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Format
Study
Date
19 December 2023

The roll-out of large-scale heat pumps in Germany

Strategies for the market ramp-up in district heating and industry

The roll-out of large-scale heat pumps in Germany

Preface

This study on large-scale heat pumps provides an overview of the current market status and the potential of large-scale heat pumps and their use in district heating and looks at the political priorities for action required for their deployment.

The roll-out of large-scale heat pumps requires a triad consisting of strategic goals and incentives from the public authorities, technological innovation on the part of manufacturers and accelerated imple­mentation by district heating providers and industry. This entails a solution-oriented partnership between private companies and the public sector. Against this background, it makes sense to use the idea of the Mission Economy, as put forward by the Italian American economist Marianna Mazzucato, as a way to promote the market ramp-up of large-scale heat pumps for the German climate transformation.

This new approach to solving major societal tasks is characterised by an active partnership between the private and public sectors in which the state defines the challenges and problems to be solved without imposing detailed prescriptions and provides investment confidence and security for the private sector. In return, private actors commit to goals such as cost reductions or attractive products and services for customers. In addition, the state takes on entrepreneurial risks, but also takes a share of the returns.

With this study, we want to make a contribution to exploiting the considerable potential of large-­scale heat pumps and district heating systems for a successful heat transition.

Key findings

  1. Heating applications in the range up to 200 degrees are responsible for over three quarters of Germany‘s fossil gas consumption and over a quarter of its greenhouse gas emissions.

    Currently, fossil fuels dominate the heat supply in industrial processes, buildings and district heating systems. In order to achieve the climate targets and reduce fossil gas consumption, it is therefore crucial to switch to climate-neutral options based on renewable energy sources.

  2. The entire heat demand in Germany up to 200 degrees can technically be covered by heat pumps.

    As part of this, large-scale heat pumps can exploit considerable potentials offered by geothermal energy, water bodies and waste heat. By 2045, large-scale heat pumps could provide 70 percent of the district heating supply and thus replace a very large proportion of the fossil gas used. 

  3. Large-scale heat pumps are a proven technology that has considerable market potential in Germany.

    However, there were only 60 megawatts of installed capacity in Germany in 2023. Complex planning and approval procedures are slowing down the market ramp-up. In addition, the existing financial support system under the Combined Heat and Power Act (KWKG) and the higher tax burden on electricity compared to fossil gas have so far favoured gas-based heating options – these perverse incentives must be eliminated.

  4. A rapid ramp-up of large-scale heat pumps requires a cleverly coordinated mix of instruments.

    Of overriding importance is a clear overall goal, combined with energy prices that are in line with the transformation and a reform of the network use charges. Manufacturers should use the resulting planning certainty to drive innovation and reduce manufacturing costs. A revised framework of financial support and measures to speed up large-scale heat pump projects in district heating systems can then stimulate demand.

Bibliographical data

Authors
Fabian Ahrendts, Björn Drechsler, Julian Hendricks, Jan Küpper, Susanne Lang, Tim Peil, Daniel Scholz, Elena Timofeeva, Matthias Utri, Lisa Weidinger (all Fraunhofer IEG); Anna Kraus, Uta Weiß, Simon Müller (all Agora Energiewende).
Publication number
316/03-S-2023/EN
Version number
1.0
Publication date

19 December 2023

Pages
117
Suggested Citation
Agora Energiewende, Fraunhofer IEG (2023): The roll-out of large-scale heat pumps in Germany. Strategies for the market ramp-up in district heating and industry.
Project
This publication was produced within the framework of the project The roll-out of large-scale heat pumps in Germany.

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