Renewable technology that uses energy stored in the ground to heat buildings and provide hot water could be installed in hundreds of thousands of homes and offices by the end of the next decade, a report said today.

About 8,000 ground-source heat pump systems were operating in the UK – far fewer than in other European countries, such as Sweden, although the market was expanding rapidly and doubled last year, the Environment Agency report said.

The document concluded that the technology could be installed in 320,000 homes and businesses by 2020 with support from the government.

If enough support was given through the renewable heat incentive, which will be introduced in 2012 and pay homeowners and businesses a guaranteed price for generating renewable heat, more than 1m ground-source heat pumps systems could be put in place.

At the top end of its potential, ground-source heat technology could be installed in more than one in 10 homes and in 40% of commercial buildings, the report said.

Even if growth was limited to 320,000 homes and business – 1% of households and 11% of commercial buildings – it could provide 30% of the renewable heat the UK needed to produce to meet its 2020 target.

“Ground-source heating is a rapidly growing technology that has the potential to produce at least 30% of the country’s renewable heat needs – but it needs financial support in order to grow,” Tony Grayling, the head of climate change and sustainable development at the Environment Agency, said.

“We would like to see this technology given adequate financial support through the new renewable heat incentive to meet its full potential in the UK.”

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