TL;DR
The International Energy Agency has confirmed that heat pumps are cheaper to operate than gas boilers in 17 EU countries, offering up to €800 in annual savings. Deployment remains uneven, and policy support is needed to accelerate adoption.
The International Energy Agency (IEA) has confirmed that heat pumps are now cheaper to operate than gas boilers in 17 European Union countries, representing approximately 40% of low-temperature heating demand in the EU. This development underscores the potential for significant energy savings and reduced reliance on fossil fuels, making heat pumps a key technology for decarbonizing heating across the region.
The IEA’s analysis indicates that, based on 2025 prices, heat pumps have lower lifetime costs than gas boilers in 17 EU countries, including some of the largest markets like Germany, France, and Poland. In these nations, residential heat pump ownership is estimated to be 15-30% cheaper over their lifespan compared to gas boilers, driven by favorable electricity-to-gas price ratios and decreasing installation costs.
In the industrial sector, heat pumps could serve nearly all low-temperature heat demand, which accounts for about 15% of industrial energy use. The IEA emphasizes that, with appropriate policy measures such as low-interest financing, tariff reforms, and infrastructure support, deployment could be significantly accelerated. Currently, adoption remains uneven, with countries like Denmark, Germany, and the Netherlands leading due to existing policy frameworks and market conditions.
Despite these advances, upfront costs for heat pumps remain higher than for gas boilers, and installation complexity is a barrier, especially in markets where familiarity with gas boilers prevails. The IEA advocates for stronger policy support to overcome these barriers and promote electrification, including mechanisms like the EU Grids Package to reduce grid connection delays and infrastructure costs.
Implications for EU Energy Transition and Consumer Costs
This development is significant because it highlights a viable pathway for the EU to reduce fossil fuel dependence, cut emissions, and lower household and industrial heating costs. With heat pumps proven to be more economical in most countries, policymakers and consumers have a clear incentive to prioritize their adoption. Accelerating heat pump deployment could also help the EU meet its climate targets and improve energy security by reducing imports of fossil fuels.
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EU Heating Market and Policy Landscape
The EU currently imports around 80% of its fossil fuels, with heating representing a major energy demand in both residential and industrial sectors. While heat pumps are recognized as a cost-effective solution for low-temperature heating, deployment remains uneven across member states due to market structures, policy support, and consumer awareness. Countries like the Nordics, Portugal, France, and Austria have seen higher adoption rates, driven by favorable policies and infrastructure investments. Conversely, markets such as Germany, Poland, and France still face barriers related to upfront costs and installation challenges, which hinder broader uptake.
The IEA’s analysis shows that policy measures like tariff reforms, low-interest financing, and infrastructure support are critical to unlocking the full potential of heat pumps. The EU Grids Package is highlighted as a mechanism to address grid connection and infrastructure barriers, facilitating greater deployment in industrial applications.
“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 Barriers and Uncertainties in Adoption
It is still unclear how quickly deployment will accelerate across all EU countries, given existing barriers such as high upfront costs, installation complexities, and consumer preferences. The impact of future policy changes and market developments on adoption rates remains uncertain, and data on long-term performance and cost trends is still emerging.
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Policy Actions and Market Developments to Watch
Next steps include the implementation of targeted policy measures such as subsidies, tariff reforms, and infrastructure investments to promote heat pump adoption. Monitoring the impact of the EU Grids Package and national policies will be essential to assess progress. Additionally, market trends in manufacturing costs and consumer awareness campaigns are expected to influence deployment rates in the coming years.
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Key Questions
Why are heat pumps more cost-effective than gas boilers in most EU countries?
Heat pumps are more energy-efficient and benefit from lower operating costs due to favorable electricity prices and decreasing installation costs, making them cheaper to run over their lifespan in most EU countries.
What are the main barriers to wider heat pump adoption?
High upfront costs, installation complexity, lack of consumer awareness, and policy support gaps are primary barriers that slow deployment despite cost advantages.
How can policy support accelerate heat pump deployment?
Policies such as subsidies, low-interest financing, tariff reforms, and infrastructure investments can reduce barriers and incentivize both residential and industrial adoption.
Will all EU countries see similar benefits from heat pumps?
No, regional differences in electricity and gas prices, climate conditions, and market structures mean that benefits and cost competitiveness vary across countries.
What is the significance of this development for EU climate goals?
Wider adoption of cost-effective heat pumps can significantly reduce fossil fuel use, lower emissions, and help the EU meet its climate targets.
Source: PV Magazine
