The cost of electricity could skyrocket by 46% if homes across the country get heat pumps

A policy to install hundreds of thousands of electric heat pumps in homes across Ireland could increase electricity costs by up to 46%, according to a research paper.

n the 2021 Climate Plan, the Government plans to replace fuel oil and solid-state boilers with heat pumps powered by renewable electricity, with the objective of installing 400,000 heat pumps in existing buildings by 2030.

The government also aims to retrofit around 500,000 buildings with insulation to a B2 equivalent level by 2030.

A paper from the Institute for Economic and Social Research titled Decarbonizing Heat with Electricity: Costs, Benefits and Tradeoffs for the Irish Electricity System, examined the potential scenarios around this policy.

The paper analyzed the effects of electrifying 20% ​​and 30% of Irish residential heating demand under different policy scenarios.

The results, published in the academic journal Energy policyshowed that the cost associated with retrofitting homes to the B2 BER rating needed to support a heat pump was “by far” the largest cost driver.

The study found that the heat pump policy increased power system costs by 30pc if 20pc of heating were electrified, and by 46pc if 30pc of heating were electrified.

Lead researcher and co-author of the paper, Dr Muireann Lynch, said the high cost of retrofitting “highlights the challenges associated with decarbonizing residential heating”.

“Our current heat decarbonization policy relies on retrofits, heat pumps and renewable electricity, and it is worth considering contingency plans if not all of them necessarily materialize.”

The high cost of retrofitting and installing heat pumps compares with the relatively small increase in electricity generation. The study found that the costs of investments in power generation – such as the construction of storage batteries as well as wind, solar and fossil fuel power plants – increased by 2.5% and 5% respectively.

The cost of transmission – such as cables to carry electricity – fell slightly, by 1.5pc and 1pc respectively.

“What that might suggest is that if you increase the demand for electricity by electrifying the heating sector, then what’s happening there is that we’re actually getting heat dispersed throughout the system,” said Dr. Lynch.

“And that could mean you’re better able to balance supply and demand locally.”

The ESRI study also found that when the geographic location of the heat pump investment was chosen such that it imposed the lowest cost on the electrical system, there was a slight reduction in cost compared to a policy that saw heat pump investment at a uniform rate across the country.

The location of heat pumps has been determined by the location of heat demand, with significant investment in heat pumps in the Dublin region.

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