Germany's heat pump industry calls for investment security to boost sales and meet climate targets

Heat pump sales in Germany are set to fall to around 200,000 units this year, from 350,000 in 2023, according to the German Heat Pump Association (BWP), which blames the 45 percent decline on consumer uncertainty and lack of awareness of subsidy schemes. The BWP forecasts heat pump sales of 260,000 units for 2025, and is calling on politicians to improve market conditions. 

Around 15 percent of Germany's CO2 emissions come from heating buildings, meaning the vast majority of the county's 40 million homes must switch to climate-neutral heating technology –  such as heat pumps – if the country is to reach its 2045 net-zero emissions target. Yet, a buildings energy law designed to promote this transition has been the subject of fierce debate due to the high cost of installing heat pumps. After months of wrangling, the coalition government reached a compromise in 2023, passing a less ambitious law.

"The political parties should be united by the goal of ensuring that Germany continues to be a pioneer in climate-protecting heat pump technology," BWP's managing director Martin Sabel said in a press release, arguing that political debates over the costs of the transition to climate-neutral heating were "damaging to the German economy, which depends on planning security."

BWP forecast the uptake of heat pumps under two different scenarios. In a business-as-usual scenario, the main incentive to install heat pumps is rising fossil-fuel energy costs – in part due to the European Emissions Trading System II taking effect in the buildings sector in 2027. The BWP says this would result in annual heat pump installations rising to 500,000 units in 2030 – insufficient for reaching climate targets in the building sector.

In the second "ambitious" scenario, the new German government, which will come into office following elections next year, would not just rely on traditional heating systems becoming more expensive to run, but actively reduce costs associated with heat pumps: increasing subsidies and reducing electricity prices by lowering taxes and grid fees. This, the BWP says, could result in annual heat pump sales hitting the 500,000-unit mark by 2027.