Heat pumps sit at the core of Europe’s plan to cut fossil gas imports and shield households from price spikes. Yet several governments have scaled back heat pump subsidies under budget pressure, or run them in stop-and-go cycles, just as the case for faster deployment gets stronger.
In Money for something: Designing effective heat pump support schemes in Europe, RAP experts Duncan Gibb, Marion Santini, Lorenzo Sapochetti and Samuel Thomas, with Steffen Verheyen of Agora Energiewende, argue that budget pressure is a reason to design subsidies better, so public money goes further. Subsidies don’t work in isolation. What they deliver depends on running costs and payback period, consumer confidence and the wider policy framework around them. Design decides the rest: how support is targeted, how it’s distributed, and who can reach it.
Key messages
- Keep support stable and predictable. When governments cut or reshuffle grants without warning, buyers hesitate and installers stop investing. Italy, Switzerland and France have all seen markets wobble after abrupt shifts.
- Grants work best as part of a package. Lower power bills and smart rules for manufacturers can shrink how big the grants need to be.
- Reward efficient choices and manage price inflation. Countries with fixed grants have seen less rise in prices than those with grants tied to a proportion of total project cost. Germany’s switch to a percentage-based design was in-part responsible for significant price increases.
- Design for the households that need it most. Making access to subsidies more accessible via measures such as taking the grant straight off the bill, offering one service provider to sort it all out, and covering renters and flats. Ease of access will decide whether lower-income families can join in at all.
Featured image by Dragos Condrea.
