Sustainability Atlas
Clean Energy·15 min read··...

Playbook: adopting Electrification & heat pumps in 90 days

A step-by-step rollout plan with milestones, owners, and metrics. Focus on retrofit workflows, grid impacts, and incentives that move adoption.

Europe installed 3 million heat pumps in 2024—a 13% increase from 2023—bringing the continent's total stock to over 24 million units. Yet the EU's REPowerEU target of 60 million heat pumps by 2030 requires tripling current installation rates. For policy and compliance professionals navigating this accelerated transition, the challenge is no longer whether to electrify heating, but how to execute at scale within regulatory timelines while managing grid constraints and maximising available incentives. This 90-day playbook provides a structured approach to moving from assessment to operational heat pump deployment, with clear milestones, ownership assignments, and the metrics that matter for compliance reporting.

Why It Matters

Heating accounts for approximately 50% of final energy consumption in the European Union and is responsible for 27% of the bloc's total CO₂ emissions. Fossil fuel heating—predominantly natural gas and oil boilers—remains dominant in 18 of 27 member states. The Energy Performance of Buildings Directive (EPBD) recast, adopted in April 2024, mandates the phase-out of fossil fuel boilers by 2040 and prohibits subsidies for standalone fossil fuel heating systems from 2025.

For organisations with building portfolios across the EU, compliance timelines are compressing rapidly. The Dutch government will ban new gas connections for buildings from 2026. Germany's Building Energy Act (GEG) requires 65% renewable heating in new installations from 2024. France's RE2020 standard effectively eliminates gas heating in new residential construction.

The economic case has also shifted decisively. Heat pump coefficient of performance (COP) ratings now average 3.5-4.0, meaning each kilowatt of electricity produces 3.5-4.0 kilowatts of heat—compared to a maximum of 0.9 kW from gas condensing boilers. At current EU electricity-to-gas price ratios averaging 2.5:1, heat pumps deliver 30-40% operational cost savings for most building typologies. Combined with carbon pricing under the EU Emissions Trading System (ETS) extension to buildings from 2027, the total cost of ownership advantage will widen further.

Grid integration represents both an opportunity and a constraint. Heat pumps can provide demand flexibility services worth €50-150 per unit annually when aggregated into Virtual Power Plants (VPPs). However, the synchronised adoption of heat pumps—particularly in dense urban areas—creates localised distribution network stress that requires proactive coordination with Distribution System Operators (DSOs).

Key Concepts

Retrofit Workflow Categories

Heat pump retrofits fall into three distinct workflow categories, each with different timelines, costs, and compliance implications:

Drop-in Replacements: High-temperature heat pumps (65-80°C output) that connect directly to existing radiator systems without emitter upgrades. Products from Vaillant (aroTHERM plus), Viessmann (Vitocal 250-A), and Daikin (Altherma 3 H HT) now achieve these temperatures while maintaining COPs above 2.8. Installation time: 2-3 days. Capex: €12,000-18,000 for typical single-family homes.

Partial System Upgrades: Medium-temperature heat pumps (45-55°C output) paired with selective radiator replacements or supplementary underfloor heating loops in high-use rooms. This approach captures 85% of energy savings at 60% of full system replacement cost. Installation time: 5-7 days. Capex: €15,000-25,000.

Deep Retrofits: Low-temperature heat pumps (35-45°C output) combined with comprehensive fabric improvements—insulation, window upgrades, and full emitter replacement. While most expensive upfront (€40,000-80,000 including envelope measures), these retrofits achieve the highest efficiency and qualify for maximum incentive tiers across most EU member states.

Grid Impact Assessment

Distribution networks designed for gas-heated buildings typically allocate 2-4 kW per dwelling for electrical load. Heat pumps add 3-8 kW of peak demand per installation. The aggregate impact on low-voltage networks depends on:

  • Coincidence factor: The probability that multiple heat pumps operate simultaneously. Morning and evening peaks see coincidence factors of 0.4-0.6, meaning a street with 20 heat pumps may see 24-36 kW of additional simultaneous demand.
  • Diversity benefit: Staggered defrost cycles, thermal mass differences, and occupancy patterns reduce peak coincidence over time, but initial months post-installation often show higher correlation.
  • DSO reinforcement thresholds: Most European DSOs require network studies when transformer loading exceeds 80% or low-voltage cable utilisation exceeds 70%.

Proactive engagement with DSOs during the planning phase can reduce connection delays from 6-12 months to 4-8 weeks by identifying reinforcement needs early and coordinating installation sequencing.

