high gas prices, and what happened then was the 67 00:03:56.599 --> 00:03:59.960 gas price started to come down, came out of the narrative. 68 00:04:00.360 --> 00:04:03.719 We had a full strategic store of gas and it 69 00:04:03.759 --> 00:04:06.080 was much more difficult to ship heat pumps, and gas 70 00:04:06.080 --> 00:04:09.599 prices are down and electricity prices are up. Second thing 71 00:04:09.840 --> 00:04:12.240 is important in all of the numbers, there was a 72 00:04:12.280 --> 00:04:14.199 lot of orders in twenty two in the beginning of 73 00:04:14.280 --> 00:04:18.360 twenty three that were duplicate orders, so an installer has 74 00:04:18.600 --> 00:04:22.120 customers for one hundred heat pumps, and the supply chain 75 00:04:22.240 --> 00:04:24.839 was still ramping up for those very large increase in orders, 76 00:04:24.920 --> 00:04:27.639 and we saw multiple orders that went into stock when 77 00:04:27.839 --> 00:04:30.360 all of the manufacturers were able to catch up with orders, 78 00:04:30.600 --> 00:04:32.959 so that stock had to wash out in late twenty 79 00:04:33.000 --> 00:04:36.680 three twenty four. Pretty much it's washed out now. And 80 00:04:36.680 --> 00:04:39.519 what we see so Germany, one of the bigger markets, 81 00:04:40.120 --> 00:04:43.040 we have for the first time seen heat pumps overtake 82 00:04:43.120 --> 00:04:47.279 gas boilers, so they're the number one heating technology in Germany. 83 00:04:47.720 --> 00:04:50.319 So what we saw in the first half of twenty 84 00:04:50.360 --> 00:04:54.279 twenty five is a nine percent growth rate. We don't 85 00:04:54.279 --> 00:04:56.800 have the final numbers for the end of twenty five 86 00:04:57.079 --> 00:05:01.360 just yet, but we expect to see most European markets 87 00:05:01.600 --> 00:05:04.759 will deliver end of your performance back in growth, which 88 00:05:04.800 --> 00:05:08.160 is very positive. We had four markets in twenty four 89 00:05:08.360 --> 00:05:10.800 in growth. We'll see a lot more in twenty five. 90 00:05:11.160 --> 00:05:13.160 So bol can I jump in there and just ask you, 91 00:05:13.279 --> 00:05:16.319 just talk a little bit about what is driving demand 92 00:05:16.600 --> 00:05:18.639 across Europe for heat pump A. 93 00:05:18.680 --> 00:05:19.399 Couple of things. 94 00:05:19.600 --> 00:05:23.240 The last commission passed I think nineteen pieces of legislation, 95 00:05:23.800 --> 00:05:26.759 the Clean Deal or the Green Deal, So governments are 96 00:05:26.759 --> 00:05:32.759 really from a climate and energy perspective incentivized through European regulation. Second, 97 00:05:33.040 --> 00:05:37.680 Europe's problem in competitiveness is gas. Europe's problem in climate 98 00:05:37.959 --> 00:05:42.040 is gas. Europe's problem in security is gas. We see 99 00:05:42.040 --> 00:05:45.519 a very clear driver from we say, the civil servants 100 00:05:45.519 --> 00:05:47.240 and the people who are outside of the wave of 101 00:05:47.319 --> 00:05:51.399 politics that's going around focused on delivering a transition away 102 00:05:51.399 --> 00:05:55.680 from gas. The European government's spent six hundred and eighty billion, 103 00:05:55.720 --> 00:05:59.759 according to Brugel, between twenty two and twenty four on 104 00:05:59.800 --> 00:06:03.839 soies for consumers for their bills, but effectively money that 105 00:06:03.959 --> 00:06:07.879 was exported to Russia, to Qatar, to the US and 106 00:06:07.920 --> 00:06:11.600 to Norway and all of those ministries for finance. They 107 00:06:11.639 --> 00:06:13.480 want to make sure that that doesn't happen again. They 108 00:06:13.480 --> 00:06:16.639 want to ensure away from high price spikes. And I 109 00:06:16.639 --> 