European heat pump demand shows signs of recovery with policy and subsidy reforms driving growth in select markets

Preliminary figures from the European Heat Pump Association show a modest recovery in residential heat pump demand across parts of Europe in 2025, with sales rising by about 11% in the 16 countries covered by the association.

According to the EHPA, roughly 2.63 million residential heat pumps were sold in those markets last year, up from about 2.38 million in 2024, bringing the association’s estimate of the European installed base to roughly 28 million units. The organisation points to more stable subsidy frameworks and measures that have eased the cost of running electric heating , notably reductions in taxes on electricity bills in several markets , as key drivers of the uptick.

The improvement was uneven. Twelve of the 16 countries tracked reported year-on-year increases, including Belgium, where a mix of new limits on fossil fuel heating and a reduced VAT for heat pumps in new buildings coincided with a 7% rise to about 111,000 units. The UK also expanded volumes, with sales rising about 27% to roughly 125,000 units, a result the EHPA linked to ongoing schemes such as the Boiler Upgrade Scheme and the Warm Homes plan. Homebuilding reports that separate planning-permission reforms in the UK , including exemptions for many installations sited within one metre of a boundary , have helped accelerate uptake, and energy firm Aira said Boiler Upgrade Scheme grant applications in the first half of 2025 rose by around 54% compared with 2024.

EHPA director general Paul Kenny framed tax policy as central to accelerating deployment. “It’s government 101 that taxation is how you change behaviour,” he said, urging governments to move faster to lower taxes on heat pumps and electricity so the technology becomes “the most competitive choice.” Kenny also described the European Commission’s forthcoming heating and cooling strategy and an electrification action plan as “great opportunities” to press national policymakers to cut electricity taxation more rapidly.

The association’s data underline stark disparities in penetration. Norway, Finland and Sweden remain the leaders on a per-household basis, with Nordic countries selling more than 30 units per 1,000 households; separate EHPA analysis highlights Norway at roughly 632 units per 1,000 households and Finland at about 524, figures the association uses to argue how much additional demand could be unlocked if other markets closed the gap. By contrast, Poland and the UK lag on a per-household metric, and the EHPA noted that misinformation in Poland and budgetary uncertainty around support schemes in France depressed sales in those markets in 2025.

The 2025 rebound follows a sharp contraction in 2024. Industry reporting and EHPA releases set out a large fall in sales the previous year , declines of 22–23% across wider samples , with some markets hit hard: Belgium and Germany experienced particularly steep reductions in 2024 in several accounts. Those 2024 setbacks have been attributed to policy uncertainty, weakened incentives and the competitive impact of low-cost subsidised gas, which prompted production cuts and job losses in parts of the supply chain.

Germany’s market, however, has shown signs of returning confidence. The EHPA notes that last year heat pumps represented nearly half of all heat generators sold in Germany, a milestone the association links to improved consumer confidence after earlier politicisation of heating policy and to the technology’s contribution to energy security.

For industrial decarbonisation stakeholders, the mixed picture underscores two operational imperatives. First, stable, predictable policy and fiscal settings remain pivotal to sustaining demand , government programmes and tax treatment materially shift investment and procurement decisions across residential and commercial projects. Second, uneven national performances point to substantial latent demand; if high-penetration markets like Norway were a template for the rest of Europe, the EHPA argues, sales could be multiple times current volumes, a prospect that would reshape manufacturing, installation capacity and supply chains.

The 16 countries surveyed by the association were Austria, Belgium, the Czech Republic, Denmark, Spain, Finland, France, Italy, the Netherlands, Norway, Poland, Portugal, Sweden, Switzerland and the UK. Industry participants and policymakers will be watching whether the incremental improvements seen in 2025 can be consolidated into sustained growth through clearer incentives, streamlined planning and continued efforts to bring down total cost of ownership for electric heating solutions.