Industry representatives are strongly opposing a proposal from the conservative bloc to reduce subsidies for heat pumps to fund a reduction in electricity taxes for all consumers. Concerns over future regulatory frameworks are already deterring building owners from making necessary investments, according to Martin Sabel, Managing Director of the German Heat Pump Association (BWP), speaking to Funke-Mediengruppe newspapers.
Sabel emphasized that the government’s recent statements are likely counterproductive. He suggested that the ongoing recovery in demand for heat pumps presents an opportunity to incentivize further investment through additional reductions in electricity taxes. A two-cent reduction in the electricity tax, he estimates, could save a typical heat pump operator with an annual consumption of 5,000 kilowatt-hours (kWh) approximately €100 per year.
The proposal to curb heat pump subsidies arose from the conservative bloc amid discussions regarding the electricity tax reduction. Tilman Kuban previously stated that those utilizing electricity for heating directly benefit from lower electricity prices and therefore require less subsidy, citing a potential funding volume of €16 billion for the following year.
However, BWP disputes this figure, clarifying that of the total €15.3 billion earmarked for building energy efficiency upgrades (BEG) this year, only €3.5 billion is allocated to heat pump subsidies.
The German Heating Industry Association (BDH) also voiced strong opposition to the conservative proposal. The BDH stated that suggesting a reduction in heat pump subsidies to offset electricity tax relief sends the wrong signal, particularly given the current market conditions and climate policy objectives for the building sector.
The agreement for a general reduction in electricity taxes was initially established in the coalition agreement between the conservative and social democratic parties. The cabinet recently approved measures including relief on network charges – a component of the electricity price – and the abolition of the gas storage levy for gas customers. A reduction in the electricity tax for industry, agriculture and forestry is intended to be made permanent. The decision to postpone the electricity tax reduction for consumers until a later date has drawn widespread criticism, even within the conservative ranks. The issue is expected to be addressed again at a coalition committee meeting this week.