00:06:20.800 think when in twenty two when the gas price card 110 00:06:20.959 --> 00:06:24.720 was played by Putin to try and really destabilize European 111 00:06:24.800 --> 00:06:27.720 governments and push on this war. He can only play 112 00:06:27.759 --> 00:06:30.680 that once. That's the nineteen seventy three oil crisis in gas, 113 00:06:30.720 --> 00:06:33.319 and now everyone is trying to drive away. So what's 114 00:06:33.360 --> 00:06:37.639 driving market sales is in countries where electricity is competitive 115 00:06:37.680 --> 00:06:40.199 with gas, we see lots of heat pump deployments. So 116 00:06:40.240 --> 00:06:45.360 the Scandinavian countries traditionally cheap electricity, traditionally high carbon taxation, 117 00:06:45.920 --> 00:06:49.240 and they've been really solid heat pump markets for many years. 118 00:06:49.680 --> 00:06:53.759 France has relatively cheap electricity, real solid heat pump market 119 00:06:53.759 --> 00:06:57.800 for many years as well. Cooling is driving, particularly in 120 00:06:57.839 --> 00:07:01.160 the southern European countries, is really driving heat pump deployment, 121 00:07:01.319 --> 00:07:03.199 and air to air heat pump in Europe is a 122 00:07:03.199 --> 00:07:06.720 heat pump. It can heat and cool. Obviously, cooling needs 123 00:07:06.800 --> 00:07:10.480 are increasing with climate change and climate adaptation, so they're 124 00:07:10.560 --> 00:07:14.800 kind of the key drivers. Obviously, governments are supporting subsidizing 125 00:07:15.000 --> 00:07:17.560 heat pumps in various different ways with various different levels 126 00:07:17.600 --> 00:07:21.360 of success and competence, and that's also really driving that. 127 00:07:22.000 --> 00:07:25.199 There's a number of different drivers, but ultimately the solution 128 00:07:25.519 --> 00:07:28.839 to all of these things is a competitive heat pump 129 00:07:28.879 --> 00:07:30.680 market with large amounts of deployment. 130 00:07:31.319 --> 00:07:34.519 Well, as you have described going up and down and 131 00:07:35.000 --> 00:07:38.560 you are in direct contact with the supply chain the installer. 132 00:07:39.079 --> 00:07:42.160 What are the positive innovation you've seen Recently. 133 00:07:42.600 --> 00:07:47.319 We switch refrigerant from particularly from monoblocks for single family 134 00:07:47.439 --> 00:07:51.680 houses from R thirty two and our four ten a 135 00:07:51.800 --> 00:07:54.959 before that, to a lot of propane in R to ninety. 136 00:07:55.519 --> 00:07:59.079 That's delivering a higher temperature, slightly larger devices, and slightly 137 00:07:59.160 --> 00:08:03.040 higher costs, but that's delivering higher temperatures at a higher efficiency. 138 00:08:03.079 --> 00:08:06.639 So that innovation is helping the transition from high temperature 139 00:08:06.639 --> 00:08:10.040 heating systems into heat pumps. The second big innovation that 140 00:08:10.079 --> 00:08:13.240 we see in the market is really designed for installation. 141 00:08:13.759 --> 00:08:16.199 So before maybe ten years ago, you bought the heat 142 00:08:16.199 --> 00:08:18.759 pump and you bought the circulation pump, and you about 143 00:08:18.800 --> 00:08:20.600 the feet, and you bought the sensors. You know, they 144 00:08:20.639 --> 00:08:22.839 all came different. Now what we're seeing is a lot 145 00:08:22.879 --> 00:08:25.519 easier to install. If you go to a trade show, 146 00:08:26.040 --> 00:08:28.959 all of the manufacturers are displaying the innovation they've done 147 00:08:29.040 --> 00:08:32.399 to try and make this better, faster, quicker installation, easier installation. 