Germany’s heat pump industry, once booming, is now facing a steep decline in demand. Despite this, Economic Minister Robert Habeck remains optimistic about the future of this eco-friendly technology.
Heat pump industry struggles after record year
The German heat pump industry, which saw a record year in 2023, is now experiencing significant challenges. Federal Economic Minister Robert Habeck, a strong advocate for heat pumps, is on a tour in northern Germany promoting these heating systems that utilize heat from air, groundwater, or the earth. However, demand for heat pumps has sharply declined in 2024, leading companies like Stiebel Eltron and Vaillant to reduce their workforce. For instance, Stiebel Eltron, which does not manufacture gas or oil heating systems but focuses solely on heat pumps, has announced job cuts, though not as severe as initially reported.
In 2023, the German government set an ambitious goal of installing 500,000 new heat pumps annually. However, according to the Federal Association of the German Heating Industry (BDH), only 90,000 units were sold in the first half of 2024, a 54% drop from the same period in the previous year. The industry now expects a total of 200,000 units sold in 2024, a significant decrease from the 356,000 units sold in 2023. BDH’s managing director, Markus Staudt, notes that the market is returning to pre-2020 levels, affecting not only Stiebel Eltron but also other major players like Bosch and Vaillant, which have also announced layoffs.
Minister Habeck’s continued optimism
Despite these challenges, Minister Habeck remains confident in the heat pump’s future. He described it as a “super product made in Germany” that increases property value and saves money in the long run. Habeck believes that the investment in heat pumps will eventually pay off, though the current market conditions are testing the industry’s resilience. The industry’s challenges are further compounded by political uncertainty, particularly regarding the Heating Act, which has caused confusion and delayed purchasing decisions. Bosch CEO Stefan Hartung criticized this political instability, calling it “poison for long-term buying decisions,” while Viessmann CEO Max Viessmann lamented the damage done to the industry’s reputation.
Potential recovery amid uncertain future
The heat pump industry’s outlook is clouded by various factors, including fluctuating government policies and high electricity prices. However, there is a glimmer of hope: the number of approved funding applications for heat pumps increased in June, indicating a possible recovery. Minister Habeck has pledged that as long as he is in office, the funding for heat pumps will remain intact. Nevertheless, the future remains uncertain, especially with the upcoming 2025 federal election, where a potential shift in government could alter the current support for the industry. For now, Habeck insists that the best time to invest in a heat pump is “now.”
