Sales of heat pumps across Europe have plummeted by 47% in the first half of 2024, as shrinking subsidies and a decrease in gas prices have dampened consumer interest in moving away from gas boilers. This decline in sales poses a challenge to the European Union’s ambitious green energy transition goals.
According to the European Heat Pump Association (EHPA), just 765,000 heat pumps were sold in the first six months of 2024 across 13 major European countries, including France, Germany, Italy, and Sweden, which together make up 80% of the market. This marks a sharp drop from 1.44 million units sold in the same period in 2023. The EHPA attributes this fall to fewer government subsidies and lower gas prices, which have reduced the financial incentive for households to switch to heat pumps.
Following Russia’s invasion of Ukraine in 2022, which led to skyrocketing fossil fuel prices, the EU had set a target of installing at least 10 million heat pumps by 2027 as part of its strategy to decarbonize household heating. Heat pumps, which transfer heat to and from the outside air or ground using electricity, are seen as a key tool in reducing carbon emissions, especially when powered by renewable energy. However, high costs, a shortage of qualified installers, and inconsistent government support have hampered their widespread adoption.
Germany, once hopeful to lead the transition to heat pumps, faced significant public resistance after introducing a law last year to encourage the switch from gas and oil-fired boilers to heat pumps. The backlash forced the government to soften its proposals.
“The difficulties facing the heat pump sector reflect broader challenges in Europe’s energy transition,” said Luke Sussams, an analyst at Jefferies. He noted that the sluggish sales in the first half of the year suggest fewer than 1.5 million units will be sold in 2024, a regression to 2019 sales levels after a period of rapid growth. Sussams emphasized the need for sound economic reasoning and policy consistency to win consumer support for the switch to heat pumps.
Between 2020 and 2023, investments in heat pumps surged by 75% to €23 billion, according to Bloomberg NEF. However, spending has since cooled, driven largely by the reduction in subsidies in key markets like Germany and Italy. This fall in heat pump sales coincides with rising concerns about Europe’s ability to meet its decarbonization targets. Critics argue that the numerous goals set by the European Commission under its 2019 Green Deal climate law are overly stringent and difficult to meet.
Paul Kenny, head of the EHPA, has called for urgent action from the incoming European Commission to reverse the downward trend in heat pump sales. The Commission had promised an “action plan” to boost investment in the heat pump sector, but the plan, originally slated for release at the end of 2023, has yet to materialize. In May, 15 EU member states, including Spain and France, urged the Commission to provide clear guidance and direction for the industry.
Efforts to decarbonize residential buildings have also sparked anti-EU sentiments in countries like Italy. To address this, European Commission President Ursula von der Leyen has assigned the responsibility for housing to the incoming energy commissioner, in preparation for the new European Commission’s start later this year following the June EU elections.