TL;DR
The International Energy Agency (IEA) has confirmed that heat pumps are cheaper to operate than gas boilers in nearly all EU countries, with 17 nations already seeing lower lifetime costs. Despite this, deployment remains uneven, hindered by policy and cost barriers. The report highlights the need for stronger policy support to accelerate adoption.
The International Energy Agency (IEA) has confirmed that heat pumps are cheaper to operate than gas boilers in 17 EU countries, representing approximately 40% of low-temperature thermal energy demand in the region. This development underscores the economic and environmental benefits of electrification, although deployment remains uneven across the EU.
The IEA’s analysis shows that, based on 2025 prices, heat pumps have lower lifetime costs than gas boilers in 17 EU countries, including many with significant heating needs. This cost advantage is driven by rising gas prices, falling electricity costs, and technological improvements in heat pump efficiency.
In residential settings, heat pumps are cost-competitive with gas boilers in 16 countries, covering around one-third of the EU’s residential space heating demand. Countries like the Netherlands, Portugal, and Bulgaria see ownership costs for heat pumps 15%–30% lower than gas boilers, making them an attractive alternative for consumers.
Despite these benefits, the report notes that upfront costs for heat pump installation remain higher than for gas boilers, and installation complexity can deter consumers. Market adoption is uneven, with Nordic countries, France, Portugal, and Austria leading the way. In other regions, high initial costs and policy barriers slow uptake.
The IEA emphasizes that policy measures such as low-interest financing, targeted subsidies, and reforms to electricity and gas pricing could accelerate adoption. For industrial applications, heat pumps could serve nearly all low-temperature heat needs, reducing reliance on fossil fuels and imports.
Implications for EU Climate Goals and Energy Costs
This confirms that widespread adoption of heat pumps could significantly reduce the EU’s dependence on imported fossil fuels, lowering energy costs for consumers and supporting climate targets. The findings highlight the economic case for stronger policy measures to overcome deployment barriers, which could lead to faster decarbonization of heating in both residential and industrial sectors.
Increasing heat pump adoption could also improve energy security, reduce greenhouse gas emissions, and enhance indoor comfort, especially as costs continue to decline. Policymakers are urged to implement supportive frameworks to unlock these benefits across the EU.
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EU Heating Market and Policy Landscape
Currently, the EU imports around 80% of its fossil fuels, with heating representing a major energy demand segment. Deployment of heat pumps has been uneven, with market penetration varying widely among countries due to differences in policy support, electricity and gas prices, and consumer preferences.
Previous efforts to promote heat pumps have faced challenges such as high upfront costs, infrastructure constraints, and long grid connection times. Countries like Denmark, Germany, and the Netherlands have introduced policies like reduced grid fees for flexible demand to improve economics, but many others lag behind.
The EU’s Grids Package aims to reduce barriers to industrial heat pump deployment, addressing issues like high capital costs and infrastructure delays. The broader context underscores the need for coordinated policy action to realize the full potential of heat pumps in the region.
“Heat pumps are cheaper to operate than gas boilers in almost all EU countries, with annual energy savings of up to €800 ($924).”
— an anonymous researcher
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Remaining Uncertainties in Deployment and Policy Impact
It is still unclear how quickly and extensively heat pumps will be adopted across all EU countries, given ongoing barriers like high upfront costs and infrastructure constraints. The actual impact of proposed policy measures remains to be seen, and regional variations could influence outcomes.
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Next Steps for Policy and Market Adoption
Policymakers are expected to consider and implement supportive measures such as subsidies, tariff reforms, and infrastructure investments to promote heat pump deployment. Monitoring of market uptake and further research into cost reductions and consumer acceptance will inform future strategies.
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Key Questions
Why are heat pumps more cost-effective than gas boilers in most EU countries?
Due to rising gas prices, falling electricity costs, and technological improvements, heat pumps now offer lower lifetime costs for heating compared to gas boilers in many EU nations.
What are the main barriers to wider heat pump adoption in the EU?
High upfront costs, installation complexity, infrastructure constraints, and policy gaps are key barriers limiting broader deployment across the region.
How can policies accelerate heat pump deployment?
Implementing measures such as low-interest financing, targeted subsidies, and tariff reforms can reduce barriers and incentivize consumers and industries to switch to heat pumps.
What benefits do heat pumps offer besides cost savings?
Heat pumps improve thermal comfort, increase property values, reduce exposure to fossil fuel price volatility, lower local air pollution, and enhance indoor air quality.
Will the trend toward heat pumps impact the EU’s energy independence?
Yes, increased heat pump adoption can reduce reliance on imported fossil fuels, strengthening energy security and supporting climate objectives.
Source: PV Magazine
