Market Potential for Heat Pump Assisted Hot Water Systems in Food Service Facilities

Electrifying the building sector is a critical step toward meeting California’s decarbonization goals. Gas-fired water heating for foodservice applications represents 340 million therms of consumption per year, presenting a significant electrification opportunity through the application of electric air-source heat pump water heaters (HPWH). Currently, HPWH used in new buildings or replacement applications in existing foodservice facilities face extensive regulatory barriers. Heat pump water heating is a fairly new technology, and state, county, and city health departments may effectively disallow their use due to out-of-date sizing guidelines. These government entities may allow a facility to use a HPWH if it is oversized 300 percent to 400 percent beyond the heating output requirements of conventional heaters. Using a heat pump and storage tank upstream, in series with the existing approved conventional water heater in an “assist” fashion, is one way to overcome current regulatory barriers in most foodservice facilities with medium to large hot water loads. In facilities with small hot water loads, there is a regulatory path to use large, residential 80 gallon or light, commercial 120 gallon integrated heat pump/electric resistance hybrid water heaters. The Research Team interviewed seven subject matter experts (SMEs) and three restaurant owner/operators who provided the following key drivers and barriers for adopting heat pump water heating in foodservice facilities: Drivers: Heat pump water heating provides a path to electrification which aligns with some companies’ sustainability goals as the discharge cooled air released by HPWHs can be used to cool the kitchen, increase resiliency, and (particularly if the existing technology is electric resistance water heating) lower operating costs. Barriers: Heat pump water heating often has higher upfront costs. It requires additional equipment space (particularly in an assist scenario) and can increase noise. The health department regulation barrier could be lower for a heat pump assist configuration, as it overcomes the output temperature limitation of a “heat pump only” hot water system. The SMEs suggested that high upfront costs (heat pump equipment, electrical upgrades, etc.) are potential barriers for hard-to-reach (HTR) foodservice operators and owners and those from disadvantaged communities. Both restaurant operator interviews also indicated a lack of awareness of the costs and benefits of heat pump technology. The interviews and the literature review conducted by the Research Team provided information on how foodservice facilities can incorporate heat pump water heating technology, either independently or in an assist configuration. The literature review and interviews also identified a selection of case studies where facilities have installed, or plan to install, a HPWH; some of these case studies reinforced the aforementioned barriers to HPWH adoption since in some cases, the HPWH installation was ultimately denied by local code officials. Certain types of foodservice facilities are well-positioned to overcome barriers, though, or be particularly motivated by the drivers including facilities with abundant extra space, very small hot water loads, spare electrical capacity, high radiant cooking loads, or owners/operators who are committed to acting on their sustainability goals. New construction facilities are most likely to be the best positioned to use a heat pump assisted water heater (HPaWH) system, because the facility could be designed to accommodate the space requirements and electrical needs of the system, and could also use an integrated design approach that downsizes the gas water heater and makes use of the waste heat from the HPWH to cool the kitchen. For existing facilities, a minority of facilities have characteristics of likely early adopters, which include those with electric resistance water heaters, abundant space and spare electrical capacity, small water heating needs (such as coffee shops or delis), and those that consider sustainability in decision making processes. While HPWH systems were cited by several SMEs as an ultimate goal, a HPaWH system takes a step closer to full decarbonization as the industry transitions from full dependency on conventional water heaters. Emphasizing the HPaWH alternative to full HPWH adoption provides health departments, utilities, municipalities, and the state time to increase familiarity with heat pump hot water heating, reduce installation and operating costs, and address other barriers to market adoption in this challenging sector. Field demonstration projects could provide an important example to illustrate benefits and better characterize costs, and—in the long term—utility programs and rebates would be important to accelerate adoption.