Now even tank builders want to be part of the German heat pump miracle

Weapons and car parts: The Düsseldorf group Rheinmetall is perhaps the most German company there is. On December 28, however, the manufacturer announced the biggest deal it has ever landed outside of its two classic corporate divisions: Rheinmetall will supply an unspecified customer with so-called refrigerant compressors for 770 million euros. The group is successfully implementing its “diversification strategy”, it said in an accompanying message.

Growing through technologies

The deal was hardly noticed in the business press at the time, which is probably due to the holidays and the fact that tanks are a much more exciting field of activity for the group in Ukraine than refrigerant compressors. On Thursday last week, however, it became known in which product the compressors are to be used: heat pumps. To be more precise: heat pumps for German apartments and houses.

“A leading German heating manufacturer” is said to have ordered this central component for the heat pump in a large order, reported the “Handelsblatt” on Thursday. According to industry circles, it is said to be the Viessmann company. Anyone who asks Rheinmetall for more details will only receive a general statement that “opening up business areas in the field of alternative energy supply” represents a great success. It is important “to grow through promising technologies”.

Mega factories for the “people’s heat pump”

Others have long recognized the growth potential of heat pump technology in Germany. In Central and Eastern Europe, manufacturers such as Viessmann, Vaillant, Bosch and Daikin are setting up several heat pump mega factories, some of which are scheduled to start production as early as 2024. Mitsubishi Electronics is currently expanding its gigantic plant in Turkey again, with the aim of producing 300,000 heat pumps per year for the European market.

Observers expect a brutal battle for the lucrative sales area. Viessmann recently took refuge with its heat pump division under the umbrella of the large US group Carrier in order to be able to increase its production volumes as well. Other players from outside the industry are also entering the market – such as the German solar market leader Enpal, which will now offer a “people’s heat pump” together with Bosch. “Enpal shows practically how the federal government can achieve its climate goals,” it said in a statement on Thursday. “The heat pump is worthwhile, is technically feasible and you can scale it up quickly.”

Suddenly within reach

A look at the figures shows that the heat pump in Germany has long since become the “national heat pump”. According to the Federal Association of the German Heating Industry (BDH) and the Federal Association of Heat Pumps (BWP), a total of 91,500 heating heat pumps were installed in the first quarter of this year alone, plus 16,500 heat pumps for hot water. In the same quarter of the previous year, there were only 43,500 heating heat pumps – an increase of 110 percent. Since 2019 alone, sales of heat pumps in Germany have tripled.

An ambitious goal that Economics Minister Robert Habeck announced last June is suddenly within reach again: the installation of 500,000 heat pumps per year from 2024. The 500,000 mark “will be reached”, the BWP recently announced confidently. In addition, two major bottlenecks that had recently slowed down expansion are slowly disappearing: with the increase in production capacities, prices and delivery times are also falling.

And the situation is also improving in the skilled trades, at least slowly. The shortage of skilled workers continues to cause problems for the industry, but know-how is increasing. “More and more companies are taking up qualification offers and specializing in the installation of heat pumps,” says the BWP. Craft businesses that simply stubbornly installed gas heaters because they didn’t want to deal with the new technology are becoming fewer and fewer.

The turning point has long since come

The forecasts from the past are regularly exceeded by reality. In its own industry study from January 2021, even the BWP assumed lower figures than were then observed in reality. “The sales figures and market developments are at the upper end of what I expected,” says Nils Thamling, an expert on buildings and heat supply at the economic research institute Prognos, about FOCUS online Earth.

The development of the heat pump market shows two things. First: Anyone who now, in spring 2023, still wants to wage a culture war for gas heating and against the heat pump is on a losing battle. There has long been dissatisfaction in the industry about how the current political and media debate about the heat transition is contributing more to uncertainty than to enlightenment. And secondly: The forces of the market are already having a stronger effect than many market participants would have thought. The heat pump revolution has long since arrived.

“There is no more leeway”

This also puts the role of politics in a new light. It has committed itself by law to making the building sector climate-neutral by 2045. But is there still a need for detailed regulatory regulations such as the Building Energy Act (GEG) from Robert Habeck’s Ministry of Economic Affairs, which wants to prescribe exactly when which heating systems may no longer be installed and which requirements must be met? Hasn’t the market already proven to be more efficient? Especially since European emissions trading will take effect from 2027, which according to various estimates will make heating with gas and oil roughly twice as expensive? Or to put it another way: is the “heating hammer” still the right tool?

Unfortunately, it’s not that simple, says Thamling. For the Ministry of Economics, the building expert has created one of the most important background studies on the heat transition by 2045 – hardly anyone knows as well as he does what needs to be done on the way to climate neutrality. “Emissions from the building stock have fallen much more slowly than necessary in recent years,” explains Thamling. “Unfortunately, from a purely technical point of view, there is now no longer any significant scope.”

Wasted time

The fundamental problem is that 22 years in the building sector is a darn short time. An average gas heater, for example, lasts about 20 years – so if Germany is serious about climate neutrality from 2045, it will not be allowed to install a single new fossil device in the year after next at the latest. Can the market really do this on its own?

Thamling does not assume that Germany has simply done too little in the past. It must be stated “that the previous federal governments did not manage to get the necessary development off the ground,” says the expert. “Ten or fifteen years ago, the measures for this would have been comparatively moderate.” But the shorter the time becomes, the more drastic the measures taken have to be – that’s the simple principle. “For example, it would have been time for a long-term entry into CO2 pricing and we would have already reached a level with a steering effect, such as in Switzerland or Sweden,” explains Thamling.

So instead of selectively reaching into the toolbox and picking out individual measures, all instruments must simply be used if the heat transition is to work by 2045. In other words, the market is enormously important, but it cannot do it alone. In addition to major regulatory interventions such as building energy, other measures are also relevant, explains Thamling – including “massive support” for expensive conversion work.

“This is absolutely misleading”

But something else is also particularly important, according to the Prognos expert: comprehensive information work and education. For example, there is currently an environment “in which people are suggested that the use of electricity-based renewable fuels such as hydrogen would be a widely available and cost-effective option in the short term and that one would be on the safe side with an H2-Ready boiler – that is absolutely misleading ‘ criticizes Thamling. “There is no solid scientific evidence to suggest that H2 could play this role.”

In fact, the heat pump boom of the last few months has also been accompanied by a boom in gas and oil heating. According to the heating association, sales of oil heaters have doubled compared to the same quarter of the previous year. Many homeowners are now installing a new fossil fuel boiler in order to have peace of mind – often without knowing what the European emissions trading from 2027 will mean for them.

The state must inform people here and take them along, the expert demands, instead of leaving them alone. “I think that leads to a lot of people being caught in the open,” says Thamling. “Climate protection goals cannot be achieved in this way.”