Electricity price to promote heat pump expansion

09/19/2023

Source: Energy & Management Powernews

On the occasion of the third heat pump summit at the Federal Ministry of Economics and Technology, the industry states a slump in demand. Blame are the heating debate and the unclear promotion future.

The long debate around the building energy law (GEG) and the uncertainty about the promotion conditions valid starting from the coming year would have let the demand for heat pumps break down strongly. Thus also the competitive situation of the production location Germany worsened, criticized the Federal association heat pump (BWP) on the occasion of the third heat pump summit in the Federal Ministry of Economics. Therefore the federal policy should tie up over reliefs with the electricity price to the good market dynamics of the year 2022, in order to reach the German climatic protection goals.

"The heat pump industry invested massively into the development of production and training capacities and is now in the position to install in the coming year the agreed upon 500,000 heat pumps", said BWP managing director Martin Sabel. However, if the German government does not take action now to counteract the drop in demand, its expansion target will move into the distant future, he warned.

The BWP estimates that sales of heat pumps are likely to rise to around 330-350,000 units in 2023. However, it said this is a result of very strong demand from 2022 and expanded production capacity by manufacturers. The heat pump subsidy from the German Federal Office of Economics and Export Control (BAFA), on the other hand, is a better indicator of current demand, he said, because subsidy applications are submitted immediately before a new heat pump is commissioned. The number of monthly applications for subsidies had fallen by 73 percent compared with the previous year.

In view of the dynamic situation, BWP commissioned the consulting firm PWC to analyze the current situation in the industry. According to first results of this study the heat pump offensive is at a fork in the road. On the one hand the trend is marked to the heat pump. The installation numbers rose European-wide, heat pumps are the first alternative to the heating with natural gas and fuel oil.

On the other hand the heating industry is with the conversion of fossil heating engineering to heat pumps in a hard competition with competitors from North America and Asia. In this competitive situation, manufacturers in Germany need a clear perspective, in particular a reliable domestic market clearly geared to growth, BWP demands.

According to the PWC study, consistent measures to revive demand for heat pumps and build on the good momentum of 2022 are crucial for this. In addition the location Germany must become more attractive and the begun development of the manufacturing capacities with attractive basic conditions in similar way be supported, as this succeeds in North America and Asia, in addition, in other parts of Europe.

In the first place the BWP demands therefore the lowering of the electricity tax to the European-legal minimum. BWP managing director Sabel said, "The state share of the electricity price in Germany is about twice as high as the European average." Electricity is still far more heavily burdened with taxes and levies than fossil natural gas, he added. "We do not demand special treatment, but only fair competitive conditions," Sabel said.

After the heating debate, people needed a clear sign that switching from gas and oil to heat pumps would quickly pay for itself through favorable operating costs. Therefore the BWP demands in addition that in heat pumps used river should profit from a lowered value added tax. The horizon of the current debate on the industrial electricity price should therefore be extended to end consumers, he said.

Author: Susanne Harmsen