When considering the total cost – including the first cost and heating cost of the machine – CO2 (R744) heat pumps fare well against traditional gas boilers and biomass boilers, according to Kim G. Christensen, Managing Director at Danish OEM Fenagy.

“If you compare the heating price [EUR/MWh] and payback period, it even performs better than a biomass gas boiler,” he said.

Christensen made the business case for commercializing heat pumps based on natural refrigerants during a presentation at the ATMOsphere (ATMO) Europe Summit 2023. The conference took place September 19–20 in Brussels and was organized by ATMOsphere, publisher of R744.com.

Fenagy manufactures heat pumps that range from 300KW (85.3TR) to 3MW (853.03TR) of heating capacity and use CO2 and isobutane (R600a) as natural refrigerants.

“There have been several places where CO2 application is limited; hence, we started championing the isobutane product line next to the CO2 product line,” said Christensen.

Fenagy has generated €30 million (US$32.2 million) in revenue since launching in 2020, a sign of the broader potential of the CO2 heat pump market.

“Denmark is implementing heat pumps in several sectors, and the application figures are compelling,” said Christensen. “For instance, 62% of heat was supplied via district heating networks (DHN) in 2022, which is set to rise to 70% by 2030.”

In addition, the United Kingdom also has big goals for its DHN, which currently accounts for just 2% of the country’s total heat supply. It wants to increase that share to 20% by 2030, indicating a substantial potential for the deployment of CO2 heat pumps.

He also referred to REPowerEU, the bloc’s plan to end its dependency on Russian fossil fuels, which includes doubling the rate of deployment of heat pumps.

Heat pumps have a market potential of more than €2 billion (US $2.1 billion) annually in Northern Europe alone. Because of their efficiency, heat pumps have been touted as a win-win solution.

Selling a project

Christensen noted that it’s not merely about manufacturing heat pumps but ensuring their optimal implementation. For Fenagy, the journey starts before the installation of a heat pump and every stage is vital, from consulting about temperature refrigerant types to performance testing.

“We are not selling heat pumps; we are selling a project,” said Christensen.

For those considering the world of heat pumps, Christensen has a clear message: “You are not too late; start the business now.”

However, there exist some challenges in accessing these opportunities.

Christensen urged companies to be ready for penalties if they cannot deliver products with the same heating capacity, COP and temperature as per agreements.

“Before jumping into the market, always be careful,” he warned. “Working with big projects poses challenges in cash flows and performance deliveries.”

“You are not too late; start the heat pump business now.”

Kim G. Christensen, Managing Director at Danish OEM Fenagy.

Author Saroj Thapa