Europeans cool on heat pumps

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Heat pump sales across Europe fell by 47 per cent in the first half of the year as consumers lost enthusiasm for switching away from gas boilers, putting more pressure on the EU’s green agenda.

In the first six months of 2024, just 765,000 heat pumps were sold across the 13 major European countries, including France, Italy, Germany and Sweden, which collectively account for 80 per cent of the market, according to the European Heat Pump Association (EHPA).

Sales fell from 1.44mn in the same period last year, as fewer subsidies and lower gas prices lessened the incentive for households to switch away from gas boilers, the EHPA added.

Under plans published in 2022 after Russia’s full-scale invasion of Ukraine drove up the price of fossil fuels, the EU set a goal of installing at least 10mn more heat pumps by 2027.

Heat pumps heat or cool buildings by using electricity to transfer heat to and from the outside ground or air. They are widely seen as a solution to decarbonising household heating, when powered by renewable energy, but their adoption has been hampered by cost, a lack of qualified installers and wavering government subsidy schemes.

Germany had hoped to become a pioneer in the switch to the new technology but a law introduced last year to encourage people to replace their gas and oil-fired boilers with heat pumps prompted a massive public backlash and the government eventually retreated and watered down the proposals.

“The struggles of Europe’s heat pump sector offer a read-across to the challenges Europe is facing across its energy transition,” said Luke Sussams, an analyst at Jefferies, in a research note.

He said the faltering sales of heat pumps in the first half of the year suggested that fewer than 1.5mn units would be sold in 2024, a return to 2019 levels after a recent boom. “If the economics do not work, the consumer will not accept it. Secondly, policy certainty and consistency is paramount,” he added. 

Investments in heat pumps increased 75 per cent to €23bn between 2020 and 2023, according to Bloomberg NEF figures. However, spending on the sector has since cooled in large part thanks to a drop off in subsidies in countries including Germany and Italy.

The fall-off in sales of heat pumps comes amid concerns over the trajectory of Europe’s decarbonisation with industries arguing that the hundreds of targets set by the European Commission in its Green Deal climate law in 2019 are too strict.

Industry ministers gathered in Brussels on Thursday to discuss the state of the EU’s competitiveness, amid heavy lobbying for the car industry and the Italian minister to ease emissions standards for cars.

Paul Kenny, the head of the EHPA, called for the new European Commission to take urgent action to “reverse the slowing market”. 

The Commission has promised an “action plan” to help guide and scale-up investments into heat pumps across the bloc. The plan was due to be published at the end of 2023 but has yet to be released despite calls from 15 member states including Spain and France to “set a clear direction” for the sector in May.

Efforts to decarbonise buildings have already proved a lightning rod for anti-EU sentiment in countries such as Italy. To counter this, Commission president Ursula von der Leyen has added housing to the energy commissioner’s portfolio when the new commission starts sitting later this year, following EU wide elections in June.

Additional reporting by Guy Chazan in Berlin