Incentive Stack Optimisation

The EU and member states deploy a complex matrix of incentives that, when properly stacked, can reduce net heat pump capex by 40-70%:

  • National grants: Germany's BEG programme provides up to €21,000 per installation (maximum 70% of eligible costs). France's MaPrimeRénov' offers €4,000-11,000 depending on household income. Italy's Conto Termico covers up to 65% of costs.
  • Regional and municipal top-ups: Many cities add €2,000-5,000 to national schemes. Amsterdam's Energiesubsidie, Vienna's Raus aus Öl und Gas, and Barcelona's PIREP funds exemplify this layer.
  • EU Structural Funds: The Recovery and Resilience Facility (RRF) and Cohesion Funds channel €35 billion toward building renovation, accessible through national implementation agencies.
  • Carbon credits: Aggregated residential heat pump installations can generate verified emission reductions tradeable on voluntary carbon markets at €30-80 per tonne.

What's Working

The Netherlands: Neighbourhood-Scale Coordination

The Dutch "Aardgasvrij" (gas-free) programme has transitioned 15 pilot neighbourhoods representing 8,400 dwellings to heat pump and district heating solutions. The approach succeeds through three mechanisms:

Collective procurement: Municipalities aggregate demand across 200-500 homes, negotiating 20-35% discounts on equipment and installation. The gemeente Purmerend achieved €14,200 average installed cost versus €19,500 for individual procurement.

DSO co-investment: Liander and Stedin, the dominant DSOs, proactively reinforce networks 18 months ahead of scheduled transition dates, eliminating connection delays that plagued early adopters.

One-stop-shop services: Municipal energy coaches handle incentive applications, contractor coordination, and post-installation commissioning, reducing homeowner friction that typically causes 40% drop-off rates in voluntary programmes.

Poland: Social Housing Mass Deployment

Poland's Czyste Powietrze (Clean Air) programme—backed by €4.4 billion in EU recovery funds—has installed 420,000 heat pumps since 2023, predominantly replacing coal boilers in social housing. Key success factors include:

Income-adjusted subsidies: Low-income households receive 90% cost coverage, eliminating the access barrier that concentrates heat pump adoption among wealthy homeowners in other markets.

Standardised installation protocols: A certified installer network trained on five approved heat pump configurations reduces assessment time from 3-4 hours to 45 minutes and installation defect rates from 18% to 4%.

Bulk purchasing agreements: Government framework contracts with Bosch, Mitsubishi Electric, and domestic manufacturer NIBE reduced equipment costs by 28% versus retail pricing.

Ireland: Grid Flexibility Integration

ESB Networks' "Electric Ireland Superhomes" programme retrofits 35,000 homes annually while integrating heat pumps into the electricity system's ancillary services market. Participants receive:

Dynamic time-of-use tariffs: Shifting heat pump operation to off-peak hours (23:00-07:00) reduces running costs by 35% while flattening system demand curves.

VPP aggregation payments: Heat pumps with smart controllers participate in frequency response services, earning €80-120 per unit annually while contributing to grid stability as renewable penetration increases.

Predictive pre-heating: AI-optimised controllers from Climote and Pinergy heat buildings during low-price periods using weather forecasts and occupancy patterns, reducing peak demand by 40% without compromising comfort.

What's Not Working

Installer Capacity Constraints

The European Heat Pump Association estimates the EU needs 500,000 qualified installers by 2030—double the current workforce. Germany alone faces a shortage of 60,000 technicians. Consequences include:

  • Extended lead times: Average wait times of 4-8 months for residential installations in Germany, France, and the Netherlands deter time-sensitive adopters.
  • Quality variance: Rushed installations by undertrained crews cause 15-20% of systems to underperform by >20% relative to design specifications.
  • Warranty voidance: Manufacturer warranties increasingly require certified installer documentation that smaller contractors cannot provide.

Several member states have launched fast-track certification programmes—Germany's Wärmepumpen-Führerschein and France's QualiPAC Express—but pipeline throughput remains inadequate for REPowerEU targets.

Refrigerant Regulatory Uncertainty

The EU F-gas Regulation revision (2024) accelerates phase-down of high-GWP refrigerants including R410A, which dominates current heat pump stock. The transition to R290 (propane), R32, and CO₂-based systems creates:

  • Product availability gaps: R290 heat pumps require larger outdoor units due to charge limits, constraining deployment in apartment buildings and urban sites.
  • Installer retraining: Propane systems require additional safety certifications that only 12% of current installers hold.
  • Stranded asset risk: Heat pumps installed in 2024-2025 using R410A face uncertain maintenance availability after 2030.

