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Europe experienced a slump in heat pump sales in 2023, according to new figures released today (18 July) by industry association EHPA – putting pressure on the next European Commission to reinvigorate a sector critical to decarbonisation efforts.
The EU’s building sector accounts for one-third of energy-related CO2 emissions, mostly due to the use of coal and gas to heat homes. Heat pumps, which use ambient heat and renewable power to warm houses, are considered key for reducing emissions.
One problem is that heat pump sales are on a downward trajectory. In 2023, sales amounted to just three million new units—a 6.5% drop from 2022 sales, according to data released by the European Heat Pump Association (EHPA).
The EU market’s saving grace was Germany, where 360,000 units were sold in 2023. This was a 58% increase on the previous year’s sales, but it may have been a blip.
The German heating association expects sales to drop back down to 200,000 units in 2024, projections released on 9 July show.
As sales slow, supply chains are contracting. German manufacturer Stiebel Eltron sent 2000 workers on furlough in May, Viessmann did so for 100 workers in July.
Germany’s goal of installing 500,000 heat pumps this year – a political target based on which Berlin urged manufacturers to build out production capacity – is out of reach according to the German heating association.
EHPA notes that European Commission modelling requires 60 million heat pumps to be installed in Europe to hit 2040 climate targets and warns that this will be missed by 30 million units on the current trajectory.
In Brussels, that means the incoming European Commission is faced with a major task: rejuvenating the EU’s slumped heat pump markets.
A major task
“The first priority for a new Energy Commissioner must be to finally release the Heat Pump Action Plan,” says EHPA’s Mélanie Auvray.
Initially slated for early 2024, the document was taken off the Commission’s agenda in late 2023. It was envisioned as a document providing high-level backing to the nascent heat pump market.
“Political support” in the form of the heat pump action plan should be the priority for the next Commission, said Richard Lowes, of clean-energy think-tank RAP and a research fellow at Exeter University, in comments to Euractiv.
Beyond the plan, which according to EHPA will be a grab-bag of policy fixes from upskilling installers to highlighting the need for new financing models, the EU’s future top energy bureaucrat faces a daunting task: fixing the gas-to-power price ratio.
European gas prices have dropped to pre-2020 levels, which means that an electricity-powered heat pump, while climate-friendly, is more expensive to run than a standard-issue gas boiler.
“Most important of all is getting the price ratio right: electricity must be no more than 2.5-times more expensive than natural gas, otherwise heat pumps will remain unattractive,” says Lowes.
“This is really the most importing thing, but it is also really difficult because it is primarily within the remit of EU countries,” explains Auvray.
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