Heat pump sales soar across Europe as states cut electricity taxes

Overview

Updated Sep 28

Europeans bought 1.16 million heat pumps in the first half of 2026, up 11% from a year earlier and breaking two straight years of decline. The surge follows the Iran war's spike in oil and gas prices plus a European Commission push to cut electricity taxes across member states.

Heat pumps run on electricity, so they only beat gas boilers on running costs when power is priced close to gas. That is rare: most European countries tax electricity far more heavily than gas, making it several times more expensive. The EU now targets a 2.5-to-1 electricity-to-gas price ratio by 2030, and how fast governments act decides whether this rebound lasts.

Why it matters

If Europe keeps taxing electricity above gas, heat pumps lose their cost edge and the continent keeps importing 25 billion cubic meters of gas yearly.

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Key Indicators

1.16M

Heat pumps sold in Europe, H1 2026

Up from 1.05 million in the first half of 2025, an 11% rise across 12 countries.

11%

Year-over-year sales growth, H1 2026

The jump follows the Hormuz crisis and electricity tax cuts in several states.

2.9M

Heat pumps sold in Europe, full-year 2025

Up 13% from 2024, the first rebound after two years of declining sales across 21 countries.

29.3M

Heat pumps installed across 21 European countries

Together they avoid roughly 25 billion cubic meters of gas imports annually, saving about €9.7 billion.

Voices

Curated perspectives — historical figures and your fellow readers.

Organizations Involved

European Heat Pump Association (EHPA)

Trade association

Publishes the market data driving this story

European trade body that tracks heat pump sales and lobbies for policy to cut electricity taxes.

European Commission

EU executive body

Publishing plans to cut electricity taxes and speed electrification

The EU's executive arm, which urged member states to lower electricity taxes after the Iran war disrupted gas supply.

Timeline

February 2022 September 2026

7 events Latest: September 28th, 2026 · 1 month ago

Tap a bar to jump to that date

September 2026
EHPA reports 11% first-half sales jump
Latest Data

1.16 million heat pumps sold across 12 countries in H1 2026, up from 1.05 million a year earlier.
September 28th, 2026
April 2026
Crude oil nears $126 per barrel
Market

The strait closure squeezes supply, raising energy costs across Europe and reinforcing the case for electrification.
April 30th, 2026
March 2026
European Commission urges lower electricity taxes
Policy

Days after the war begins, the Commission publishes plans to cut electricity taxes and speed the shift from fossil fuels.
March 1st, 2026
February 2026
US-Israeli attacks on Iran unleash war
Conflict

Iran closes the Strait of Hormuz, disrupting oil and gas shipments and sending prices higher.
February 28th, 2026
December 2025
European heat pump market rebounds
Market

Around 2.9 million units sold in 2025, up 13% from 2024, helped by lower electricity taxes in several countries.
December 31st, 2025
December 2024
Heat pump sales fall for second straight year
Market

Easing gas prices and reduced subsidies cut demand; manufacturers trim output and jobs.
December 31st, 2024
February 2022
Russia invades Ukraine
Conflict

Gas prices spike; European heat pump sales surge as running costs shift toward electricity.
February 24th, 2022

Scenarios

Electricity tax cuts make heat pump rebound durable

Likely Resolves by Q1 2027

Discussed by: European Commission electrification strategy; EHPA market analysis

If more member states follow the Commission's guidance and lower electricity taxes, heat pumps keep their operating-cost edge over gas. EHPA data shows countries with fairer energy taxation consistently see stronger heat pump markets. The EU target of a 2.5-to-1 electricity-to-gas price ratio by 2030 gives governments a benchmark to measure against.

Iran war ends, price incentive fades, heat pump growth stalls

Possible Resolves by Q1 2027

Discussed by: The 2022-24 cycle, which EHPA says shows how price spikes and subsidies drive demand

The 2022 Ukraine shock produced a surge that collapsed when gas prices fell and support lapsed. If the Iran war ends and the Strait of Hormuz reopens, fuel prices drop and the running-cost advantage shrinks. Without sustained tax reform, sales could cool again as they did in 2023 and 2024.

EU makes electricity-gas tax parity binding law

Unlikely Resolves by End of 2028

Discussed by: European Commission Electrification Action Plan language

The Commission's Electrification Action Plan already states that electricity should not be taxed above gas. If that guidance becomes binding legislation, heat pumps gain a structural cost edge across the bloc. EHPA says such rules, combined with fossil-fuel subsidy phase-outs, could significantly boost deployment.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

February 2022

Russia's invasion of Ukraine energy shock (2022)

Russia's invasion sent European natural gas prices to record highs, making electricity-driven heat pumps cheaper to run than gas boilers. Sales surged in 2022 and manufacturers poured money into new factories.

Then

2022 sales spiked as households switched heating systems; the industry expanded capacity.

Now

When gas prices fell and subsidies lapsed, sales dropped through 2023-24, forcing job cuts and production reductions.

Why this matters now

The current rebound echoes 2022's price-shock surge. The difference is whether electricity tax reform makes it stick this time.

October 1973

1973 oil embargo reshapes Western energy policy

Arab oil producers cut exports to Israel's allies, quadrupling crude prices within months. Governments responded with fuel-economy standards, efficiency programs, and nuclear and heating diversification to cut oil dependence.

Then

Petrol prices and rationing hit consumers; economies slowed.

Now

Lasting efficiency standards and fuel-switching policies emerged that persist decades later.

Why this matters now

Like 1973, today's price shock is pushing governments to use policy to cut fossil dependence. Heat pumps are the current fuel-switching technology, and tax policy determines whether they win.