Heat pumps in Germany Cost up to Twice of that in UK Due to Stricter Reglations and Higher Taxes

Heat pump

GERMANY: A study by Octopus Energy and RWTH Aachen University’s Institute for Energy Efficient Buildings and Indoor Climate reveals that purchasing and installing an 8-kW air-to-water heat pump costs about €28,000 ($30,390) in Germany, compared to only €14,000 in the UK. The research, which analyzed real-world heat pump offers and installation expenses in both nations, attributes the disparity to a mix of stricter technical requirements, varying subsidy and tax frameworks, and more intricate installation processes in Germany.

For example, the outdoor unit in Germany is priced at more than twice that in the UK, and German indoor units often come with a defrost buffer and an additional heating element for enhanced comfort—features that drive up costs. Moreover, electrical components are significantly less expensive in the UK due to reduced technical and safety standards, and the simpler house connection systems there are viewed as a model worth emulating.

Higher technical demands also lead to more costly installations in Germany. Enhanced efficiency and sound insulation standards require more complex foundation work for the heavier, quieter systems commonly used there, whereas installations in the UK are generally more straightforward. Additionally, Germany’s colder climate necessitates higher flow temperatures in heating systems to maintain efficiency, further impacting the price.

Tax and subsidy differences further widen the gap. Heat pumps in the UK benefit from a VAT exemption, while in Germany the full 19% VAT is applied. The study also notes that major markets like Norway and Denmark operate with VAT exemptions. In terms of financial support, the UK provides a fixed subsidy of £7,500 (just under €8,900) per heat pump, while Germany bases its subsidies on a percentage of the overall costs.

Source: Octopus Energy