Heat Pumps to REPowerEU: The need for a European industrial heat pump policy

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

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[Viessmann]

REPowerEU must be a win for energy security, the climate and European competitiveness. With the right focus, the May package can propel a wave of sustainable heat pumps “made in Europe”.

Alix Chambris is Vice President for Global Public Affairs and Sustainability at Viessmann. 

The heating sector clearly holds a key to success when cutting fossil dependencies: Almost half of EU gas demand is used to heat buildings, 40% of which is currently coming from Russia. Reducing gas in heating via an even faster rollout of green and efficient solutions – heat pumps, PV, solar thermal, district energy, smart controls – is a must.

An exponential transformation

Make no mistake: that is a colossal challenge. The European heat pump market has been growing steadily in the past years. In 2020, it grew by 7.4%. Yet, sales and production capacities are still far below what is necessary. For every new heat pump sold in 2020, about 5 oil and gas boilers were still sold in parallel. REPowerEU aims to reverse this ratio by frontloading 2 million heat pumps/year in the next 5 years and reaching a total of 30 million new installations by 2030.

Germany wants to go even faster. The plan is to allow new heating systems only if they are running on a minimum of 65% renewable energy as from January 2024. That means that most standalone oil and gas boilers will not be allowed anymore – unless they run on 100% green fuel which is unlikely in the short term given the lack of supply. In short, a high decrease of combustion boiler sales within 20 months in Germany. For comparison, the automotive industry has until 2035 to phase out combustion, i.e. 14 years lead time.

A powerhouse for jobs & growth

Let me be clear: I am convinced we can do this. With its 1.8 million direct and indirect jobs, the European heating industry is a force for innovation and local value creation.

Viessmann alone plans to invest 1 billion euros over the next three years in heat pumps and other green solutions. In our 105 years history this is an unparalleled effort. An effort we have to accomplish in times of geopolitical instability, economic turmoil and falling revenues.

Clearly, the exponential transformation will not be possible without a historic coalition – a policy support equivalent to the European Chip Act. A priority is to avoid replacing one dependency by another one.

When US President Joe Biden offers to supply Europe with American heat pumps to meet our ambitions, it does not only show genuine support but also smart industrial policy considering only 10% of space heaters sold on the EU single market are currently imported from third-countries. Now is the time to build on our strengths or we risk losing our industrial footprint. A few years ago, the European PV industry lost its frontrunner position within a matter of years. This history must not repeat itself.

5 S for a successful heat pump wave made in Europe

REPowerEU action must strengthen the EU’s strategic autonomy for a key technology. How do we do this – with the “5 S” compass.

1. Speed: Aim is to “super fast track” production capacities. Key enablers are investment grants, credit guarantees and state aid exemptions as well as the prioritised use of existing EU funds. We can also quickly reduce current oil and gas demand via the hybridization of existing heating systems – e.g. by retrofitting a hydronic heat pump or solar thermal solution with smart controls.

Hybrid heat pumps (combining a hydronic heat pump with a combustion backup boiler) can reduce by 80 to 90% the annual heating demand –  especially in buildings where a stand alone heat pump is not an immediate option. This flexibility is ideal for staged renovation pathways and requires less upfront investments for households.

2. Scale: A priority is to expand the heat pump portfolio for even more building types. That means R&D in the development of products that can cater to higher heat loads for use in existing buildings without prior renovations, and plug and play solutions to reduce installation time. New business models such as heating as a service will also be instrumental, especially for self-consumption models which are more capital intensive.

3. Skills: Installers and employees in manufacturing are the backbone of the heating transition. REPowerEU needs to include targeted programmes to tackle the well-documented skills gap and pragmatic compensation for loss of earnings due to increased training efforts – especially for small businesses.

4. Customer Satisfaction: Success will heavily depend on customer satisfaction, for example on peace of mind, affordability, noise levels and electricity-use. Adequate financial support is critical to ensure affordability for all households and a stable demand.

5. Sustainability: The vision is to leapfrog into sustainable consumption and manufacturing. The use of natural refrigerants with zero global warming potential is an opportunity not to be missed.

It is clear that our ability to super fast-track heat pumps made in Europe will be the true changemaker in order to cut our energy dependence and make REPowerEU a reality. The task ahead is the challenge of a century. Let’s work together to make this a triple-win for energy security, the climate and European competitiveness!

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