From pv magazine Germany
The cost of purchasing and installing an 8 kW air-to-water heat pump in Germany is around €28,000 ($30,390), while in the UK it costs only €14,000. This is the key finding of a study conducted by Octopus Energy in collaboration with RWTH Aachen University's Institute for Energy Efficient Buildings and Indoor Climate. The survey is based “on a detailed analysis of real heat pump offers and installation costs” in both countries.
The main reasons for the price differences are cited as “a combination of increased technical requirements, different subsidy structures and taxation, as well as more complex installation in Germany.” For example, the outdoor unit is more than twice as expensive in Germany, and there is no separate indoor unit in the UK. “The indoor unit in Germany often includes a defrost buffer and an additional heating element, which leads to increased comfort but also higher costs,” Octopus Energy said in a statement. Electrical components, in turn, are considerably cheaper in the UK because “the technical requirements, including those regarding safety technology, are significantly reduced compared to Germany.” House connections are also “generally technically simpler” – something the authors of the study clearly consider worthy of emulation.
The different technical requirements also make installing a heat pump in Germany significantly more expensive. In addition, higher efficiency and sound insulation requirements make the process more complex. “In particular, the quieter and therefore heavier systems in Germany usually require complex foundations, whereas the systems in the UK can usually be easily installed.” The weather also plays a role, because the lower temperatures in Germany require higher flow temperatures in the heating system; the heat pumps must therefore “still be able to provide heat efficiently even in these areas, which is reflected in the price.”
VAT Exemption and Fixed Subsidy Amount
The study also identifies differences in taxes and subsidies as a key factor in the price differences. In the UK, heat pumps are exempt from VAT, while in Germany the full rate of 19 percent applies. However, as the study indicates, other large heat pump markets such as Norway and Denmark also operate without VAT exemptions. The support system in the UK provides a fixed subsidy of £7,500 (just under €8,900) for a heat pump, while in Germany, there is a subsidy based on a percentage of the costs.
For Octopus Energy CEO Bastian Gierull, the study proves that heat pumps are being “artificially inflated” in Germany: “Policymakers must finally act: reduce taxes, simplify subsidies, or even phase them out – because when the total costs of an installation finally decrease, subsidies become obsolete. In addition, the necessity of the high regulatory and technical requirements should definitely be examined more closely.”
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