148 00:08:32.799 --> 00:08:35.000 And I think the third thing that we've seen from 149 00:08:35.039 --> 00:08:39.360 an innovation point of view not necessarily really really new, 150 00:08:39.440 --> 00:08:41.879 but what we're seeing is deployment in the market is 151 00:08:41.960 --> 00:08:45.600 around flexibility. So whether it's through a home energy management 152 00:08:45.639 --> 00:08:49.679 system or directly into the heat pumps API, the ability 153 00:08:49.879 --> 00:08:52.320 where the market signals are there the LIKESI scan and AVIA, 154 00:08:52.399 --> 00:08:55.720 the UK via Octopus and so on. Where a heat 155 00:08:55.720 --> 00:08:57.960 pump if it only needs to run for five hours 156 00:08:57.960 --> 00:08:59.799 a day because it's very mild, or ten hours a 157 00:08:59.840 --> 00:09:02.759 day because it's somewhat colder, that it starts to use 158 00:09:03.039 --> 00:09:07.120 energy at those low electricity prices. For me, that particular 159 00:09:07.159 --> 00:09:10.200 innovation is the one that is going to really drive 160 00:09:10.240 --> 00:09:13.000 heat pump sales because it will drive down your electricity 161 00:09:13.039 --> 00:09:15.320 bill for running your heat pump and make it really 162 00:09:15.399 --> 00:09:20.200 much more competitive versus the incumbent fossil technology. 163 00:09:20.159 --> 00:09:23.000 So that's the older smart almost that domain. 164 00:09:23.639 --> 00:09:25.840 It's a little bit more advanced than that. It's reading 165 00:09:25.840 --> 00:09:28.799 outside temperature, predicting how much energy you need to use 166 00:09:28.799 --> 00:09:31.879 in your house, and then scheduling the heat pump demand. 167 00:09:32.120 --> 00:09:36.399 It's almost more a smart meter coupled with slightly smarter devices. 168 00:09:36.440 --> 00:09:39.840 But this technology is not necessarily new. It switches that 169 00:09:39.879 --> 00:09:42.879 look at energy prices and so on, but the algorithms 170 00:09:42.919 --> 00:09:46.399 and the aggregators are there. They're very active in Scandinavia 171 00:09:46.639 --> 00:09:49.080 to said, and there's others in other countries. But some 172 00:09:49.080 --> 00:09:54.120 countries have really strong regulation, strong regulators and good technology 173 00:09:54.159 --> 00:09:57.240 rolled out. Smart meterings so on. In other countries are behind, 174 00:09:57.399 --> 00:09:59.279 so we don't have huge amount of smart meters in 175 00:09:59.320 --> 00:10:02.480 Germany as an example, and that restricts that ability to use. 176 00:10:03.039 --> 00:10:05.399 You talk all the time about negative prices and the 177 00:10:05.440 --> 00:10:08.639 electricity system. I hear it, but like those negative prices 178 00:10:08.639 --> 00:10:11.399 should be passed through to customers. If you increase demand 179 00:10:11.679 --> 00:10:15.200 at times of large amounts of generation, you get less 180 00:10:15.480 --> 00:10:19.679 hours of negative pricing and less negative pricing, which obviously 181 00:10:19.840 --> 00:10:22.840 is great for renewable deployment because you're not eating your own. 182 00:10:22.720 --> 00:10:26.919 Lunch, and what about the buttlenecks that, in your opinion, 183 00:10:27.240 --> 00:10:29.039 are the most urgent to resolve. 184 00:10:29.799 --> 00:10:33.320 When we think about the bottlenecks of heap on deployment, 185 00:10:33.720 --> 00:10:36.600 you've probably got the biggest one is the electricity to 186 00:10:36.639 --> 00:10:39.720 gas price ratio, and that is driven by a number 187 00:10:39.759 --> 00:10:44.039 of different things. First of all, some government's tax electricity 188 00:10:44.159 --> 00:10:47.120 far more than the tax gas. Obviously, if you want 189 00:10:47.360 --> 00:10:49.679 someone to use a lot of something, you don't tax 190 00:10:49.679 --> 00:10:51.919 it a lot. And if you like cigarettes, if you 191 00:10:51.960 --> 00:10:53.919 want people to not use them, you tax them out. 192 00:10:54.159 --> 00:10:57.159 So right now, we have some countries that tax electricity 193 00:10:57.240 --> 00:11:00.519 six times more than gas. Then we've produced a paper recently. 