Heat Pumps Lead Heating System Replacements in Germany

In Germany, heat pumps surpassed fossil fuel boilers as the most frequently installed heating system in 2025. The Institute of the German Economy (IW) found that 1.9 percent of owner-occupied households replaced their heating with a heat pump, compared to 1.4 percent who installed new fossil fuel boilers.

This marks a shift in preference, driven by low heating costs and the ability of many heat pumps to also provide cooling. Overall, fewer new heating systems were installed in 2025, a rate of 3.4 percent compared to 5 percent the previous year, according to data from the Ariadne project and the IW.

In new constructions, heat pumps are also gaining traction, heating 73.6 percent of the approximately 58,900 completed residential buildings. Government subsidies for heat pumps and other climate-friendly heating systems will decrease in the coming years, potentially impacting adoption rates. The maximum investment grant for heating replacement, currently up to 21,000 euros, will be gradually reduced by several thousand euros by 2030.