Slowdown in Heat Pump Sales in 2023: Urgent Action Needed by European Countries

Despite a strong start, the heat pump market showed signs of slowing down throughout 2023, according to the latest data from the European Heat Pump Association (EHPA).

The promising beginning of the year failed to maintain its momentum, as sales of heat pumps for space heating and hot water production decreased in the following months.

Heat Pump Sales: EHPA Records a 14% Decline Between September and December 2023

During the first quarter of the year, sales performed positively, but this trend reversed in the second and third quarters. In several European countries, the volume of sales was even lower than in the same period in 2022.

The average sales across the ten countries analyzed by EHPA showed a 14% decline in the third quarter of 2023 compared to the previous year. This negative trend is a warning sign for achieving European decarbonization targets.

There is also a risk that the €7 billion investments announced by heat pump manufacturers and component suppliers for the construction and renovation of production plants may be compromised. These investments, planned for the 2022-2025 period, were stimulated by the positive political response to heat pump technology and the increased demand recorded in 2022 and previous years.

The sales decline can be attributed primarily to several factors, including ambiguous communication from politicians and changes in government policies and subsidies, which have left consumers uncertain. Additionally, the decrease in fossil gas prices, while the cost of electricity— the primary energy source for heat pumps— remained unchanged, has made the use of heat pumps less economically advantageous.

Heat Pump Sales: According to EHPA, Government Intervention is Crucial

European and national policymakers will need to address these issues in the upcoming European Commission's heat pump action plan, scheduled for early 2024. It is crucial that national governments present concrete solutions in their national energy and climate plans.

Among the urgent actions requested from the countries is the need to make energy taxation more balanced, gradually eliminate fossil fuel subsidies, and reduce the tax burden on electricity.

Thomas Nowak, Secretary-General of EHPA, expressed concern and called for change: "Heat pumps represent the most cost-efficient and climate-neutral solution for heating and cooling. However, consumers perceive them as expensive and risky. It is essential for politicians to intervene to correct this perception, clearly commit to heat pump technology, and create favorable economic conditions for this ecological solution. As an immediate measure, it is necessary to reduce the cost of electricity for residential, commercial, and industrial applications so that it does not exceed twice the price of fossil gas."