Electricity Price Volatility

Despite favourable long-term economics, electricity price spikes during 2022-2023 undermined consumer confidence in electrification. While prices have stabilised, the experience created persistent perception barriers:

  • Payback uncertainty: Consumers applying 2022 peak prices to investment calculations see 15-year paybacks instead of the 5-7 years achievable at normalised prices.
  • Contract complexity: Time-of-use tariffs that optimise heat pump economics require active engagement that many residential users find burdensome.
  • Grid tariff restructuring: Several member states are shifting network cost recovery from volumetric to capacity-based charges, which disadvantages heat pump adopters who increase their connection capacity.

Key Players

Established Leaders

  • Viessmann Climate Solutions — Acquired by Carrier Global for €12 billion in 2024. Full product range from residential to commercial heat pumps, with strong R290 portfolio. Market leader in Germany with 24% share.
  • Daikin Europe — Japanese multinational with European manufacturing in Belgium and Czech Republic. Altherma series dominates UK and Benelux markets. Pioneered VRV systems for commercial buildings.
  • Vaillant Group — German manufacturer with aroTHERM plus achieving 75°C output temperatures. Strong installer network across 20 EU countries. Acquired thermondo's operations in 2024.
  • NIBE Industrier — Swedish conglomerate owning 16 heat pump brands including NIBE, Enertech, and Mitsubishi Electric distribution rights in Nordics. 35% market share in Sweden and Finland.
  • Bosch Thermotechnik — Engineering conglomerate with Compress 7000i AW series. Strong presence in social housing programmes through government framework agreements.

Emerging Startups

  • Aira (Sweden) — Direct-to-consumer heat pump company offering vertically integrated installation. Raised €180 million Series A in 2024. Operating in Germany, UK, and Italy with proprietary CRM and scheduling platform.
  • Quatt (Netherlands) — Hybrid heat pump specialist combining small electric heat pumps with existing boilers for gradual transition. €23 million raised, 15,000 installations in Benelux.
  • 1Komma5° (Germany) — Climate tech roll-up acquiring installation companies and integrating solar, storage, and heat pumps. €430 million raised, valued at €1 billion.
  • Thermondo (Germany) — Digital-first installer platform with AI-powered system design. Serves 40,000 customers annually. Installation booking to completion in <4 weeks.
  • Octopus Energy Services (UK) — Energy supplier's installation arm with 2,500 employed installers. Installs 1,000 heat pumps monthly with full financing integration.

Key Investors & Funders

  • European Investment Bank (EIB) — €1.5 billion dedicated lending facility for building decarbonisation through 2027. Finances aggregated retrofit programmes at 1.5% interest rates.
  • Breakthrough Energy Ventures — Bill Gates-founded fund with investments in Quilt (US heat pump startup) and monitoring platform Sense Labs.
  • World Fund — €350 million European climate VC with investments in Aira and 1Komma5°. Focus on heating decarbonisation as core thesis.
  • IKEA/Ingka Investments — Strategic investment in Swedish heat pump ecosystem through joint ventures with SunRoof and energy storage providers.
  • EU Innovation Fund — €40 billion through 2030 supporting industrial decarbonisation including large-scale heat pump manufacturing facilities.

Action Checklist

  1. Complete building stock assessment (Days 1-14): Audit all properties for current heating systems, radiator sizing, insulation levels, and electrical infrastructure. Use European Building Stock Observatory data as benchmarks. Assign building categories to retrofit workflow types.

  2. Engage DSOs for grid capacity confirmation (Days 7-21): Submit connection applications for all planned installations simultaneously. Request transformer loading data and identify any reinforcement requirements. Negotiate installation sequencing to avoid network constraints.

  3. Map available incentives by jurisdiction (Days 14-28): Document national, regional, and municipal grants applicable to each building location. Calculate maximum subsidy stacks and confirm application deadlines. Assign dedicated resource for incentive administration.

  4. Issue collective procurement RFP (Days 21-35): Aggregate demand across building portfolio to negotiate volume discounts. Require minimum COP ratings, R290/R32 refrigerant, and smart grid connectivity. Include installer capacity guarantees in contract terms.

  5. Establish installer partnerships (Days 28-42): Contract with certified installer networks covering all geographic regions. Confirm QualiPAC, MCS, or equivalent certifications. Agree installation schedules aligned with incentive deadlines and grid connection dates.

