Heat pumps in Germany twice the cost of UK
12th March 2025
GERMANY: The cost of buying and installing a heat pump in Germany is sometimes almost twice as high as in the UK, a new report reveals.
The study by Octopus Energy and the chair of Building and Indoor Climate Technology at RWTH Aachen University compares the prices for an 8kW air-to-water heat pump and identifies massive differences in acquisition and installation costs.
The cost of an 8kW heat pump in Germany is around €28,000, according to the study, while consumers in the UK pay only around €14,000.
The study blames a number of factors for the price differences, including a combination of increased technical requirements, different subsidy structures and taxation, and more complex installation in Germany.
The study reveals that in Germany there is a separate indoor unit, which often includes a defrost buffer and an additional heating element. This leads to increased comfort but also higher costs, the study says.
Electrical components are also said to be significantly cheaper in the UK, as the technical requirements, including those regarding safety technology, are significantly lower than in Germany.
It also insists that domestic connections are also “generally technically simpler” in the UK with Germany demanding “more technically sophisticated” and expensive components. Higher requirements for efficiency and sound insulation are cited, with the quieter and therefore heavier systems in Germany usually requiring complex foundations.
Due to lower outside temperatures in Germany, higher flow temperatures are also required in the heating system.
Subsidies and tax
A key factor in the price differential is the different tax systems and subsidy structures in the two countries.
While heat pumps are completely exempt from VAT in the UK, the full tax rate of 19% applies in Germany. In addition, the subsidy in Germany is based on a percentage, while in the UK a fixed subsidy of £7,500 (€8,888) is available thought the UK’s boiler upgrade scheme.
Octopus Energy has called for simplification of the German market. “Heat pumps are artificially expensive in Germany. Unnecessary bureaucratic hurdles make the transition more costly than necessary,” said Bastian Gierull, CEO of Octopus Energy Germany.
“If we take the energy transition seriously, we must relieve consumers’ burdens instead of scaring them off with high costs. Policymakers must finally act: reduce taxes, simplify subsidies, or even phase them out – because when the overall costs of an installation finally decrease, subsidies become obsolete. In addition, the necessity of the stringent regulatory and technical requirements should definitely be examined more closely.”
Dr Jan Rosenow, vice president and European director for global strategy at the Regulatory Assistance Project (RAP), a clean energy non-profit organisation, also emphasised the need for reforms to Germany’s TGA+E specialist planner: “In Great Britain, a fully installed heat pump costs an average of €15,000 – without subsidies. New players have entered the market in competition with traditional trades.”
Rosenow calls for Germany to learn from these developments and take measures to open up the market and lower prices.
