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What are heat pump subsidies?

All across Europe, different governments have introduced a range of subsidies to help householders move towards greener energy options.

Switching an older gas or oil boiler for a heat pump can have significant cost implications and a heat pump subsidy is designed to give qualifying properties the financial assistance needed to make these changes easier. Most subsidies come in the form of grants paid directly to the installing company or the investor or as monthly payments over a set period.

Why do we have a heat pump subsidy?

Gas has been used to heat homes and businesses for more than 100 years in many European towns and cities. Governments have decided to phase out gas and oil boilers and move towards low carbon solutions such as heat pumps as we try to combat climate change.

The big challenge has historically been convincing homeowners to make this change but with rising gas prices a problem across Europe and subsidies now in place in most countries, there’s increasing enthusiasm and recognition that heat pumps are a viable option. 

According to the European Heat Pump Association, the installation of heat pumps across Europe has increased steadily over the last 13 years. In 2020, despite the pandemic, some 14.84 million were installed across 21 countries.

The cost of installing a heat pump

The cost of a heat pump comes in two parts. There’s the price of the device itself and then there is the cost of installation.

  • An air-source heat pump could cost as much as €8-10,000 to install.
  • Due to the extensive land excavation required, a ground source heat pump could cost approximately €16-22,000.

For older properties, retrofitting equipment into existing heating systems and potentially improving building insulation to make the heat pump installation a viable option is an additional challenge which can add to the costs.

Which European countries offer a heat pump subsidy?

Currently, 21 European countries provide heat pump subsidies, each with its own eligibility criteria. Here are a few examples:


Austria provides subsidies for air, water and ground-source heat pumps but not for hybrid heat pumps. Homeowners can receive a set monthly payment depending on the heating capacity of their system and the energy produced. The government provides grants up to a maximum of €5000 for single-family buildings and €1000 for multi-storey homes. There are also local loans and grants available.


Like many countries in Europe, Hungary is focused on changing from fossil fuel heating to low carbon solutions such as heat pumps though it has fewer incentives at the moment than many of its neighbours. Their current offer is focused on a soft loan scheme for installing renewable and low carbon solutions, including heat pumps, with discounts of between 5 and 7%.

United Kingdom

The UK offers two ways to support installing a heat pump in the home. The first is a grant that covers part of the initial installation and is aimed at those on low incomes. With uptake lower than in many other regions, the UK government has just announced a £5,000 subsidy for households over the next three years.

The second area of support is a monthly payment for 7 years through the Renewable Heat Incentive (RHI) scheme, the amount depends on the energy output the system produces.

Final thoughts

With the challenge of climate change reaching a critical juncture, the schemes designed to move us away from fossil fuels to a much cleaner future will only grow in popularity across the EU and around the world.

With affordability being the most significant consideration for many families, rising subsidies could be the key to making low carbon heating possible for people at all ends of the affordability scale.

Find out more about heat pumps by visiting the Daikin Home Solutions Hub, a place dedicated in providing you with all the information you need about your home’s heating and hot water needs.

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