European heat pump sales drop in 2023, resulting in layoffs

Heat pump sales tumbled 4.7% last year in 14 countries tracked by the European Heat Pump Association (EHPA). Manufacturers are forced to cut expenses and the workforce while the European Commission delayed its action plan for the sector.

Heat pumps are one of the essential technologies for the decarbonization of buildings and the residential sector. As part of the trend of electrifying everything, they are among the drivers of demand for massive grid upgrades. But after a decade of strong growth, 2023 brought a 4.7% drop in heat pump sales, EHPA said in a report on 14 European countries.

The decline to 2.64 million units reverses the trend of steady increases every year over the previous decade. The slowdown is already forcing manufacturers to cut or reduce jobs – the changes announced so far will impact nearly 3,000 employees.

Heat pump sales declined quarter after quarter

France, Italy, Sweden, Finland, Poland, Denmark, Austria and Switzerland all saw heat pump sales drop last year. The numbers in Portugal, Belgium, Norway, the Netherlands, Spain and Germany did grow, but not enough to offset the overall decrease.

Market analysts expect the downward trend to continue way into 2024

Total sales declined in every quarter. What’s more, even in many countries that saw overall growth, quarterly sales declined towards the end of 2023, the findings showed. Market analysts expect the downward trend to continue way into 2024. On the other hand, new data from the United Kingdom, not yet included in the graphs or overall calculations, show that last year sales grew 4%.

Interest rates, policy changes weigh on investments, consumers alike

The drop in sales coincides with a delay in the launch of the European Union’s Heat Pump Action Plan. In the meantime, high interest rates and changing national policy measures are unsettling investors and consumers, EHPA noted.

“Governments increased support for people investing in heat pumps in 2022 following the energy crisis triggered by the Russian invasion of Ukraine. In 2023 much of that support was restricted or removed. This was the case in Italy, which saw one the biggest drops between 2022 and 2023 sales, for example,” the report reads.

The slowdown in heat pump sales puts the EU’s climate and energy objectives at risk, its authors warned. It includes the 2030 target of 49% renewables in heating and the 60 million heat pumps from the REPowerEU plan.

Energy taxes and levies should be addressed to reduce the price of electricity for end users, in EHPA’s view

“What’s now vital is a compass in the form of the EU Heat Pump Action Plan and subsequent national plans. These will steady the waters,” the association’s Secretary General Thomas Nowak stated.

Energy taxes and levies should be addressed to reduce the price of electricity for end users, in EHPA’s view. In 2022 gas prices were high, making electric heat pumps a more financially worthwhile investment. With the price of fossil gas coming down, and electricity often carrying a tax burden, electricity prices are sometimes as much as four times those of gas, the organization pointed out.

EHPA estimated the total heat pump stock in the EU, UK, Norway and Switzerland at 23 million.