  6. Deploy monitoring infrastructure (Days 35-49): Install sub-metering and IoT sensors enabling performance verification and VPP participation. Select aggregation platform partner (Kiwi Power, Flexitricity, or equivalent) for demand response revenues.

  7. Execute phased installations (Days 42-84): Begin with properties requiring no network reinforcement. Coordinate DSO-dependent installations in subsequent tranches. Document all installations for EPD compliance and carbon credit verification.

  8. Commission and optimise (Days 70-90): Verify actual COP performance against design specifications. Adjust heating curves and scheduling based on occupancy patterns. Enrol eligible installations in VPP programmes and time-of-use tariffs.

FAQ

Q: Can heat pumps provide adequate heating in poorly insulated buildings without full fabric upgrades?

A: Modern high-temperature heat pumps (65-80°C output) can directly replace gas boilers in most existing radiator systems without insulation upgrades, though at reduced efficiency (COP 2.5-3.0 versus 4.0+ with low-temperature systems). The economics depend on building-specific factors: properties with EPC ratings of D or better typically achieve positive payback within 6-8 years using drop-in replacements. For E-G rated buildings, hybrid approaches—small heat pumps handling 80% of annual heating load with existing boilers as peak backup—often provide the best balance of capital efficiency and carbon reduction until deeper retrofits become feasible. Viessmann's Vitocal 250-A and Daikin's Altherma 3 H HT specifically target this market segment.

Q: How do we manage grid connection delays that threaten incentive deadlines?

A: Proactive DSO engagement is essential—submit connection applications at project initiation rather than after equipment procurement. For time-constrained projects, consider hybrid heat pump systems (Quatt, Bosch Compress 5000) that operate within existing electrical allocations (3-4 kW) while gas backup handles peak loads. These systems qualify for most national incentive schemes while avoiding network reinforcement dependencies. Additionally, several member states—including Germany and the Netherlands—now allow "provisional commissioning" where installed heat pumps can operate at reduced capacity pending full connection upgrades, preserving incentive eligibility dates.

Q: What performance metrics should we track for EPBD compliance reporting?

A: The recast EPBD requires building-level energy performance certificates (EPCs) to reflect actual operational data by 2028. Essential metrics include: Seasonal Coefficient of Performance (SCOP) calculated monthly and annually, deviation from design performance specifications (>15% underperformance triggers commissioning review), percentage of heating demand met by heat pump versus backup systems, and grid interaction data showing peak demand contribution and flexibility service provision. The EU Digital Building Logbook framework, mandatory from 2027, will standardise reporting formats. Early adoption of compliant monitoring systems—such as those from Sense, Hive, or Tado—reduces future integration costs.

Q: How do we evaluate VPP aggregation offers and ensure fair revenue sharing?

A: VPP revenues derive from three primary services: frequency response (fastest, highest value), demand turn-up/turn-down (most common), and capacity reservation (predictable but lower value). Aggregator contracts should specify: minimum annual revenue guarantees (€60-80 per heat pump is reasonable for residential systems), transparent algorithm access showing when and how loads are shifted, override protocols allowing occupants to opt out during critical periods, and data ownership terms ensuring building operators retain performance data. Leading aggregators—Kiwi Power, Flexitricity, and Octopus Energy's Kraken platform—now offer standardised contract templates reviewed by industry associations. Avoid revenue-share-only arrangements without floor guarantees; these often underperform during mild weather periods when flexibility value is lowest.

Q: What refrigerant strategy minimises regulatory and maintenance risk through 2035?

A: The EU F-gas phase-down creates a clear hierarchy: R290 (propane) systems offer the lowest long-term risk with GWP of 3 versus 2,088 for R410A, but require safety certifications and larger unit footprints unsuitable for some urban applications. R32 (GWP 675) provides a transitional option with smaller equipment and broader installer capability, though availability will tighten post-2030. For new installations, prioritise R290 where site conditions permit; for constrained sites, R32 remains viable through 2030 with acceptable maintenance availability. Avoid R410A for any installation after 2025—repair costs will rise sharply as supply restrictions take effect, and residual values at end-of-lease will reflect stranded asset risk.

Sources

The 90-day window from assessment to operational heat pump deployment is achievable with structured planning, proactive stakeholder engagement, and disciplined execution. Organisations that master this transition methodology will not only meet tightening EPBD requirements but capture operational savings, grid flexibility revenues, and the competitive advantage of demonstrated climate leadership. The regulatory trajectory is clear; the incentive frameworks are generous; the technology is proven. Execution is now the differentiating capability.

Topics

electrificationheatcomplianceancillary servicescapexVPPtransition plan

Related Articles