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Energy: Customers are waiting: Heat pump market is not picking up

Energy: Customers are waiting: Heat pump market is not picking up

Get off the heat pump rollercoaster: first a boom, now disillusionment. Sales figures are falling far short of expectations. What does that have to do with the regulars’ table.

The heat pump is supposed to play a key role in the “heat transition” – but the market is not gaining momentum. On the contrary: sales have collapsed. Impatience is growing in the industry. Customers are waiting. “The uncertainty is palpable every day for heating contractors across the country,” said Frank Ebisch, spokesman for the Central Association of Sanitary, Heating and Air Conditioning. The Federal Association of the German Heating Industry (BDH) speaks of a “challenging” market situation. “The companies have made investments amounting to billions in some cases.”

Targets are missed

According to BDH figures, heat pump sales fell by 52 percent to 46,000 units in the first quarter, with the overall market declining compared to the previous year. The industry expects around 200,000 units to be sold for the year as a whole. This means that the market is falling well short of expectations. The federal government had set a target of installing 500,000 heat pumps every year from 2024 onwards.

Industry sees great uncertainty among customers

The lengthy and public debate about the new Building Energy Act (GEG) has squandered a lot of consumer trust when it comes to modernizing heating systems, said a BDH spokesperson. “In addition, people currently know far too little about the GEG-compliant technical solutions and the new funding framework.”

The sharp drop in demand compared to the previous year is due to a number of factors, said Martin Sabel, Managing Director of the German Heat Pump Association. “Just two years ago, end users were very worried about the price and security of supply for gas and oil. Many of them are no longer concerned about this, although gas prices have fallen but have become quite unstable depending on the global situation.”

In addition, CO2 prices would continue to rise, possibly even dramatically from 2027 onwards due to the European certificate trading. In addition, the discussion surrounding the GEG and municipal heat planning has led to great uncertainty and a wait-and-see attitude among many homeowners.

Heating law and funding

After fierce political disputes, including in the traffic light coalition, the GEG – also known as the Heating Act – came into force at the beginning of 2024. The aim is to make significant progress in climate protection in the building sector. The law generally stipulates that from 2024 onwards, every newly installed heating system must be powered by 65 percent renewable energy. However, the regulations initially only apply to new buildings in a new development area. Functioning heating systems can continue to be operated.

The key point for existing buildings is municipal heating planning. This should be available in large cities from mid-2026 and for the remaining municipalities from mid-2028. Homeowners should then have clarity as to whether they will be connected to a district heating network, for example, or whether they should look for their own decentralized solutions for a new heating system – for example a heat pump.

Is heat planning slowing down the heat pump market?

But the industry fears that heat planning could slow down the heat pump market for the time being. “Investors willing to modernize are waiting, watching the heat planning that is starting in the municipalities and, if in doubt, ordering gas or oil heating systems,” said Ebisch. Politicians must be “honest” about municipal heat planning and the expansion of district heating, said Sabel. “Because it is already clear in the vast majority of supply areas that building owners will have to look for a decentralized form of climate-neutral heating.”

Regaining regulars’ table sovereignty

“In the summer of 2022, many people knew: I want to move away from natural gas and the heat pump is the solution,” said Tillmann von Schroeter, managing director of the heating manufacturer Vaillant Germany. “At the regulars’ table, the motto was: ‘Heat pump, heat pump, heat pump.'” Property owners should now take a sober look at the situation. “We have to get off this rollercoaster in which the heat pump was first portrayed as a panacea and then wrongly portrayed as an unsuitable and very expensive technology.”

Waiting for the municipal heating plan makes no sense. “If I, as a homeowner, have space to install a heat pump, that is the best solution for most properties,” said von Schroeter. “The costs for installation, including subsidies, are comparable to the costs for installing a gas or oil heating system. The running costs are lower in the long term.” And the value of the property increases. “The heat pump is therefore a sensible investment for me, my grandchildren and my house. If the regulars’ table knows that again, we will have taken a giant step.”

Better information about funding?

When switching to a climate-friendly heating system, a maximum of 70 percent of the subsidy is possible. In addition to a basic subsidy, there is a speed bonus and an income bonus. The maximum investment costs eligible for subsidies are 30,000 euros for a single-family home.

However, from the industry’s point of view, this does not seem to have reached many households yet. “We expect the federal government to step up its efforts to provide information about the funding program and the legal framework following the GEG amendment,” said Sabel. There is no doubt that federal funding has been greatly improved. The BDH is also calling on politicians to launch a “broad-based” communications campaign.

Mario Kohle, head of the company Enpal, which also sells heat pumps, would like to see the bureaucracy of the subsidy simplified. You need income tax returns from the last two years to receive the income bonus. “But millions of pensioners don’t even file an income tax return. We need another solution for that. And the second thing: I think what politicians can do is educate people. Many people believe that heat pumps would not work in existing buildings or without underfloor heating. In reality, they work very well and efficiently in most buildings.”

Source: Stern

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