Business Energy Glossary
What is a commercial heat pump?
A commercial heat pump is an electric heating system that extracts heat from the air, ground, or water and delivers it at higher temperature for building or process heating. Heat pumps work on the same principle as refrigeration in reverse: a refrigerant cycle absorbs heat from the source, compresses it to raise its temperature, and releases it to the building. Commercial heat pumps typically deliver 3 to 4 units of heat for every unit of electricity consumed (Coefficient of Performance, COP, of 3 to 4). Compared to gas boilers (around 90 per cent efficient), heat pumps deliver 300 to 400 per cent effective efficiency.
Heat pumps are a core technology in UK net zero strategies for commercial buildings and process heating. Falling capital costs, improving COPs, and rising gas prices have shifted the commercial case in favour of heat pumps for many applications. Understanding commercial heat pumps matters when evaluating heating replacement or new build heating strategies.
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How heat pumps work
A heat pump uses a refrigerant cycle to move heat from a lower temperature source to a higher temperature use:
- Evaporator. Refrigerant absorbs heat from the source (air, ground, water) and evaporates.
- Compressor. The compressor raises the refrigerant pressure and temperature using electric power.
- Condenser. The hot refrigerant releases heat to the building heating circuit and condenses.
- Expansion valve. The refrigerant pressure drops, cooling it back to the source temperature for re-evaporation.
The cycle continuously moves heat from the source to the building. The electricity input goes only into the compressor work; the bulk of the delivered heat comes from the source.
Types of commercial heat pump
| Type | Source | Typical COP | Best suited to |
|---|---|---|---|
| Air source (ASHP) | Outside air | 2.5-4 | Most commercial buildings |
| Ground source (GSHP) | Ground via boreholes or loops | 3.5-5 | Sites with land or space |
| Water source (WSHP) | Lake, river, aquifer | 3.5-5 | Sites near suitable water |
| Exhaust air | Building ventilation exhaust | 3-4 | Mechanically ventilated buildings |
| High-temperature industrial | Various | 2-3.5 | Process heat up to 150°C |
Coefficient of Performance (COP)
The Coefficient of Performance (COP) measures heat pump efficiency:
COP = heat delivered (kWh) / electricity consumed (kWh)
A COP of 3 means the heat pump delivers 3 kWh of heat for every 1 kWh of electricity consumed. COP depends on:
- Source temperature (warmer source = higher COP).
- Delivery temperature (lower delivery temperature = higher COP).
- Heat pump quality and design.
The Seasonal COP (SCOP) averages performance across an annual heating season and is the more useful metric for sizing and economics.
Commercial applications
Commercial heat pump applications:
- Office and retail heating. Standard ASHP serving radiators or underfloor heating.
- Hotel and leisure heating. Larger ASHP or GSHP serving hot water and space heating.
- Manufacturing process heat. High-temperature heat pumps providing process steam or hot water.
- District heating. Large heat pumps serving multi-building heat networks.
- Food and drink processing. Heat pumps for heating and cooling integrated processes.
Heat pumps work less well for process heat requirements above 150°C, which is currently the typical upper limit for industrial heat pump technology.
Heat pump economics
The economic case for heat pumps depends on the spark gap (the ratio of electricity to gas prices) and the heat pump COP:
- If electricity costs 25 p/kWh and gas costs 8 p/kWh, the spark gap is 3.1.
- For a heat pump to break even on running cost, COP must exceed the spark gap (so 3.1+).
- Modern heat pumps achieve COPs of 3 to 4, breaking even or beating gas at current UK price ratios.
- Capital cost remains higher than gas boilers; payback typically 5 to 15 years.
For new build, the additional capital cost is modest compared to retrofit. For retrofit, payback is sensitive to the existing heating system age and energy price assumptions.
Government support
UK government support for commercial heat pumps:
- Boiler Upgrade Scheme (BUS). Grants for smaller commercial installations (up to 45 kWth).
- 0 per cent VAT. On heat pump installations and accessories until March 2027.
- Industrial Energy Transformation Fund (IETF). Grants for industrial decarbonisation projects including process heat pumps.
- Public Sector Decarbonisation Scheme. Capital grants for public sector heat pump installations.
- Salix loans. Interest-free finance for public sector energy efficiency including heat pumps.
Programme eligibility, funding levels, and application processes change periodically. Latest details are at gov.uk.
a commercial heat pump FAQs
What is a commercial heat pump?
An electric heating system that extracts heat from the air, ground, or water and delivers it at higher temperature for building or process heating. Commercial heat pumps typically deliver 3 to 4 units of heat for every unit of electricity consumed.
How efficient are heat pumps?
Coefficient of Performance (COP) ranges from 2.5 to 5 depending on type and conditions. A COP of 3 means 3 kWh of heat delivered per 1 kWh of electricity consumed. This compares to 90 per cent for a gas boiler, making heat pumps 300 to 400 per cent effectively efficient.
What types of commercial heat pump are there?
Air source (ASHP), ground source (GSHP), water source (WSHP), exhaust air, and high-temperature industrial. Each has different applications, COPs, and capital cost profiles.
When does a heat pump make financial sense?
When the COP exceeds the ratio of electricity to gas prices (the spark gap). At current UK prices (electricity around 25 p/kWh, gas around 8 p/kWh), heat pumps with COP above 3 to 3.5 break even or beat gas on running costs.
How much does a commercial heat pump cost?
Highly variable by size and type. Small commercial ASHPs from £15,000 to £50,000. Larger systems serving manufacturing or district heating can run into millions. Capital cost is higher than gas boilers but supported by grant programmes.
Can heat pumps provide process heat?
Yes, for process temperatures up to 150°C using industrial heat pumps. Higher temperatures require electrification via resistance heating, hydrogen combustion, or biomass, depending on the application.
What support is available for heat pumps?
Boiler Upgrade Scheme grants (up to 45 kWth), 0 per cent VAT, Industrial Energy Transformation Fund, Public Sector Decarbonisation Scheme, and Salix loans for public sector. Programmes change periodically.
Will my electricity bill go up with a heat pump?
Yes, but typically by less than the gas saving. A heat pump replacing a gas boiler increases electricity consumption (the compressor power) but eliminates gas consumption. Net cost depends on the price ratio and COP.