Review of Business Models for Industrial Heat Pumps

Abstract

The heat pump market is experiencing remarkable growth and rapidly expanding in various sectors. Industrial heat pumps are an emerging technology for electrifying and decarbonizing the heat supply, such as hot water, hot air, and steam. However, integrating industrial heat pumps into business models is not yet common. As a result, little research has been conducted linking business model frameworks to the rapidly evolving heat pump sector. Besides, there are challenges in the transition from fossil fuel heating to electrical-driven heat pumps, including unfavorable electricity-to-gas price ratios, regulatory issues, alternative heating technologies, low maturity of services, the requirement for tailor-made designs, more complex integration principles, simultaneous need for excess heat, and higher CAPEX (compared to fossil or electric boilers). This study reviews business models for industrial heat pumps based on scientific literature and interview results with manufacturers as part of the EU Horizon project PUSH2HEAT. The goal is to explore innovative business models that could emerge from industrial heat pumps based on the changing framework conditions. First, the status of business models is reviewed to identify gaps in the academic literature. Next, ideation inputs are considered from case studies on high-temperature heat pumps, analogies to other markets such as domestic heat pumps, large-scale heat pumps for district heating networks, waste heat recovery, combined heat and power generation, as well as lessons from other innovative business models in the energy sector (e.g., energy contracting, heat as a service). Then, various players in the value chain (e.g., planners, manufacturers, integrators, installers, service providers, etc.), their capabilities, and the added value will be analyzed. Finally, a short list of business models will serve as a basis for decision-making for existing players, such as utilities and new companies considering entering the heat market.