Heat-pumps are energy efficient as they use a small amount of electric energy to transfer a larger amount of heat from the environment into the house. Heat-pumps replace oil burners and thus required heating energy is transformed from fossil fuel to electricity which is mainly produced by renewable resources.
The official policy in the Faroe Islands is to reduce the dependency on imported oil. An obvious possibility on this track is to replace oil burners used for space heating by heat pumps. Therefor installations of heat pumps are encouraged. The government has agreed that home owners that install heat pump systems are entitled to recover the VAT.
Heat pumps are a rather new technology in the Faroe Islands. However, more than 1000 systems have been installed in the past 10 years. Of these 1000 systems around 200 are based on ground source heat. This system requires a 200m deep hole to be drilled down into the underground rock. Heat is extracted from this hole to heat the house or building using a heat pump. The system is more expensive than other heat pumps systems, but it has higher energy efficiency and better longevity.
Three companies have been licensed for ground source heat-pump installation: