Work

The importance of heat pump cost reduction and domestic supply chain development in the presence of persisting energy price shocks

Year: 2024

Type: article

Abstract: In this paper we conduct economy-wide scenario simulations to investigate whether and how the wider economic stimulus associated with deploying heat pumps in the UK may help mitigate the macroeconomic and distributional impacts of persistently high electricity and gas prices. Our results show that expansionary processes triggered by producing and installing heat pumps can help offset contractionary pressures associated with higher energy prices. However, outcomes depend on the extent of domestic supply chain content in manufacturing heat pumps, on installation costs to households, on how and where government revenues accrue. Moreover, the relative importance of drivers varies over time. For example, higher purchase and installation costs may support a greater initial stimulus via producer and domestic supply chain gains, despite the greater cost burden on households. However, over time, cost reductions are required to deliver the most favourable economy-wide outcomes.

Source: Energy Strategy Reviews

DOI: 10.1016/j.esr.2024.101518

Authors: Antonios Katris, Karen Turner, Christian F. Calvillo, Long Zhou

Institution: University of Strathclyde

Language: English

Topic: Energy, Environment, and Transportation Policies

Subfield: Renewable Energy, Sustainability and the Environment

Field: Energy

Domain: Physical Sciences

SDGs: Affordable and clean energy, Climate action, Industry, innovation and infrastructure

Open Access status: gold

Estimated APC paid: $3,260