Heating: The Next Frontier of Decarbonization?

Low carbon energy is gaining steam in fast-growing technologies like solar PV and battery EVs, but a key lagging sector—heating—may see a pickup in its own decarbonization. Alongside transport, the CEO of E.ON UK recently mentioned heating as a specific area where the company wants to play a larger role, suggesting perhaps that renewable electricity has more sustainable momentum than heating. This agrees with trends Guidehouse Insights has been following and projecting, as outlined in this blog.

Though global data on heating alone is somewhat limited, for example heating and cooling in Europe accounts for 51% of final energy use, the stakes are indeed high. Together, transport, electricity, and heat accounted for about two-thirds of global COemissions in 2015, according to the International Energy Agency.

Multiple Pathways Will Decarbonize Heating

There are several parallel paths to decarbonizing this sector—one that has traditionally relied on burning fossil fuels onsite. Among these paths, fuels can be decarbonized, heat production processes can be made more efficient, and heat sharing business models can be expanded.

Fuel decarbonization is covered in depth in a new report for the Gas for Climate consortium by Ecofys, a Guidehouse Company. The report concludes that renewable gas—including biomethane and power-to-gas—can help achieve a net-zero carbon energy system in the European Union by 2050, while saving €138 billion annually compared to a scenario without any gas. The report mentions space heating and industrial heating as benefiting from gas especially during the coldest winter snaps, when the fuel can be dispatched in huge bursts for both heat and power.

Heat production can also be made more efficient with the use of heat pumps and a variety of combined heat and power (CHP) technologies such as fuel cells. Heat pumps are broadly adopted for heating and cooling applications and, especially in high adoption places like Europe, look to provide a compelling bridge between clean electricity and heating and cooling. Meanwhile, CHP systems are being embraced in ever-smaller applications, much smaller than traditional multi-megawatt systems. This is enabled in part by improved packaged systems in the 1 kW-100 kW range, which open massively larger markets than before. Guidehouse Insights forecasts significant growth in CHP in microgrids, and smaller package systems such as micro-CHP fuel cells ready to rise in Europe and elsewhere following significant sales in Japan.

Winning Energy Solutions Serve Multiple Sectors

Energy use in most sectors increasingly overlap. Renewable gas usage can be used for transport, electricity generation, and space heating, among other things, and heat pumps also provide a key link between electricity and heating and cooling.

As a final example, consider thermal storage systems such as those at University of California, Irvine (UCI), where 44% of total energy is used for space cooling. On a high PV penetration electrical grid that values flexibility, the cold thermal storage well pays for itself by allowing the campus to shift loads across the day, saving millions of dollars in demand charges while offering an efficient and lower carbon solution.

This type of system works well on large campuses that can share the load across many buildings—in UCI’s case, 8 million SF. But the same basic concept applies to district energy systems that dispense heat and cooling to many facilities and households, especially in certain larger cities. If there is a serious desire to keep this planet from overheating, these types of models should be embraced in ever-smaller, and more flexible, applications.