Heat pump expansion in Germany stalls

26 September 2023

Germany’s heat pump industry has called for reductions in electricity prices in order to achieve the country’s expansion target of installing 500 000 units a year from 2024, reports online agency Clean Energy Wire. The German heat pump association (BWP) says that demand for heat pumps has fallen steeply in recent months owing to uncertainty stemming from the protracted debate on heating, and unclear funding conditions. This follows a roughly 50 % drop in applications for heat pump subsidies in the first six months of 2023 following a subsidy cut. As a result, Germany’s competitiveness as a heat pump producer has also deteriorated, the BWP added.

The association has called on political leaders to build on the favourable market dynamics of 2022 by reducing electricity prices, pointing out that the market ramp-up of low-carbon technology was in a crucial phase. “The heat pump industry has invested heavily in expanding production and training capacity and is now in a position to install the agreed 500 000 heat pumps next year,” said BWP managing director Martin Sabel. “However, if the federal government does not take any measures to counteract the reduced demand, its expansion goal will be a long way off”.

Federal heat pump funding is a good indicator of current demand as funding applications are submitted when new heat pumps are commissioned. The number of monthly funding applications has now fallen by 73 % compared to 2022. While the number of heat pump installations is increasing across Europe, Germany’s heating industry faces tough competition from North American and Asian heat pump manufacturers. “In this competitive situation, manufacturers in Germany need a clear perspective, especially a reliable domestic market that is clearly geared towards growth,” the BWP said in its statement. A reduction in Germany’s electricity tax – which is about twice as high as the European average – would therefore be required, the association argued.

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