In 2025, nearly one in two new heating systems sold in Germany was a heat pump, significantly surpassing gas and oil heaters. The industry association warns that operating these conventional fossil fuel systems could soon become prohibitively expensive.
Martin Sabel, Managing Director of the German Heat Pump Association (BWP), suggests that anyone opting for a gas or oil heating system today should receive an informational leaflet. This leaflet, he playfully proposes, would require customers to confirm they’ve been informed about the ‘cost trap’ risks associated with fossil fuels. While not entirely serious, Sabel argues that given warning labels for products like medications and financial services, it’s high time to caution consumers about the escalating operating costs of oil and gas, especially in light of recent geopolitical events impacting energy prices.
Norbert Ruths, a BWP board member and managing director of ESR-Bolender (a building services company), affirmed that “the operating costs for a heat pump are about 50 percent lower than for fossil fuels.” Ruths, who has been installing heat pumps since 1990—increasingly in older homes—and remotely maintains over 100 properties, emphasized their efficiency: “The devices run highly efficiently, even with old radiators. The technology works.”
While an industry association’s praise for its own technology is expected, studies from the German Energy Consultants Association and the Fraunhofer Institute corroborate that heat pumps offer significantly lower operating costs compared to other heating systems. Rising oil prices, exacerbated by geopolitical conflicts, are further shifting the economic advantage towards heat pumps. Moreover, increasing CO2 pricing is anticipated to create additional long-term cost benefits for these environmentally friendly systems.
50 Percent Surge in Sales
Consequently, significantly more customers opted for heat pump installations in the past year. The industry reported selling 299,000 units, marking a 55 percent increase compared to 2024. According to association figures, the market has grown by approximately 50 percent for the third time in four years. With a market share of 48 percent, heat pumps have, for the first time, become the most frequently sold heating system in Germany. Conversely, demand for oil and gas heating systems has sharply declined. BWP board member Sabel stated, “A clear, sustainable trend towards heat pumps is now emerging.”
Sales in January and February of this year remained high, at around 23,500 units per month, though the trend has shifted sideways. BWP chief Martin Sabel attributes this to the revised Building Energy Act (GEG), which “puts oil and gas heating systems back into play.” The new draft law allows for the continued installation of fossil fuel heating systems, introducing a ‘bio-staircase’ mechanism. This mechanism mandates a gradual increase in the blending of climate-friendly fuels with traditional fossil fuels. However, the initial proportion of green gas or oil required is very low, starting at just one percent in 2028, with planned increases later. Sabel warns that this regulation poses significant cost risks for consumers using oil and gas heating: “It’s clear that such green fuels are currently only available in limited quantities.” He concludes that if all owners of traditional heating systems are eventually required to blend sustainable fuels, “this will lead to exploding prices for these fuels.”
Why the Overall Market Suffered a Significant Downturn
According to BWP figures, Germany now has 1.9 million installed heat pumps, contributing to annual savings of 25 terawatt-hours of oil and gas and a reduction of 3 million tons of CO2 emissions. The entire value chain supporting this technology has created 100,000 jobs, not including tradespeople. Industry leaders are confident that installation rates could accelerate significantly, as supply bottlenecks for heat pumps, experienced in the past, are no longer an issue due to massive production expansions. Furthermore, the overall heating installation sector had not yet reached its full potential.
In 2023, the heating industry installed nearly 1.3 million new heating systems of all types. However, last year saw only about 600,000 installations, a halving of the volume. The BWP criticizes that “the constant back and forth in politics, which fails to provide a clear strategy,” has unnerved many customers. They note, “Other countries recognized the need to move away from fossil energy after the first oil crisis; Germany has largely slept through this.” The debate over heating subsidies and uncertainty stemming from government reshuffles further contributed. These factors are believed to have halved sales figures across the entire heating sector from 2024 onwards, a trend otherwise inexplicable. Currently, homeowners installing heat pumps benefit from substantial funding. In 2025, approximately €4.8 billion was claimed for nearly 300,000 devices. An analysis by BEG (Federal Funding for Efficient Buildings), which distributes these grants, found that every Euro of funding generates a fourfold investment, triggering an additional four Euros of private spending. This level of funding is expected to continue until 2029. The BWP urgently advocates for a reduction in electricity taxes to make heat pump operation more predictable and significantly more advantageous.
How Political Decisions Will Influence Heat Pump Sales
If current conditions persist—including the Building Modernization Act (GMG), which again permits gas and oil heating systems—the heat pump sector is projected to continue growing, but at a significantly slower pace. Growth would slow to just over ten percent annually, down from the recent 50 percent. Sales forecasts would then reach around 480,000 units by 2029. However, if policymakers fully leveraged the potential by lowering electricity prices, significantly advancing emissions trading, and establishing more robust district heating plans, nearly double the number of sales—around 850,000 units—would be realistic. “This would bring us just under 5 million installed units by 2030, placing us within the target corridor of almost 6 million units” previously aimed for by the former ‘traffic light’ coalition government with its heating law.
The BWP urgently warns against reduced subsidies, a measure reportedly considered by the Grand Coalition at times. “In such a scenario, we anticipate a major market collapse for heat pumps,” the association states. This would see sales drop to around 240,000 units by 2029. Given the approximately €5 billion that major companies across Europe have recently invested in this technology and production capacities, “that would be a catastrophe.” Hendrik Ehrhardt, spokesperson for Stiebel Eltron, confirmed that their company alone had laid off 1,000 employees “since the heat pump market trend has looked like a jagged crown.” He also urged, “We need continuity in funding and must consider lowering electricity prices.” Both the BWP and numerous recent studies emphasize that electrification is the key to climate transition. From a scientific perspective, there is no doubt about this.
