CLEAR-HP: High costs cool consumer enthusiasm for heat pumps

Europe needs a home heat transition, and if more consumers install heat pumps it could provide comfortable homes, protect consumers from bill shocks and bring us closer to energy independence.  

What are heat pumps? Heat pumps have been championed as a versatile way of transforming the consumer heating experience. In tandem with good insulation, they can heat and cool homes using a lot less energy than traditional aircon units, boilers or electric heaters.

But getting from initial idea to installation can be a complicated and expensive journey. Switching whole home energy systems is a big step to take in an unfamiliar product market with few trusted information sources and multiple financing options.  

Crucially, those who are keen to invest in a heat pump face a costly up-front outlay. At a time when persistently high living costs are leaving households with little spare money, this is out of reach for many.

What is holding back consumers from installing heat pumps?

• High up-front costs of the product and the installation
• Complex financing options
• Shortage of qualified installers
• Finding the best option and brand 
• Unclear or misleading information about benefits and risks

How can consumer organizations support consumers’ heat pump journey? 

The CLEAR-HP project was formed by nine European consumer organizations in 2023 to learn with consumers about what it takes to design a better heat pump purchasing experience, from information to price.  

With cost topping the list of barriers to uptake, CLEAR-HP trialed a collective purchasing scheme so consumers can use their joint purchasing power to save money.  

The CLEAR-HP partners, including Euroconsumers’ members OCU, Testachaats/ Testaankoop, Altroconsumo and DECO PROteste share what they have achieved and learnt.

How did the heat pump collective purchasing scheme work? 

Collective purchasing schemes bring together large groups of consumers, allowing intermediary organizations, such as national consumer organizations, to leverage this combined demand to negotiate more favourable prices and conditions with heat pump suppliers and installers.

CLEAR-HP’s campaign strategy moved beyond offering simple price discounts and focused instead on providing trustworthy, reliable support throughout the entire consumer journey. Here’s how the collective purchase scheme worked:  

• Motivations: The consumer organizations researched consumers’ needs and motivations for getting a heat pump including energy efficiency, cost, size etc.
• Curation: CLEAR-HP organizations brought together their knowledge of consumer demand and market supply to select a carefully curated set of at least three heat pump models to offer to each collective purchase scheme. So that households on different budgets to participate in the scheme, their selection covered top-performing premium options, high-quality mid-range alternatives and more affordable, yet technically robust, entry-level solutions. 
• Verification: The International Consumer Research and Testing organisation (ICRT) organized the testing of the selected heat pump models for things like noise levels, ease of installation and use, overall value for money and connectivity.  
• Negotiation: Project partners then negotiated a sales package on behalf of consumers’ in each of their countries, these included for example, things like direct percentage discounts, fixed installation discounts, preferential unit price reductions, guaranteed price ranges including installation and system start-up and fixed timescales for installation.
• Communication: To generate consumer interest, the partners ran around 59 workshops, reaching 6,500 consumers who could find out everything they needed to know before installing a heat pump. They were given advice on how to make their homes heat pump-ready, how to apply for funds and what to know about the installer’s visit. 

Co-funded by the European Union’s LIFE programme under the grant agreement No. 101119923. Views and opinions expressed
are however those of the author(s) only and do not necessarily reflect those of the European Union or CINEA.
Neither the European Union nor the granting authority can be held responsible for them.

Information was also shared more widely through heat pump comparison webpages by OCU and Altroconsumo.  …

What did the heat pump collective purchasing scheme achieve?  

Overall, over 23,000 consumers registered for the seven collective purchase campaigns and 522 installations were triggered.

That amounts to around €1,000,000 of investments in sustainable energy technologies, CO2 emissions reductions of 519.56 tons and 1.66 GWh/year primary energy savings – the equivalent of fully charging an electric vehicle (75 kWh) 22,000 times.

Results for consumers were positive too, follow up research with new heat pump users found they were highly satisfied, particularly with energy efficiency and comfort.

Why did people not go ahead with heat pump purchase?  

However, consumers who had signed up but not gone ahead with a purchase confirmed that up front costs were a significant barrier, and while government incentives have helped mitigate these costs in several countries they are not available everywhere and were withdrawn or changed at short notice.

But there are deeper challenges than just cost. Many people live in homes that are not ‘heat pump ready’ and cannot be easily adapted. The best suited accommodation for heat pumps are owner occupied newer builds with good installation. For people renting, living in multi-apartment buildings or older houses will find installation or performance challenging.

What policy changes has CLEAR-HP achieved so far for consumers? 

By drawing on direct experience of supporting consumers through the heat pump purchase journey, the CLEAR HP consumer organisations mapped out where different national policies, legal requirements like planning permission and funding or tax incentives were impacting on consumer appetite and ability to choose to install a heat pump. 

For example, in Belgium both the operating and up-front costs of heat pumps have had tax reductions, and in Italy consumers are now able to recover up to 65% of eligible costs for clean heating upgrades in private residences. 

In Spain, local tax incentives and simplified processes have made air-to-water heat pumps more accessible and affordable for residents, and Portugal has launched low-interest public loans to cover retrofit works such as window replacement, insulation, heat pumps and solar panels.

Why we need a full policy roadmap to accelerate heat pump adoption

The wins CLEAR-HP achieved in just three years are very welcome, but a much more comprehensive national and EU wide approach is needed.

The collective purchasing scheme showed how important stable and predictable policy frameworks especially around financing are to unlocking consumer affordability, confidence and uptake. 

Uptake improved when national schemes were clear and aligned with market initiatives, for example, combining VAT reductions or subsidy schemes with clear communication and timing of campaigns helped make heat pumps more affordable and easier to access.   

Here is the policy roadmap created by CLEAR-HP partners to help develop a stable and predictable environment for heat pump consumers: 

• Review the structural and fiscal factors which make the price of electricity for heating so high, and identify where reductions or exemptions could make it more affordable. 
• Champion innovative measures to cut energy use and energy bills, like dynamic demand pricing and smart meters. 
• Maintain steady, predictable incentives like publicly backed low interest loans and subsidies to boost take up of heat pumps by lower income families.
• Set up more creative and flexible financial schemes so that people can invest in heat pumps with banks, electricity suppliers, heat pump suppliers and energy performance contractors.
• Skill up the installation workforce with recognised qualifications that the public can trust, and continuing training to keep them up to date on the latest technologies.   
• Communicate clearly with consumers to build confidence in heat pump investment with government-backed, verified information about heat pump installations through one-stop-shops
• Access to Alternative Dispute Resolution mechanisms in heat pump installations will give consumers confidence they have a place to go if things go wrong.
• Focus on multi-apartment buildings and enabling residents to have the opportunity to switch to heat pumps.

Lessons to take forward for a stronger heat pump future

Heat pumps are one of the many potential  green investments people are currently putting off.  Even though longer term savings are predicted, the immediate up front costs feel too high for too many.

Running collective purchasing schemes like CLEAR-HP’s reduce some of the costs, and take away a lot of the technical and financial uncertainty for consumers.

But without consistent, long term fiscal and financial strategies to help consumers afford new green home energy, it’s unlikely that uptake will reach the tipping point required to reduce bills and energy use.  

Co-funded by the European Union’s LIFE programme under the grant agreement No. 101119923. Views and opinions expressed  are however those of the author(s) only and do not necessarily reflect those of the European Union or CINEA.  Neither the European Union nor the granting authority can be held responsible for them.