Accelerating Deployment and Affordability of Heat Pumps Through Collective Purchase Actions and Procurement

Electrification is expected to play a central role in buildings, in particular through the rollout of heat pumps for space heating, cooling and domestic hot water production. In the residential sector, the share of electricity in heating demand should grow to 40% by 2030 and to 50-70% by 2050. Heat pumps are one of the key technologies to meet this demand, contributing to the EU’s 2030 and 2050 climate and energy targets. Although these technologies and the quality of installations have been improving, the upscaling of existing and the development of new supply chains are not rapid enough to prevent bottlenecks and ensure competitive pricing throughout the supply chain. As part of the REPowerEU plan^[1] to phase out EU dependence on fossil fuels imports, the European Commission has called for doubling the EU’s yearly pace of deployment of heat pumps and reaching 10 million heat pumps installed in the next five years across EU Member States.

In order to achieve these objectives, various barriers to the deployment and installation of heat pumps need to be tackled, such as:

• high upfront costs and perceived complexity of design and installation;
• lack of awareness on the available technologies and confidence in the quality of installations; lack of awareness on how targeted changes in existing buildings and their heat distribution systems may often enable efficient heat pump deployment even without or prior to large scale renovations;
• distress purchase decisions (i.e. repairing or replacing an existing heating system following breakdown);
• technical barriers, such as physical space for setting up the new equipment (outdoor and indoor unit, buffer tank and DHW accumulator, etc.); the potential need to increase the electrical power of the building (modification of the electrical installation); the potential need to increase building insulation and/or to adapt the emitter system.

The proposed actions should set up and/or support collective purchase and procurement actions aiming at reducing significantly the product and/or installation prices by creating large-scale demand for well-specified (ranges of) heat pump products. The focus of the proposed actions should be at least on space (and water) heating for households; however, this does not preclude targeting non-residential buildings in addition. Synergies of heat pumps with self-consumption installations (PV) and hybrid renewable heating and cooling systems could also be promoted.

The proposed actions should cover the following:

• Coordinate calls for interest on the purchase and installation of heat pumps, and undertake negotiations with related economic operators (e.g. manufacturers, installer associations, energy companies or other potential service providers, including of optional financing elements). Operation related aspects, such as longer guarantee periods and post purchase maintenance or other customer services for products bought under these schemes, could be included in concluded agreements. Solutions including full or partial financing of upfront investment could also be considered.
• Ensure simplification of the offer/demand (e.g. by basing such schemes on a limited number of products and capacities, satisfying essential criteria to increase volumes of specific production series and deliver quality installations); ensure building suitability and readiness (e.g. thermal insulation, heat distribution system) for heat pump installation prior to any purchase, and proper building heating needs and heat pump size evaluation (various methods can be used possibly in combination such as, short term temperature measurements, building and energy system simulation tools, assessment by qualified technicians).
• Support the preparation (e.g. organisational, technical, access to financial support) and execution of such projects. Moreover, identify, simplify access to and seek synergies with relevant national, regional or local financing opportunities (e.g. loans, subsidies, tax incentives).
• Undertake other initiatives along the value chain (e.g. ensuring quality installation procedures, training on offered products and promotion of related certification schemes, further developing innovative propositions/ services e.g. heating as a service) that would lead to lowering the installation price.
• Engage in promotional and awareness raising activities, including on related installation training schemes, targeting specific consumer groups and other relevant stakeholders (e.g. SMEs, young people).

All relevant stakeholders necessary for the successful implementation of the action should be involved, including relevant public and/or private entities (e.g. public authorities, consumer organisations, private companies, housing associations, large building owners); if not directly involved, their support should be demonstrated in the proposal. The purchased heat pumps should be installed by installers with relevant training and certification. Organisations should demonstrate independence from commercial technology providers and justify their capacity to select best value for money. For public procurement actors, green/ circular public procurement criteria (including under the Energy Efficiency Directive) should be taken into account.

The proposed actions are invited to build on experiences and lessons learned in other relevant projects and programmes^[2].

The Commission considers that proposals requesting a contribution from the EU of up to EUR 2 million would allow the specific objectives to be addressed appropriately. Nonetheless, this does not preclude submission and selection of proposals requesting other amounts.

Proposals should result in an increased deployment of heat pumps through collective purchase and procurement actions, and demonstrate the effectiveness and replicability of the proposed actions for accelerating the deployment and affordability of heat pumps.

Proposals should quantify their impacts using the indicators listed below, where relevant, as well as other project-specific performance indicators:

• Number of installations triggered by the action, including a performance guarantee for the end user.
• Number of collective purchase and/or procurement actions setup and/or supported by the action (local, regional or national; public or private; residential or non-residential).
• Number of actors with increased skills (public authorities, installers, consumers and other relevant actors).
• Primary energy savings triggered by the project (in GWh/year).
• Renewable energy generation triggered by the project (in GWh/year).
• Investments in sustainable energy renovation triggered by the project (cumulative, in million Euro).

The impacts of the proposals should be demonstrated during the project and within 5 years after the project lifetime.

[1]Communication from the Commission of 8.3.2022 to the European Parliament, the European Council, the European Economic and Social Committee and the Committee of the Regions, REPowerEU: Joint European Action for more affordable, secure and sustainable energy, COM(2022) 108 final.

[2]This should include e.g. LIFE projects, the implementation of Air Quality Plans and the implementation of Operational Programmes under ESIF, H2020 projects, Intelligent Energy Europe projects, and other relevant national, local, or regional initiatives.