With heat pumps moving from the margins to the mainstream, TAF is exploring how to seize the moment and accelerate their adoption.
Heat pumps are increasingly interesting to building owners, investors, installers, and policy-makers: their demand is growing in double digits every year, and the International Energy Agency says they can help deliver 500 million tonnes of global emission reductions by 2030.
It’s a huge opportunity for carbon reduction, but it depends on getting far more heat pumps installed, moving far faster than the industry ever has in the past. One way to do this in communities is to aggregate local demand and take advantage of bulk buying strategies, based on a new report we commissioned from Montreal-based Dunsky Energy + Climate.
Harnessing pathways to scale
Despite rapid progress, there are still barriers preventing building owners, energy utilities, and policymakers from realizing the full potential that heat pump technologies offer. These include technology awareness, product availability, workforce capacity for installations at a mass scale and higher capital costs.
Some of them can be tackled by aggregating heat pump demand and buying the systems in bulk. Benefits of bulk purchasing programs include:
- Streamlined supply chains and minimized disruptions and supply delays;
- Improved customer product, technology awareness and buy-in;
- Better market penetration and availability of market options;
- Increased demand for local contractors and installers and more knowledgeable, experienced workforce to install and service this equipment.
Cost-wise, bulk purchasing can vary with some programs showing savings up to 20% on the price and delivery of the equipment.
The details matter
Of the eight steps Dunsky recommends for structuring bulk procurement deals, the most important job is to address the often-long supply chain that stands between the manufacturers who have the product and the Canadian builders, renovators, housing agencies and neighbourhood groups who need it.
There are lessons to learn from other bulk buying programs, such as the Clean Heat for All initiative by the New York Housing Authority, which offered a unique marketing opportunity to attract more manufacturers and drive down the price of competitive bids. This strategy begins with the profile and media boost of bringing the product to a new, local market, particularly if the buyer is offering a long-term commitment to the product.
The report also recognizes the role of trusted messengers—the neighbourhood groups and community partners with established relationships in a new market—in assembling large numbers of buyers onboard.
Click here to read TAF’s report on scaling heat pump retrofits through aggregation and bulk procurement.