194 00:11:00.559 --> 00:11:03.159 It's you can get on our website and LinkedIn and whatever. 195 00:11:03.960 --> 00:11:07.159 It's really trying to correlate the electricity to gas price 196 00:11:07.279 --> 00:11:10.559 ratio with the taxation ratio. So how much governments actually 197 00:11:10.799 --> 00:11:14.919 tax and levy electricity. Now, what's good about this is 198 00:11:14.960 --> 00:11:17.840 there are choices. This is in then electricity market, this 199 00:11:17.919 --> 00:11:20.200 is the pastor costs. On top of that, there are 200 00:11:20.240 --> 00:11:23.720 choices that governments can make, and some of those choices. 201 00:11:23.960 --> 00:11:26.759 We've been pushing this quite hard, and now there's others 202 00:11:26.799 --> 00:11:29.639 on board, including the Commission writing to government saying you 203 00:11:29.679 --> 00:11:32.519 need to shift your taxation from electricity to gas to 204 00:11:32.600 --> 00:11:36.399 encourage people to use electricity, which is clean, indigenous, more secure. 205 00:11:37.279 --> 00:11:40.639 And as an example, late last year we saw a 206 00:11:40.720 --> 00:11:45.240 number of different countries. So Belgium announced a tax increase 207 00:11:45.279 --> 00:11:48.600 in gas funded by a tax decrease in electricity in 208 00:11:48.639 --> 00:11:52.159 the UK budget. At the November twenty twenty five they 209 00:11:52.279 --> 00:11:55.919 announced a shift of the renewable electricity subsidies off the 210 00:11:55.919 --> 00:12:00.840 electricity bill and into the exchequer finance. Denmark announced a 211 00:12:01.320 --> 00:12:04.159 tax break for electricity use for home heating via a 212 00:12:04.159 --> 00:12:07.799 heat pump. Germany has using their Climate Fund. They announced 213 00:12:07.840 --> 00:12:10.960 that in twenty five to fund the transmission system costs, 214 00:12:11.320 --> 00:12:14.799 and there's further discussions that maybe they'll further bring down 215 00:12:14.840 --> 00:12:19.039 the price of electricity through different mechanisms. So one by one, 216 00:12:19.360 --> 00:12:22.679 as we engage with European governments and as our national 217 00:12:22.679 --> 00:12:26.519 associations engage with European governments trying to push them to 218 00:12:26.600 --> 00:12:29.639 make these decisions, we see those decisions are getting made. 219 00:12:29.799 --> 00:12:32.519 And that's probably if you talk about the barrier to 220 00:12:32.639 --> 00:12:36.240 heat pump deployment, that's the number one economics one O one. 221 00:12:36.279 --> 00:12:38.480 If something is cheap, people will use it. If something 222 00:12:38.639 --> 00:12:41.639 is expensive, people will look for the alternative. The second 223 00:12:41.639 --> 00:12:44.159 one I think was a big issue in twenty two 224 00:12:44.240 --> 00:12:47.879 in Germany, which was the capacity of installers. It is 225 00:12:47.919 --> 00:12:50.720 an issue across Europe, but it is coming down and 226 00:12:50.759 --> 00:12:54.480 down and down, and as the technology becomes more competitive 227 00:12:54.519 --> 00:12:57.039 from a running cost point of view, more installers are 228 00:12:57.039 --> 00:12:59.399 coming into the market and there's lots of initiatives across 229 00:12:59.399 --> 00:13:02.360 Europe to drive up the number of installers, and that 230 00:13:02.440 --> 00:13:05.320 will obviously bring competition into the installer market, which is 231 00:13:05.360 --> 00:13:07.759 one of the key challenges to deployment, the high cost 232 00:13:07.799 --> 00:13:08.679 of installation. 