Heating is electrifying rapidly, and heat pumps have become a serious option for an increasing number of properties. But what does heat pump-based heating as a service actually involve, and when is it genuinely a sensible choice?
In this article, our expert Timo Jokila takes an in-depth look at the subject. We explain which properties suit heating as a service, which technical and financial factors need consideration, and how a risk-free energy service works in practice.
A service model delivers savings immediately
Properties often consider heat pumps when upgrading their heating systems. Solutions previously installed mainly in detached houses have grown over the years and become viable options for housing companies and industrial, logistics and office properties. Heat pumps are at the heart of our energy service.
Heat pump-based heating as a service offers property owners several advantages. First, improved energy efficiency improves the property’s finances. With the service model, the owner starts saving from day one.
Second, reducing fossil fuel use improves the property’s environmental responsibility and helps combat climate change. Third, switching to heat production as a service frees the owner’s resources from heating-related maintenance and repair investments.
With an energy service, it is not a question of investment or payback time, because the property owner does not invest in the technology or its maintenance. It is a service model with a monthly charge.
Weighing the options carefully
A heat pump-based energy service suits properties with annual energy demand exceeding 500 megawatt-hours. For housing companies, this means those with more than 50 apartments.
When assessing a property’s suitability, we first look at whether ventilation is mechanical or natural. Natural ventilation effectively rules out heat recovery from extract air.
Natural ventilation is fundamentally very energy-efficient, and it is not worth converting it to mechanical ventilation just to recover heat. Once heat recovery has been ruled out, we assess whether a ground-source or air-to-water heat pump is the more sensible solution.
An air-to-water heat pump is often the most cost-effective option when building a new heating system. It delivers the greatest amount of energy for the lowest capital outlay.
The coldest winter weather is a challenge for this technology. However, the assessment should always focus primarily on the share of annual energy demand covered, rather than peak capacity. This approach allows us to build the most profitable long-term service solution for our customer.
For an air-to-water heat pump, we need to assess its energy coverage and which parallel energy source will supplement it in the coldest weather. In densely built residential areas, the substantial noise from air-to-water heat pumps must also be considered. A unit cannot be placed in a hard-surfaced courtyard, as soundproofing it would be prohibitively expensive.
If ground-source heating is selected, the longer contract periods compared with air-to-water heat pumps must be considered, because the equipment and its commissioning cost significantly more. This is why we typically discuss 30-year lifecycle agreements. During the long contract, the housing company can buy the equipment if it wishes.
Ground-source heating solutions are more sustainable in the long term than air-to-water heat pumps for three reasons. Air-to-water heat pumps have a lower SCOP (seasonal coefficient of performance), cannot meet winter peak loads, and are not as durable as ground-source solutions.
A backup system is always needed
In Finland, we prepare for heating demand even in the coldest weather, for which it is not sensible to size heat pumps. Heat pumps must therefore always have another energy source alongside them. District heating should be avoided as a backup heat source: its annual capacity charge is determined by peak demand, which significantly increases the total cost.
An electric boiler typically supplements ground-source heating, and electricity can also provide backup heat at sites with air-to-water heat pumps. Biogas or natural gas can also be used as backup, depending on the property’s existing equipment and location.
Gas still plays an important role alongside heat pumps. If a housing company already has a gas connection, gas is a good source of backup energy. Our service supports using gas where it is already available.
We have also delivered sites where air-to-water heat pumps operate alongside both electricity and gas solutions. The property’s heat source is then switched to whichever is most economical. By switching energy sources flexibly and participating in electricity reserve markets, properties can earn real income.
A low-risk solution
When a property owner chooses an energy service, cost-effectiveness, ease of use and reliable operation are often the main reasons for proceeding. With the service provider taking responsibility from design and implementation through to commissioning and maintenance, the owner is spared many decisions and difficulties.
For a housing company, heating as a service is a sensible choice because it does not require an investment funded by a loan. Many shareholders do not want additional debt. Finland also has many housing companies that struggle to obtain loans because their debt has grown while their property’s collateral value has fallen. In these cases, an energy service is a well-founded choice when upgrading the heating system.
When a housing company selects an energy service, we sign an agreement committing to delivery within 5–7 months. During this period, we take the project from ordering components through to commissioning the system.
I would also emphasise the low risk of an energy service. Its costs are the company’s operating expenses rather than financing costs. Security comes from linking fixed service costs to the cost-of-living index and variable costs to electricity or gas prices. We also give the heat pumps an output guarantee for the entire lifecycle agreement.
Experience with a wide range of solutions
Switching from district heating to heat pumps has become sensible in places such as Helsinki, where district heating is clearly more expensive than heat produced by heat pumps. There, it is financially worthwhile for large housing companies to enter into 30-year ground-source heating agreements.
For more than five years, we have delivered air-to-water heat pump solutions not only for housing companies but also for industrial properties, logistics facilities and port buildings. We have completed dozens of projects using different technologies. In commercial premises, air-to-water heat pumps are excellent for cooling as well as heating.
In the current economic climate, a modern energy service is an excellent alternative to traditional heating for medium-sized properties in different types of use.
We have the experience to offer a cost-effective energy service for your property!
Get in touch and I will tell you more. I am Timo Jokila, a heating and energy services professional with many years of experience. I understand properties’ heating needs and will work with you to find the best solution. 040 702 1439, timo.jokila@aurisenergia.fi