Break-even coefficient of performance: Scenario-based analysis of industrial heat electrification feasibility in Europe

This study used the Break-even Coefficient of Performance (COP) and the subsequent Break-even temperature outside heat integration studies as performance indicators for evaluating the viability of investments in industrial heat pumps taking a top-down approach. The Break-even COP represents the minimum efficiency required for a heat pump to be considered a feasible investment, independent from the specifics of the process such as the required temperatures and availability of excess heat. The research used the Break-even COP considering operation and investment costs to explore various investment scenarios: firstly, socio-economic and private-economic risk aversion, characterized by differences in expected payback periods (investment lifetime and usual industry payback periods, respectively); secondly, the use the energy prices from recent years is compared to the use of energy prices projected using Balmorel according to the Net-Zero-Emissions scenario from the International Energy Agency. Results from the most conservative approaches reveal Break-even COPs ranging from 2.5 to 4. However, considering longer investment horizons alongside projected growth in emission prices results in Break-even COPs of less than 2. This disparity underscores the importance of utilizing such projections and adopting a less conservative approach to projections, costs, and prices in HP feasibility studies. The findings emphasize the importance of shifting decision-making perspectives on investment risks to accelerate the adoption of heat pump technology. To support this transition, policymakers should prioritize fostering industry confidence in a stable energy transition and providing reliable energy price projections, as investment risk and uncertainty are key barriers to implementing heat pumps in industrial contexts.