19 Sep 2023, 13:30
Edgar Meza

Heat pump expansion and producers in Germany need lower electricity prices to succeed - industry

Clean Energy Wire

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. In a statement, the German heat pump association (BWP) said demand for heat pumps has plummeted in recent months due to uncertainty stemming from the protracted debate on heating and unclear funding conditions. This follows a roughly 50 percent-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. The market ramp-up of low-carbon technology was in a crucial phase, the BWP pointed out. “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,” BWP managing director Martin Sabel said. “However, if the federal government does not take any measures to counteract the reduced demand, its expansion goal will be a long way off,” he added. The BWP estimates that sales of heat pumps could increase up 350,000 units in 2023.

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 percent compared to last year. 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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