Heat Pump Purchasing Guide for Mu­ni­cip­al­it­ies and Housing Companies

Four key things to know when buying a heat pump system:

• needs assessment and feasibility study
• project planning
• supervision of the work
• ensuring the system’s functionality, providing guidance on its use, in-service monitoring and optimisation.

It is important to remember that the purchase of a heat pump system is a full renovation project, and general good practices for renovation projects must be applied to the project. If carried out by the building company itself, it is a heavy project and involves considerable risks. A professional, experienced designer will be able to manage the risks, ensure a functioning system and only burden the management of the housing association to the extent necessary, i.e. in the decision-making process.

The building society should know:

• future repair needs (maintenance plan/PTS, repair programme)
• the will of the shareholders, including targets for energy efficiency and housing cost levels.

In most cases, the purchase of a heat pump system can be carried out as a completely separate project. Knowledge of the repair needs is important to ensure that the heat pump purchase can be properly integrated with future repair projects. If a heat pump system can be combined with, for example, a plumbing renovation, a ventilation renovation or a heat distribution system renewal, savings can be made in building services work and the systems can be designed to work together as well as possible.

When purchasing, it is very important to pay attention to the repair and replacement needs of the existing ventilation and heat distribution system (e.g. replacement air, ventilation fans, district heating equipment).

The procurement of a heat pump system starts with a needs/feasibility study to assess whether the system is feasible and cost-effective for the site in question.

Heat pump sales have also been boosted by the long period of low interest rates on loans, and the possibility of using the household tax credit for renovation projects. Increasing concerns about climate change could boost heat pump sales.

Significantly reduce the environmental burden

At national level, the energy savings from heat pumps contribute to a reduction in carbon dioxide emissions from electricity consumption, while reducing emissions of health-damaging fine particles. The purchase of a heat pump is a significant environmental step. From the point of view of carbon dioxide emissions from energy production and the environmental impact, the investment in a heat pump makes the most sense in electricity and oil heating applications.

Heat pumps put the brakes on rising heating costs

Energy prices have risen by a few percent per year over the long term. With a heat pump, absolute energy cost increases are much lower. The purchase of a heat pump puts a brake on the increase in heating costs for a property, and heat pumps can further reduce energy costs through the use of control systems based on the price of electricity from the exchange and possibly energy storage and even seasonal storage of heat.

Technologies of the future

The importance of heat pumps will increase in the future as demand response needs grow. The more renewable electricity is generated from solar or wind power, the more the electricity market will need to be flexible in times when weather-dependent energy is scarce. This will directly benefit those who generate their energy with heat pumps, which can be used to help store energy at times when demand is low.

The energy stored by heat pumps can be used when energy prices are high, i.e. when demand is high. Demand response opens up further savings opportunities for the heat pump owner.

Before deciding to buy a heat pump, you should find out the following to ensure a successful purchase of a heat pump system.

Operating licences

Check with the municipal building control office to see if you need a building permit. You may need permission from the electricity company to connect the equipment to the grid. The contractor will assist you with the permit or take care of all the necessary permits.

Consumption level before purchasing a heat pump

High energy consumption levels in heating improve the return on investment through economies of scale. High consumption buildings usually include sports halls, apartment blocks, terraced houses, office buildings, commercial buildings, health centres, hospitals and most schools.

Who does?

A professional designer or procurement consultant can select the most suitable options and applications and also assist the client with the necessary permits for each system. Choose a professional and reliable contractor who will deliver the system installed, preferably turnkey. Contact details can be found on the website of the Finnish Heat Pump Association.

Schedule

Allow enough time for tendering and anticipate waiting times for equipment and installations. Good system design, installation and commissioning can usually be completed in weeks, but it can take up to several months from tendering to commissioning.

Is a heat pump suitable for our property?

Almost every property can use a heat pump. Some properties use 2-3 types of heat pumps for different purposes (e.g. cooling, exhaust air heat recovery and space heating).

Profitability is influenced by many factors, but in general it can be said that profitability is improved in particular by the high energy price of the current form of heating and the large size of the building / energy consumption of the property. The type of heat distribution in the building, the temperature level of the heat distribution and the ventilation solution in use also influence which heat pump solution is best suited to the site.

The more detailed the project planning for the heat pump procurement, the more reliable and comparable the contract offers will be for the housing company. The project design is carried out by a professional designer with a proven track record of successful projects of this kind.