233 00:13:09.360 --> 00:13:11.559 Can I ask a little bit about sort of coupling 234 00:13:11.840 --> 00:13:14.960 key pumps with other technologies, in other words, putting in solar, 235 00:13:15.360 --> 00:13:19.120 putting in batteries, putting in some hot water storage. What's 236 00:13:19.159 --> 00:13:21.159 your view in and around all of this. 237 00:13:21.799 --> 00:13:24.639 It's something that we see a lot of installers doing. 238 00:13:24.720 --> 00:13:26.600 So they go to a homeowner and they say, look, 239 00:13:26.879 --> 00:13:29.399 we'll come to your house, we'll put in a PV system, 240 00:13:29.480 --> 00:13:31.360 and we'll put in your heat pump, put an EV 241 00:13:31.559 --> 00:13:34.320 charger and so on. And that's a really good angle 242 00:13:34.440 --> 00:13:38.360 from an installer market perspective, because if you're a householder 243 00:13:38.559 --> 00:13:40.799 and you put in three four, five six kilo, what's 244 00:13:40.840 --> 00:13:42.919 the PV. It's all going on to the grid unless 245 00:13:42.960 --> 00:13:45.200 you have a device to be an electric car or 246 00:13:45.279 --> 00:13:48.120 heat pump. That's something we see a lot of very 247 00:13:48.120 --> 00:13:51.879 supportive of it. There's complementary technologies like in particular PV. 248 00:13:52.600 --> 00:13:56.080 From a battery point of view, what I would really 249 00:13:56.120 --> 00:13:57.919 like to see is heat pumps playing the market on 250 00:13:57.960 --> 00:14:01.080 their own. So does it make sense to charge up 251 00:14:01.080 --> 00:14:03.200 a battery to run your heat pump in four hours 252 00:14:03.279 --> 00:14:06.039 time with the rentra efficiency of give or take eighty 253 00:14:06.039 --> 00:14:10.080 eighty two percent and lose that twenty percent of electricity 254 00:14:10.080 --> 00:14:11.759 to run your heat pump, I e. Make your heat 255 00:14:11.759 --> 00:14:14.840 pump twenty percent less efficient. Maybe it does if the 256 00:14:14.879 --> 00:14:18.320 electricity price ratio is big enough between middle of the 257 00:14:18.399 --> 00:14:20.519 night and during the day or whenever it is cheap 258 00:14:20.559 --> 00:14:23.360 and expensive. But I think what's much more important to 259 00:14:23.399 --> 00:14:25.960 do is pre charge and preheat your house, use the 260 00:14:25.960 --> 00:14:29.679 building itself, use your hot water storage to really drive 261 00:14:29.759 --> 00:14:33.080 on the ability to be flexible. It's something that I've 262 00:14:33.120 --> 00:14:35.759 done at home in my own house since twenty fifteen, 263 00:14:35.879 --> 00:14:38.519 which is preheat the house and cheap night rate electricity 264 00:14:38.960 --> 00:14:40.600 and then let it come down a little bit over 265 00:14:40.639 --> 00:14:42.519 the day, and when you switch from day to night, 266 00:14:42.799 --> 00:14:45.679 go back up again with your heat pump operation. And 267 00:14:45.840 --> 00:14:49.519 most houses that are reasonably well insulated, you're not going 268 00:14:49.559 --> 00:14:52.360 to notice the degree most of the year around, unless 269 00:14:52.399 --> 00:14:55.240 it's very very cold or a very poor performance house. 270 00:14:55.919 --> 00:14:58.799 In effect, the thermal storage of the home is far 271 00:14:58.879 --> 00:15:01.960 more cost effective than the electricity storage of a battery. 