European heat pump sales are collapsing

Quarterly sales figures of heat pumps in Europe are in a slump amid a 14% drop compared to last year’s quarter, which the industry says was caused by political uncertainty and dropping gas prices.

Energy used in heating and cooling the EU’s more than 100 million buildings represents almost 50% of the bloc’s final energy consumption. Heat pumps are expected to contribute the lion’s share of reducing demand and associated greenhouse gas emissions.

There is just one problem: sales of the magical technology that turns one unit of power into three of heat by concentrating ambient energy are down 14% compared to the same quarter in 2022 across the EU’s biggest markets.

In the third quarter of 2022, some 565,000 heat pumps were sold in Europe. One year down the line, that figure has dropped to some 485,000 or by 14%. The biggest drops were recorded in Finland and Denmark, traditionally strong markets.

Strong sales figures in Germany at 120,000 and the Netherlands at 38,000 propped up the quarterly result for the market.

EHPA, the association of Europe’s heat pump producers, attributes the slump in sales to mixed messaging from politicians – like during Germany’s multi-month heat pump row – and the massive drop in natural gas prices. 

The Dutch price tracker TTF sees prices three times lower than the year before, having almost reached pre-crisis levels. 

The turn away from the bloc’s future heating mainstay spells trouble for the EU’s ability to achieve its climate targets for 2030 and beyond.

One EU target may be at risk more than any other: Europe plans to install 30 million heat pumps by 2030 as part of REPowerEU – EHPA says 60 million are necessary – in order to get rid of the bloc’s dependence on Russian gas.

“Policy must aim at reducing the cost of electricity for residential, commercial and industrial applications. It should not be more than twice the price of fossil gas,” urged Thomas Nowak, EHPA’s secretary-general.

Previous attempts at correcting the price imbalance between natural gas and electricity – much of which can be attributed to different levels of taxation – have faltered. The EU’s electricity taxation framework is stuck following serious disagreements among EU countries.

National efforts, like a push in Germany to slash electricity taxes down to near-nothing by the business-friendly liberal FDP, were similarly defeated.