The project planner needs to know the following:

• information on the energy and water consumption of the housing company for the last three years
• information on average indoor air temperatures in dwellings and public spaces during the heating season
• repairs carried out and an assessment of future repair needs (PTS, repair programme) and their potential impact on energy and water use
• description, operation and condition of the existing heating system, including domestic hot water system
• description and condition of ventilation function and ventilation system (condition of ducts/ductwork, condition and service areas of fans, ventilation control and operating times, replacement air solutions)
• the designed and measured operating temperatures of the heating network
• operating temperatures of the domestic hot water system
• designed and measured exhaust air flows per fan, taking into account any ventilation gains
• description and condition of the electrical system (main switchboard, fuses, supply cable, details of any heat room distribution/group centre)
• the condition and load-bearing capacity of the upper floor/water roof
• space allowances for the system (piping, ductwork, heat pumps, heat exchangers, LTO device/equipment (heat exchangers), electrical feeds, sensor wiring)
• possible contaminants in existing structures and thermal insulation, e.g. asbestos (contaminant surveys carried out)
• agree on how to obtain the necessary baseline data for the project design phase.

The needs assessment will result in an expert evaluation, which will show:

• whether the ventilation system and heating network is suitable for a PILP system
• whether the target is large enough
• whether the PILP system should be included in the design phase of a future renovation project
• a preliminary estimate of investment costs and potential savings in heating costs.

For the solution option(s), the project planner shall provide at least the following information:

• how to implement the system at concept level
  – the technical characteristics of the system (including automation, remote management and control, remote monitoring of indoor conditions) and the impact on building components and other technical systems (need for replacement or repair, in particular for ventilation and heating systems)
  – the necessary adjustment work and the commissioning phase (including basic adjustment of the radiator network and ventilation)
  – possible harmful substances (e.g. asbestos) and their impact on implementation
  – method and timetable for implementation
• system operation, maintenance and servicing
  – life cycle assessment and equipment maintenance and servicing needs
  – implementation and organisation of monitoring, maintenance and servicing of the system
• impact on energy use per month (district heating, electricity) and on the basis for basic and energy charges (district heating, electricity)
  – when assessing energy use, account must be taken of the fact that ventilation air flows change from the baseline and that the heating system is unbalanced at baseline
• economic impact
  – an estimate of the total investment costs
  – an estimate of the impact on energy costs broken down by energy source, including power and basic charges calculated on the basis of actual energy prices and pricing models
  – maintenance and servicing costs
  – financing possibilities and indicative financing plan
  – an estimate of the impact on housing costs (management and capital charges)
• the economic profitability of the investment in relation to the chosen benchmark case
  – life cycle costs, return on investment, payback period
• the regulations and guidelines to be followed and the necessary permits and approvals to be obtained
  – building/operating permit, and whether there are any obstacles/restrictions, for example, to installing the heat recovery pipe in a casing on the building facade
  – district heating contract, district heating company’s instructions and inspection procedures for district heating plans and district heating equipment and any other boundary conditions (e.g. connection alongside district heating equipment)
  – energy efficiency requirements for renovation works
  – contractor qualifications (refrigerant, HVAC, electricity, district heating)
  – harmful substance surveys/mapping
• other impacts, such as housing during construction, indoor climate
• risks and their management.

The starting assumptions used in the economic viability analysis (e.g. length of the period under consideration, interest rate, changes in energy prices, financial costs) must be agreed with the project designer and the housing association representative. Calculations should be carried out with a range of input values to control risks (so-called sensitivity analyses), as it is difficult in practice to estimate the future.

Project planning should generate the following baseline data to guide implementation planning:

• target indoor air temperatures during the heating season, domestic hot water temperature levels and circulation pipe operation
• ventilation air flows and control, electrical energy efficiency of ventilation (specific electrical power)
• temperature levels in the heating network, with the possibility of supplementing the heating system at a later stage
• the physical dimensions of the installations and any associated limitations
• acoustic requirements/restrictions (such as noise levels), e.g. for the location of equipment
• the maximum permissible starting current of the heat pumps and the size of the electrical system with which the performance of the heat pump solution must be guaranteed
• the maximum permissible refrigerant charge for heat pumps (annual inspection requirement).

With the assistance of an expert, comparable calls for tenders will be drawn up on the basis of the project design and/or implementation design, including a request for reference projects carried out. For example, 3-5 suppliers will be invited to submit bids.

The following should be taken into account:

• whether the content of the tenders corresponds to the content of the call for tenders, including the project plan and/or implementation plans
• all contracts are made in writing
• agree who has the right to commission and approve any additional work
• precisely define the timetables for the works
• attention is paid to ensuring safety at work (safety coordinator) and responsibility for construction declarations to the tax authorities (main contractor)
• linking postal orders to the performance of the work
• agreeing on sanctions if things are not done as agreed
• assess whether there is a need to derogate from general contract terms and conditions (GTC), for example as regards guarantee periods or penalties
• taking into account, for example, the legal qualifications required by the contractor (refrigerant permits, KVV, electrical, asbestos, etc.)
• ensuring that companies meet their legal obligations, including the law on public liability and tax debt certificates
• using a legal expert to draft calls for tenders and contracts, where necessary.

When drawing up calls for tenders and awarding contracts, the aim should be to include measurable requirements and targets that will allow a concrete assessment of whether the system is delivering on its promises, in particular in terms of energy cost savings and indoor conditions.