GAS HEAT PUMP TECHNOLOGY AND MARKET ROADMAP

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GAS HEAT PUMP TECHNOLOGY AND MARKET ROADMAP ( gas-heat-pump-technology-and-market-roadmap )

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MARKET PARTICIPANTS They would like to see utilities provide insight into future state to avoid surprises down the road. They lack the time and resources to keep track of a plethora of programs. They find 0% financing, utility financing and leasing to be essential to breaking down first-cost barriers to adoption. They seek quick transition from pilot to full-scale program— ideally within one year. Based on the specific responses above, LDCs should consider communicating pilot and program plans to the market. Specific areas of communication may include: How much will incentives be, and for how long? Are the incentive models going to be mail-in rebates or are LDCs open to new incentive models? How different will these be across North America? Will GHPs be in a multi-year pilot phase before full-scale implementation? Are programs going to be custom or prescriptive? Will LDCs be equipped to offer on-bill financing/leasing programs/products-as-a-service programs? What efficiency and/or program requirements and requirement changes will there be and across how many territories? Technology Developer Findings To accelerate market entry, technology developers are working to build the value proposition and business case for manufacturers and investors. They are focused on securing funding, refining products and product prototypes, identifying opportunities to reduce product cost, understanding the market potential, and understanding contractor and consumer barriers to product adoption. Technology developers are challenged by policy cases for GHG reductions—designing equipment to meet policy case directives slows the time- to-market and introduces internal resource constraints. Interview findings include: Technology perceptions and commitment: The majority of technology developers are highly committed to GHP technology and are confident in the technology’s potential. Many believe HVAC professionals may be the most qualified install base for both space- and water-heating (a.k.a., combi) GHP technologies Product lifecycle process and expectations reported by technology developers: Like manufacturers, technology developers also highlighted their utilization of a six-to-seven step product stage gate process during product development, launch and refinement. These stages include Ideation/Discovery, Scoping, Business Case Development, Testing and Validation, Product Launch and Post-Launch Evaluation. Technology developers are also struggling to move through the Business Case Development stage. They are challenged by defining market size, geographic acceptance, willingness to pay, pay-back period and customer value drivers. The majority of technology developers need help convincing manufacturers there is a market that will accept GHP technologies. Internal financial and human resource constraints exist— many technology developer organizations are small nimble innovative organizations with limited human and financial resources. Many haven’t and/or are hesitant to share sales targets that will propel the business case for both pre- and post- commercialization. Product development plans reported by technology developers: Some technology developers with commercialized products wonder if they should continue investing in product development given the holes in the product’s business case. Many struggle to find markets where the technology and cost suit the market. Product and market barriers and risks reported by technology developers: Cost of product development Fuel cost Equipment and component cost Installer awareness and knowledge of installation, application and service Installer onboarding Lack of incentives and incentive commitment Presented by: Brio and GTI 23 Most commercialized products at this point are considered to be in the Testing and Validation phase of the product stage gate process.

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