272 00:15:02.519 --> 00:15:07.120 I'd like to switch on industrial heat pumps because there 273 00:15:07.200 --> 00:15:10.399 is this view that in the industry half of the 274 00:15:10.519 --> 00:15:15.200 gas is used for say above two hundred three hundred 275 00:15:15.240 --> 00:15:20.200 sea temperature, where you know it's technology very difficult to 276 00:15:20.279 --> 00:15:24.519 replace gas, but below the threshold, say two hundred C 277 00:15:24.720 --> 00:15:28.480 or three hundred CE, industrial heat pumps starts to provide 278 00:15:28.480 --> 00:15:31.000 excelling solutions. So what's your view on this. 279 00:15:32.000 --> 00:15:35.720 When gas prices were very cheap, companies just wasted the heat, 280 00:15:36.120 --> 00:15:38.159 they didn't bother recovering, and it was cheaper just to 281 00:15:38.159 --> 00:15:39.919 burn new gas and let the heat go up into 282 00:15:39.919 --> 00:15:43.320 the atmosphere. But what we're seeing now with gas prices 283 00:15:43.320 --> 00:15:45.919 at thirty euros a mega with our wholesale and obviously 284 00:15:45.919 --> 00:15:49.919 to companies it's at different levels it's different amounts, but 285 00:15:50.080 --> 00:15:54.720 are manufacturers who traditionally produce chillers now they have heat 286 00:15:54.759 --> 00:15:58.080 recovery and all of those chillers, it's a relatively easy 287 00:15:58.120 --> 00:16:01.720 technology to recover that heat. So what we see now 288 00:16:01.879 --> 00:16:05.320 is a really strong interest in lots of the things 289 00:16:05.399 --> 00:16:09.919 like biopharma food. If you consider every kind of food 290 00:16:09.960 --> 00:16:12.679 that's produced is heated up over one hundred degrees or 291 00:16:12.759 --> 00:16:15.879 two hundred degrees and then cool down again. Beer is 292 00:16:15.919 --> 00:16:18.279 made by you cook your ingredients and then you cool 293 00:16:18.320 --> 00:16:21.600 it down so it can ferment. So you heat and cool, 294 00:16:21.679 --> 00:16:24.480 heat and cool, and heat pumps just provide a lovely 295 00:16:24.519 --> 00:16:27.000 technology where you can pull out that heat and supply 296 00:16:27.000 --> 00:16:29.159 it back in at the beginning of the process. So 297 00:16:29.200 --> 00:16:31.279 we have a lot of ongoing work with paper and 298 00:16:31.320 --> 00:16:34.200 pulp industry, food and drink industry, the chemicals industry was 299 00:16:34.279 --> 00:16:37.840 starting individual companies waste order treatment so on, and they're 300 00:16:37.879 --> 00:16:40.679 coming to us to see how that they can support 301 00:16:40.799 --> 00:16:43.639 their industry at a wide scale to try and absorb 302 00:16:43.679 --> 00:16:46.879 the technology. Europe is funding a lot of innovation in 303 00:16:46.919 --> 00:16:50.759 the space to see the first deployment getting subsidized, and 304 00:16:50.759 --> 00:16:54.480 then obviously spend some time making sure everyone knows about it, 305 00:16:54.559 --> 00:16:58.000 so it's a massive opportunity. We're at the very very 306 00:16:58.000 --> 00:17:01.279 bottom of the s curve of technology deployment. The single 307 00:17:01.320 --> 00:17:04.279 biggest barrier in industrial heat pumps is literally knowledge by 308 00:17:04.319 --> 00:17:08.000 the engineers in factories to see I have a huge opportunity, 309 00:17:08.359 --> 00:17:12.480 and where you have waste heat and heat demand under 310 00:17:12.519 --> 00:17:16.000 two hundred degrees, you probably have a very good business case. 311 00:17:16.319 --> 00:17:19.599 And in particular where electricity is cost effective, so that 312 00:17:19.839 --> 00:17:23.480 the Nordic countries, Iberia, France and so on. We are 313 00:17:23.519 --> 00:17:27.519 seeing a lot of deployment of industrial heat pumps. However, 314 00:17:27.839 --> 00:17:30.960 five years ago this wasn't the market, the market with 315 00:17:31.039 --> 00:17:34.400 chillers to waste heat. So it's a nascent industry, but 316 00:17:34.480 --> 00:17:37.559 it has massive potential. We are seeing a lot of 317 00:17:37.599 --> 00:17:40.359 deployment start now though we are our members are all 318 00:17:40.759 --> 00:17:44.079 busy in the business development phase and deployment phase now, 319 00:17:44.079 --> 00:17:47.440 and we see new factories opening for industrial heat pumps 320 00:17:47.440 --> 00:17:48.119 around Europe. 