Whilst widely touted as the way to go for heating homes and businesses in temperate and cold regions, the uptake of heat pumps is way behind the ambition, even in Europe and most certainly the lame-duck UK.
Indeed, the European Heat Pump Association (EHPA) has warned that the EU’s 2030 climate targets will be missed by a huge margin if current trends in heat pump sales continue.
This would be a blow to Europe’s clean-tech leadership and competitiveness.
Data gathered across 21 European countries show that last year’s sales were 6.5% lower than the previous year. In fact, 2023 marked the first drop after a decade of year-on-year growth.
However, the just over 3 million heat pumps sold that year brought the total population of heat pumps in Europe’s buildings to just short of 24 million, representing a 13.7% increase on 2022’s total, says the EHPA.
If annual sales were to remain at this level (3 million a year), around 45 million heat pumps would be installed by 2030, so falling 25% short of the EU target of 60 million units installed.
But there appears to be the prospect of the EU target being missed by an even greater margin as the EHPA has reported that H1 2024 sales fell by 47% to just 765,000 versus 1.44 million for H1 2023.
So why the huge drop?
The trade body blames the slowdown on changing policies and support schemes.
“This can clearly be seen in contrasting examples like the Netherlands, where stable policies have boosted growth and Italy where a major change in the support scheme destabilised consumer confidence,” says the EHPA.
Another key reason is gas prices becoming cheaper compared to electricity, where bills are often heavily taxed.
The EHPA argues that taxes and levies should be shifted away from electricity to reboot sales.
In terms of the heat pump stock (meaning all installed heat pumps) per 1,000 households, Norway leads the way with 635, followed by Finland with 512 and Sweden with 438.
At the other end are Hungary with 12 heat pumps per 1,000 households, the UK with 15 and Slovakia with 30.
It’s just over 20 for France, the largest heat pump market in Europe which is cutting heating emissions ten times faster than the UK.
In 2023, France installed 600,000 heat pumps, compared to 55,000 in the UK.
© Supplied by IEAIn a very fresh analysis, the International Energy Agency (IEA) finds that even in poorly insulated homes, heat pumps provide energy savings compared to gas boilers, as the efficiency gains are so significant.
The IEA says heat pumps can indeed lead to a reduction in energy bills, but this depends on the cost of gas and electricity in each country.
The IEA states:
- In countries where electricity and gas prices are similar, such as Sweden, heat pumps can greatly reduce bills – by 60-90%, depending on the level of insulation.
- In countries where electricity is two to four times as expensive as gas, like in France, heat pumps can still reduce energy bills, but the gains will be smaller, especially in poorly insulated homes.
- In countries where electricity is more than quadruple the price of gas, such as the UK, switching to a heat pump results in much smaller financial benefits – and can in some cases even lead to higher bills
- As pricing mechanisms change to favour low-carbon electricity instead of gas, the financial benefits of heat pumps can become even greater.
In its global analysis of the heat pumps market, the IEA records a 3% drop in sales for 2023 after two consecutive years of double-digit growth fuelled by the most recent energy crisis.
Sales in the US plummeted 15%, Japan (one of the most mature markets for heat pumps) dropped 10%, the EU dropped 5% and only China recorded double-digit growth at 12%.
The reason for the general drop?
“This slowdown reflects broader aversion to large-ticket purchases among consumers amid higher interest rates and inflation. Heat pumps are a large investment for households, and sales are particularly sensitive to borrowing costs and consumer sentiment,” says the agency.
“At the same time, natural gas prices have mostly declined from their peaks in 2022, highlighting the need to tilt energy tariffs and taxes in favour of cleaner consumer choices.”
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