Household and whole-system assessments of distributed heat pump deployment for domestic heat decarbonisation in the UK

Air-source and ground-source heat pumps are promising low-carbon heating technologies, but their deployment in the UK remains slow, while optimal heat-pump heating system designs as well as the wider impacts on the whole-energy system are still being debated. In this work, we combine a detailed building-level heating technology and system optimisation model with a national-level whole-energy-system optimisation model to perform holistic assessments of heat pumps considering both homeowner and energy system planner perspectives. We find that at the building level the design of the optimal heat pump system depends on the interest rate being applied, but generally, the preferred systems are large enough to enable demand-shifting from peak to off-peak hours. At the whole-energy-system level, the optimal degree of heat pump deployment depends on the natural gas price, the heat pump subsidy, and the electricity grid upgrade costs. For fixed subsidies, such as the current subsidy of £7500 per heat pump installation, air-source heat pumps and preferred over ground-source equivalents due to their lower investment cost. Proportional subsidies and high grid upgrade costs can shift the balance towards more ground-source heat pumps. At grid upgrade costs of 500 M£/GWpeak, air-source heat pumps are preferred for gas prices above 70 £/MWh if no subsidies are available, and 50 £/MWh if 50 % of the investment costs are subsidised. Ground-source heat pumps dominate for subsidies larger than 60 %, while gas boilers are preferred for low gas prices and low heat pump subsidies.