321 00:17:48.480 --> 00:17:49.640 By the way, I know you might think this is 322 00:17:49.640 --> 00:17:51.480 a mad question, but I would have thought the biggest 323 00:17:51.480 --> 00:17:53.799 market for heat pumps is actually electric cars. 324 00:17:54.200 --> 00:17:55.200 You're probably right. 325 00:17:55.480 --> 00:17:57.880 It's not something that we as an association to deal 326 00:17:57.960 --> 00:18:01.480 with those sub killwatt heat punts in tumble dryers or 327 00:18:01.599 --> 00:18:04.240 cars or whatever it is. But yeah, absolutely you're seen 328 00:18:04.240 --> 00:18:07.000 and deployed everywhere. We don't deal with fridges, but everyone 329 00:18:07.039 --> 00:18:09.359 has a fridge in their house and that's the heat pots. 330 00:18:09.400 --> 00:18:12.200 It's all technology, it's one hundred and fifty years old 331 00:18:12.359 --> 00:18:15.200 and it's in everyone's house in one way or another. 332 00:18:15.680 --> 00:18:18.880 We won't be a very seious energy podcast if we 333 00:18:18.920 --> 00:18:22.279 didn't talk about that. That center us what it's more 334 00:18:22.279 --> 00:18:25.119 on the cooling side, can you explain a bit what 335 00:18:25.160 --> 00:18:26.920 you've seen the past eighteen months. 336 00:18:27.400 --> 00:18:30.960 Obviously there's a big rush to build data centers and 337 00:18:31.200 --> 00:18:33.759 they all need to be cooled, and we see a 338 00:18:33.839 --> 00:18:37.400 variety of different cooling technologies and data centers, right to 339 00:18:37.599 --> 00:18:39.960 the unchipped liquid cooling that we see kind of in 340 00:18:40.000 --> 00:18:43.440 the newer ones. What's really interesting about this, and you know, 341 00:18:43.480 --> 00:18:46.480 the market of chillers for data centers is a lot 342 00:18:46.480 --> 00:18:49.359 of our members and we talk regularly with them about it. 343 00:18:49.680 --> 00:18:53.599 But that weighs heat. If you're talking about the earlier 344 00:18:53.640 --> 00:18:56.400 technology for cooling data centers, which was just air flowing 345 00:18:56.400 --> 00:18:59.359 through the server racks, that air comes out at thirty 346 00:18:59.519 --> 00:19:04.079 thirty five degrees relatively low high volume air. You need 347 00:19:04.119 --> 00:19:06.200 to extract heat from that. It's very doable. It's a 348 00:19:06.200 --> 00:19:09.200 great source of waste heat. But as you progress through 349 00:19:09.200 --> 00:19:12.559 the technology options of cooling data centers, your liquid on 350 00:19:12.640 --> 00:19:16.319 chip cooling comes back at fifty five degrees so much easier. So, 351 00:19:16.680 --> 00:19:18.920 if you know the laws of physics around heat pumps, 352 00:19:18.960 --> 00:19:21.880 the lower the temperature lift you need to get to 353 00:19:21.960 --> 00:19:25.920 produce your heat, the higher the coefficient performance. So you 354 00:19:25.960 --> 00:19:28.960 might have had a coefficient performance of three or three 355 00:19:29.000 --> 00:19:31.119 times more heat comes out than you put in electricity. 