Heat pumps are gaining ground in Europe – electricity prices matter

Carolin Letz, Johannes Rode and Daniel Römer

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: Heat pumps are a key technology for decarbonising domestic heat. In the past 10 years, sales of heat pumps have grown considerably in Germany and Europe. There are regional differences and heat pumps already have a very high market share particularly in northern Europe. This study examines the factors in play and analyses the influence of the relative electricity price on the diffusion of heat pumps. The empirical findings suggest that the electricity-to-gas price ratio is a relevant lever for strengthening the diffusion of heat pumps in Germany and Europe. Survey data from the KfW Energy Transition Barometer support this result, as households themselves also mention cost-effectiveness as a major factor for their use. This opens up options – particularly for a country like Germany, which also manufactures heat pumps.

Date: 2025-02-20
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Persistent link: https://EconPapers.repec.org/RePEc:dar:wpaper:153404

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