Water source heat pump for business: open loop, closed loop and the permits involved

What a water source heat pump is

A water source heat pump is a heat pump whose heat source is water rather than outside air or soil. Water holds heat well and, in a river, canal, lake, dock or aquifer, its temperature varies less across the year than air temperature does. That steadier source is the main engineering attraction: the unit does not have to work against the coldest air on the coldest days, and it needs no outdoor fan coil or defrost cycle in the way an air-source unit does. How much that helps your site depends on the water, the flow temperature your building needs and the design, so treat it as a reason to investigate rather than a promised saving.

For a business the phrase covers three quite different arrangements, set out below. They share a heat pump but differ sharply in permissions, risk and cost, so it is worth being clear which one a supplier is describing. For the commercial air-source alternative see the air-source heat pump guide, and for a borehole or buried-loop alternative see the ground-source guide.

Open loop, closed loop and water-loop networks

Open loop. Water is pumped from an abstraction point, which may be a borehole into an aquifer or an intake on a river, canal or lake. It passes through a heat exchanger, where the heat pump takes heat from it, and the cooler water is then returned to the aquifer or to the surface water. GOV.UK describes open loop systems in these terms: they pump water from the ground or from nearby surface water, use it for heating or cooling, then return it. Because water is physically moved in and out of the environment, this is the route with the most regulatory attention.

Closed loop in water. A sealed loop of pipe containing a heat-transfer fluid is placed in a lake, dock, canal or river, or in a borehole. The fluid circulates between the loop and the heat pump, and no site water is abstracted. GOV.UK states that closed loop systems need neither groundwater investigation consent nor an abstraction licence, though since 2 October 2023 a discharge permit may be needed, so check the closed loop guidance for your design.

Water-loop or ambient networks. This is a different use of the word “water”. In an ambient loop, a shared pipe carries water at a near-ground temperature around several buildings, and each building has its own heat pump taking heat from, or rejecting heat to, that loop. The loop itself may be fed from a river, borehole field or waste heat, but it is a distribution network rather than a heat source. If your interest is several buildings sharing one circuit, the heat networks and ambient loops guide is the right starting point; a single-building water source system is the topic here.

When a water source system suits a business

Water source heat pumps are a site-specific option, not a general one. The conditions that make them worth looking at are:

• The water is on or next to your land. A river, canal, lake, dock or reservoir that you can lawfully use, or an aquifer under your site, is the starting requirement. Without it, the idea is not available.
• Consistent supply. Surface water can vary in level, flow and temperature, and aquifers differ in how much they yield. A source that cannot deliver the flow your peak load needs, reliably, is a weak candidate.
• Large, steady loads. Permissions, investigation and plant make a water source scheme heavy to set up. That effort is easier to justify for a large building or campus with a high annual heat demand, possibly with cooling as well, than for a small unit.
• Both heating and cooling. Where a site needs cooling too, water can serve as a heat sink in summer, which is one reason open loop schemes have appeared at canalside and dockside commercial sites.
• The building can run at a modest flow temperature. As with any heat pump, a lower flow temperature raises efficiency; the SCOP guide explains why.

If you have no suitable water, or only a small load, an air-source or conventional ground-source system is usually simpler. Hot water duty is a separate design question covered in the commercial hot water heat pump guide.

The England permissions route

These notes describe England and are taken from Environment Agency guidance on GOV.UK. Wales, Scotland and Northern Ireland have their own regulators and rules, and the guidance changes, so read the current page before you rely on any of this. The GOV.UK page “Open loop heat pump systems” lists the approvals an open loop system may need:

1. Groundwater investigation consent. Needed before drilling or test pumping an abstraction borehole for a ground source scheme. It is the first step, because it is how the available water is proved.
2. Abstraction licence. GOV.UK says one is needed if you abstract more than 20 cubic metres per day from surface water or groundwater. Below that threshold a licence is not required on that basis, but the other approvals can still apply.
3. Discharge permit or exemption. An environmental permit is needed to return the water, unless a registered or low-risk exemption applies. Exemptions are tied to system type and daily volume and have conditions, so they are not automatic.
4. Flood risk activity permit or ordinary watercourse consent. Needed for works in, over or near a main river, a flood defence or a sea defence; on an ordinary watercourse the consent comes from the council or internal drainage board.

Separately, an impounding licence is needed to create or alter an impoundment structure such as a sluice, weir or dam, which is relevant only if your scheme involves changing such a structure. For the licence rules see GOV.UK on applying for a water abstraction or impoundment licence.