356 00:19:31.160 --> 00:19:33.200 But at fifty five degrees waste heat to go into 357 00:19:33.200 --> 00:19:36.000 a district heating center, it brings that right up, so 358 00:19:36.160 --> 00:19:39.839 you end up with a larger and larger amount of 359 00:19:40.079 --> 00:19:42.400 heat from your data center for the same amount of 360 00:19:42.400 --> 00:19:46.559 electricity to transport and upgrade the heat temperature. The Commission 361 00:19:46.759 --> 00:19:50.279 is due to publish in Q one twenty six Electrification 362 00:19:50.400 --> 00:19:53.640 and Heating and Cooling Strategy. They held a workshop at 363 00:19:53.640 --> 00:19:56.440 the end of twenty five with the data center industry 364 00:19:56.480 --> 00:19:59.160 with the waste heat industry to see how they could 365 00:19:59.240 --> 00:20:02.839 really tap in to that for producing district heating and 366 00:20:03.039 --> 00:20:05.039 to try and an increase the amount of waste heat that 367 00:20:05.160 --> 00:20:07.839 comes from data centers and what are the policy leaders 368 00:20:07.880 --> 00:20:09.119 they need to do to drive that on. 369 00:20:09.960 --> 00:20:14.079 But part of the energy security package, there's also a 370 00:20:14.160 --> 00:20:18.359 lot of debates around supply chain, around technology not done 371 00:20:18.359 --> 00:20:20.200 in Europe, what's happening there. 372 00:20:20.960 --> 00:20:24.119 It's interesting a big debate in Brussels in twenty twenty 373 00:20:24.119 --> 00:20:27.079 five and it will continue into twenty six and onwards. 374 00:20:27.279 --> 00:20:30.400 Is the European preference or made an EU for public 375 00:20:30.440 --> 00:20:35.880 procurement and particularly subsidies. Now most heat pumps deployed air 376 00:20:35.920 --> 00:20:39.400 to water heat pumps are made in Europe, some of 377 00:20:39.440 --> 00:20:41.960 the components are not, and some of the components are global. 378 00:20:42.279 --> 00:20:45.920 This is a very globalized supply chain, like the automotive 379 00:20:45.920 --> 00:20:48.759 supply chain. One of the things that's really important to 380 00:20:48.799 --> 00:20:51.200 know though, is if you deploy a heat pump, you 381 00:20:51.359 --> 00:20:54.680 offset maybe ten to fifteen thousand euros and wholesale gas 382 00:20:54.720 --> 00:20:57.440 imports into the Union. And a heat pump is far 383 00:20:57.519 --> 00:21:00.640 smaller in price in terms of the actual cost per unit. 384 00:21:01.000 --> 00:21:03.160 So any heat pump deployed, even if it's not made 385 00:21:03.200 --> 00:21:07.079 in Europe, is very very beneficial to European competitives and 386 00:21:07.160 --> 00:21:11.119 European economy. However, most are actually made in Europe. The 387 00:21:11.279 --> 00:21:13.759 value chain is in Europe, the designers are in Europe, 388 00:21:13.759 --> 00:21:17.000 the installers are in Europe, and particularly the value ad 389 00:21:17.279 --> 00:21:19.720 is in Europe. But what we worry a little bit 390 00:21:19.759 --> 00:21:22.319 about is we're just going to throw trade out the 391 00:21:22.359 --> 00:21:25.279 window because we have a political necessity to say we 392 00:21:25.319 --> 00:21:27.839 can make everything in Europe. Yes we can, but it's 393 00:21:27.839 --> 00:21:30.480 not necessarily sensible to make everything in Europe. We don't 394 00:21:30.519 --> 00:21:32.759 have the workers and the supply chains right now for 395 00:21:32.839 --> 00:21:34.880 everything to be made in Europe. So we should value 396 00:21:34.960 --> 00:21:38.160 AD and add the highest value components and the final 397 00:21:38.200 --> 00:21:39.720 assembly for sure in Europe. 398 00:21:40.200 --> 00:21:42.279 Honestly, looking at you say that, Well, the biggest players 399 00:21:42.319 --> 00:21:45.119 in the world are all Japanese in South Korean in 400 00:21:45.200 --> 00:21:47.519 terms of air conditioning players and stuff. 401 00:21:47.240 --> 00:21:50.279