While heat pumps are viewed as a key solution for reducing Europe’s reliance on fossil fuels, their adoption remains slower than expected, Ember has said in a new report.
According to Ember, cost is the largest factor influencing the uptake of heat pumps, with the lifetime cost of heat pumps remaining ‘generally higher’ than that of gas boilers, a factor that will need to be addressed to ‘unlock the electrification of heat’.
As Ember noted, the case for increased adoption of heat pumps is strong, with close to a third (30%) of EU household heating reliant on imported gas, leaving many households vulnerable to volatile international markets.
In addition, between 60% and 70% of heat pumps sold in Europe are produced domestically, providing a good platform for growth.
However, associated costs can vary significantly from country to country – it can cost twice as much to install a heat pump in Germany as it does in the UK; around €12,000 in the UK compared with nearly €30,000 in Germany, before subsidies come into play.
‘Strategic rethink’
“Unlocking the full potential of heat pumps requires a strategic rethink of electricity pricing across all Member States,” commented Tom Harrison, electricity transition analyst, Ember.
“Removing outdated policy costs and ensuring that electricity prices are competitive with gas can help transform consumer choices, accelerate the shift away from costly fuel imports and invigorate Europe’s domestic heat pump industry. This is a pivotal opportunity for forward-thinking policymakers to seize, driving progress toward REPowerEU’s 2030 heat pump goals.”
Ember’s analysis also shows that the ratio between electricity and gas prices is a key factor influencing adoption of heat pumps, with the average electricity-to-gas price ratio standing at 2.85 in 2024.
In countries such as the Netherlands, where the ratio is notably lower (1.4), heat pump sales per 1,000 households are triple that of countries such as Germany, Poland or Hungary, where the ratio is higher than three.
Heat pumps are around two to three times more efficient than a gas boiler, and require up to three times less input energy than a gas boiler to output the same amount of heat, Ember noted. However, a new gas boiler costs around €3,000, significantly cheaper than installing a heat pump.
Recommended steps
Ember suggests a number of measures to unlock heat pump deployment, including removing policy costs and other taxes from electricity to general taxation; transferring policy costs and other taxes from electricity to gas; cutting VAT to the reduced rate of 5%; and reducing network costs on consumer bills using government funds.
‘Reducing the energy and supply costs of electricity is crucial to lowering consumer costs and unlocking not only heat pumps, but all types of electrification across Europe,’ it said.
‘In the near term, rebalancing energy costs through policy choices could be seen as low-hanging fruit in the push to electrify Europe. By cutting the costs of electricity and lowering the price ratio with gas, heat pumps can become more affordable compared with fossil heating.’ Read more here.
