At the end of September, France relaunched one of the most popular energy transition support programmes in recent years: the social leasing scheme for electric vehicles. With several other countries showing interest and the European Commission investigating the model further, the question now is whether social leasing can work for scaling the rollout of heat pumps across Europe.

What is social leasing?

Social leasing refers to schemes that allow low-income households to lease rather than purchase clean technologies like electric vehicles. Government support typically takes the form of subsidies or guarantees that reduce monthly payments, making access possible without a large upfront investment.

Last year, France’s first electric vehicle leasing scheme brought this model into the spotlight. Under that version of the scheme, eligible drivers, including those with annual taxable incomes below a certain threshold, were offered electric vehicles for under €100 per month, with insurance and maintenance included. It was significantly oversubscribed, with over 90,000 applications for an initial target of 25,000 vehicles, prompting a temporary suspension and a redesign of the scheme.

Testing the case for heat pumps

Like electric vehicles, heat pumps are central to Europe’s decarbonisation plans. They offer reliable heating and lower emissions. Surveys suggest that households who install heat pumps are overwhelmingly satisfied with their performance, and many report lower heating bills.

Europe is way off track with heat pump installation, and sales are going in the wrong direction. This is partly because many households can’t afford the initial investment. By integrating public support directly into a manageable monthly payment schedule, and potentially bundling installation and servicing, social leasing can offer a more accessible alternative to traditional one-off grants, which often leave households to cover significant sums up front.

Central to social leasing will be the prioritisation of low-income households and people facing or vulnerable to energy poverty. Policy design is important in that regard. Public support should be generous enough to make leasing viable for households with low or modest incomes, while avoiding windfall effects that disproportionately benefit higher-income households. In addition, it is important to ensure that contracts under a social leasing scheme are designed in a transparent and fair way for consumers; for example, by clearly specifying the terms of installation, maintenance and servicing responsibilities.

One piece of the puzzle

To deliver maximum benefits, social leasing should be embedded within a broader policy framework that ensures affordable, equitable access to clean heat.

For low-income households, certain aspects are especially important.

First, ensuring low running costs. Thanks to their high efficiency, heat pumps can reduce heating bills. But the savings aren’t guaranteed in countries with large electricity-gas price imbalances, or in poorly insulated homes. In many countries, electricity must be made more affordable relative to fossil fuels to ensure that heat pumps reduce running costs. In addition, policies like building standards and workforce training are important to ensure that heat pump systems are installed and operated efficiently.

Second, empowering tenants. Heat pumps are built into homes and, thus, belong to the homeowners. But across the EU around 31% of households rent, and among those at risk of poverty, roughly half are tenants. Tenants need dedicated policies to benefit from clean heating upgrades.

Last but not least, improving the customer journey. Replacing a fossil fuel boiler with a heat pump requires planning and usually involves some level of disruption during installation. For vulnerable households, the time, flexibility or support needed to navigate this process may simply not be available. If implemented well, social leasing could be part of a broader effort to simplify the customer journey to heat pump installation. 

As part of a comprehensive policy mechanism, social leasing could participate in a more inclusive and impactful clean heat transition. The European Commission could facilitate an exchange of experience among different organisations and countries working on this issue.