The Environment Agency also publishes groundwater source protection zones, which show the contamination risk to sources used for drinking water. A site inside one is a reason to talk to the regulator early; the zone map is on the Magic mapping service. Pre-application advice is available for both abstraction licences and environmental permits, and asking for it before you spend on design is sensible.

Where the water is a canal, the waterway is typically owned or managed by a navigation authority, and in England and Wales that is often the Canal & River Trust. The Trust says canal water can heat and cool nearby buildings using water-source heat pumps. The Environment Agency permissions above are a separate requirement, and we have not verified the Trust’s commercial terms, so contact it directly before assuming access. The same applies to any river, dock or lake owned by someone else.

Water quality, fouling and maintenance

Open loop is not just a permissions problem. The water itself can cause trouble, and this is the most common reason an apparently good water source site turns out to be hard to run.

• Fouling and scaling. Silt, algae, biological growth and mineral deposits can build up on heat exchangers and pipework, cutting heat transfer and raising pumping effort. Groundwater chemistry, such as dissolved iron, can also clog boreholes and exchangers.
• Corrosion. Brackish, dockside or mineral-rich water can attack some materials, so the wetted materials need to suit the water analysis.
• Debris and ecology. Surface intakes need screening, and fish and eel protection can be a licence consideration. GOV.UK mentions fish pass and eel passage obligations as part of the licensing checks.
• Isolation. A separating heat exchanger between site water and the refrigerant circuit is common practice, so that fouling is confined to something that can be cleaned.
• Ongoing duty. Expect regular inspection, cleaning and water testing, plus pump upkeep. Closed loops avoid most of this but still need monitoring.

No servicing interval or cost is stated here because it varies by site and design. Ask for the maintenance regime and its cost to be written into any quotation. The wider cost picture is in the cost guide.

Ground investigation, planning and electricity supply

Investigation. An aquifer scheme depends on hydrogeology: how much water a borehole can yield, the water level, temperature and chemistry, and where the returned water goes. In practice that means drilling and test pumping, which is why groundwater investigation consent comes first. For surface water, the equivalent is a record of flow or level, temperature range and quality over the seasons. A scheme should not be sized from a desk estimate alone. Proper load sizing comes first, because the abstraction volume you apply for follows from the heat you need.

Planning. In England, Part 14 Class M gives permitted development rights for water source heat pumps on non-domestic premises (Class L does the same for ground source), with conditions, while the air source rights are for homes only. For commercial premises, check with the local planning authority whether you need permission, particularly for intake structures, plant buildings or works near a watercourse. This guide does not give a planning conclusion for any site.

Electricity. A water source heat pump still draws electricity at the building, and a large one may need a network upgrade. Ask your distribution network operator early; see electrical supply and DNO upgrades.

Grants: the Boiler Upgrade Scheme question

Current Boiler Upgrade Scheme rules cover small non-domestic buildings in England and Wales, with a limit of 45 kWth for a single heat pump, up to 70 kWth for a multi-heat-pump system serving one property, and up to 300 kWth for a shared ground loop where each heat pump is no more than 45 kWth. GOV.UK lists water source heat pumps under the ground source grant, but the size limits, MCS installation and applicant rules still apply, and the open-loop abstraction and discharge consents sit outside the grant. Ask your installer to confirm eligibility in writing. Check the GOV.UK scheme page and the Ofgem installer guidance, and ask any installer to confirm eligibility in writing before you rely on a grant. Funding that has closed is covered on the grants and funding page, and the scheme basics are in the Boiler Upgrade Scheme guide.

Decision checklist

1. Do you control, or can you lawfully access, a river, canal, lake, dock or aquifer at the site?
2. Is your annual heat demand large and steady enough to justify investigation and permissions, and have you sized the peak load properly?
3. Would closed loop avoid abstraction and the licence route, and is the water body big enough to take the loop?
4. Will the abstraction exceed 20 cubic metres per day, and have you asked the Environment Agency about pre-application advice?
5. Where will the water be returned, and does an exemption or a permit apply?
6. Is the site in a groundwater source protection zone, or near a main river or flood defence?
7. Has the water been tested for fouling, scaling and corrosion risk, and is a separating heat exchanger specified?
8. Who owns the water body and the bank, and what are their terms?
9. Have planning, electricity supply and grant eligibility each been checked in writing?
10. Have you compared the result with air-source and ground-source options on running cost, using your own tariffs?

If the answers point towards a viable site, you can send your details; we reply by email. Check any installer’s MCS and other credentials on the public registers before you sign.