Norway: Heat Pump Market Report

Rolf Iver Mytting Hagemoen, Norwegian Heat Pump Association, Norway

Norway, a global leader in heat pump adoption alongside Sweden and Finland, showcases a unique energy transition model. Driven by early electrification, historically low electricity prices, and minimal gas heating, the Nordic region boasts unparalleled widespread adoption of heat pumps. Despite a recent market correction after the sales records of 2022-2023, the long-term outlook remains strong. While Norway’s district heating is less extensive than its neighbours’, heat pumps contribute nearly 10 % of its production. The share of heat pumps in district heating and industrial processes is expected to grow.

Introduction

Norway stands as a global leader in heat pump adoption, consistently boasting one of the highest per capita penetrations of heat pumps in the world. This success story is shared with its Nordic neighbours, Sweden and Finland. This common ground stems from a combination of early and extensive electrification of society, historically low electricity prices (predominantly from hydropower in Norway and nuclear/hydro in Sweden/Finland), and a notably low reliance on natural gas for building heating. While all three excel in heat pump deployment, their approaches to complementary heating solutions like district heating vary.

 Lower Electricity Prices led to a decline in heat pump sales in 2024

Electricity is the main source of heating in Norway, and there is a strong correlation between sales of heat pumps and electricity prices. In years with high electricity prices, heat pump sales increase since the main reason for purchasing heat pumps in Norway is to save money on electricity for heating. Cold winters and hot summers also drive the heat pump market, since increased comfort is also an important reason to buy heat pumps.

Around 95% of air-to-air heat pumps in Norway are used for heating, and high-quality “Nordic models” dominate the market. These are models tested for minus 25 °C or lower. Pure chillers and air conditioners for commercial buildings are not recorded in heat pump statistics in Norway.

In the fall of 2021, electricity prices skyrocketed, a trend further intensified by increasing gas prices in Europe, following the Russian invasion of Ukraine in February 2022. This followed 2020, which had the lowest electricity prices since 2002. In 2022 and 2023, Norway had abnormally high electricity prices, which contributed to two years of record sales of heat pumps. This surge was further propelled by the COVID-19 pandemic, where travel restrictions led to increased household spending on home renovations, including heat pump installations.

Supply chain disruptions experienced across Europe during the COVID-19 pandemic led to significant delivery delays. Consequently, many heat pump orders placed in late 2022 were not installed until spring 2023. This suggests that actual demand in 2022 was even higher than sales figures indicate, with a corresponding slight overstatement in 2023 sales.

With the introduction of a very favourable electricity price subsidy scheme in Norway, combined with rising housing interest rates, a decline in sales for 2024 was anticipated, and this proved to be the case. Air-to-air and air-to-water heat pumps experienced a moderate decline, while sales of brine-to-water heat pumps fell by over 40%.

A Nordic Model: Early Electrification, Low Electricity Prices, and No Gas Dependency

The high per capita penetration of heat pumps in Norway, Sweden, and Finland is deeply rooted in their historical energy landscapes. Unlike much of Central and Southern Europe, these countries underwent significant electrification of their societies early on, leveraging abundant domestic renewable energy sources – primarily hydropower in Norway and a mix of hydro and nuclear power in Sweden and Finland.

Norway boasts a nearly 100% renewable share in its electricity production, consistently exceeding 98% in a normal year, primarily driven by hydropower and wind power. In 2024, total electricity production in Norway amounted to 157.2 TWh, which was a record high production:

• Hydropower: Around 89.1% (140.0 TWh).
• Wind power: Around 9.3% (14.5 TWh).
• Solar power: Around 0.2% (0.25 TWh).

In 2024, the total renewable share of energy use in Norway increased to 55.4%. This means that almost half of the total energy use in Norway is still fossil (mainly transport and industry). In 2024, power consumption in buildings amounted to 64 TWh, while the total energy consumption in Norway was 215 TWh. Heat pumps deliver over 12 TWh of ambient heat annually.

Important Drivers for Heat Pump Sales:

• Abundant, historically low-cost electricity: For decades, electricity has been the dominant energy carrier for heating in Norway. This made electric heating a natural choice, and as heat pump technology matured, it offered a significantly more efficient alternative to direct electric resistance heating, leading to substantial economic savings for consumers.
• Minimal natural gas infrastructure: Unlike many other European nations, Norway, Sweden, and Finland have developed very little natural gas infrastructure for heating buildings. This meant that when fossil fuel heating began to be phased out, there was no large incumbent gas heating sector to displace, simplifying the transition to electric-based heating solutions, such as heat pumps. This absence of gas dependency meant a smoother pathway to decarbonization of the heating sector. Use of fossil oil for heating in buildings has been banned in Norway since 2020.

While all three Nordic countries share these fundamental drivers, their development of district heating networks differs. Sweden and Finland have a significantly higher penetration of district heating compared to Norway. In Sweden, district heating covers more than half of the total heat demand, and similarly high figures are seen in Finland, particularly in urban areas. In Norway, district heating is particularly widespread in larger cities and densely populated areas.

Market Overview and Key Trends

The Norwegian heat pump market, particularly for individual installations, has shown remarkable resilience and growth, driven by the factors mentioned above. Over 60% of Norwegian households now utilize heat pumps for heating, showcasing widespread consumer acceptance.

Most heat pumps installed in Norway are air-to-air heat pumps, largely due to their cost-effectiveness, ease of installation, and suitability for single-family homes. Unlike most buildings in Europe, direct electric heating is common in Norway, making air-to-air heat pumps a natural choice. Air-to-air heat pumps can be the main heating source in small energy-efficient homes, but will only cover part of the heating needs in buildings with a large heating demand. It is becoming more common to purchasing two or more air-to-air heat pumps in larger houses or combining them with wood heating on cold days.

However, there are several buildings with hydronic heating systems where air-to-water and ground source heat pumps are used. These heat pumps are most common in larger houses and commercial buildings. Many older buildings that were heated with fossil oil converted to heat pumps during the period before the ban was introduced in 2020. The use of exhaust air heat pumps is less widespread than in Sweden and Finland, since all new buildings are delivered with balanced ventilation with heat recovery.

Distribution of Heat Pumps in Norway

In the period 1987 – 2024, over 1,9 million heat pumps have been sold in Norway:

• Air-to-air: almost 1,76 million
• Air-to-water: over 63,000
• Liquid-to-water (brine-to-water): over 71,000
• Exhaust air heat pumps: over 28,000
• More than 1,5 million heat pumps are in operation, accounting for more than 12 TWh of ambient heat.

Key Trends Shaping the Norwegian Market Include:

• Increased focus on performance and quality: As the market matures, consumers and installers alike are increasingly prioritizing high-quality, energy-efficient models that perform optimally in Norway’s colder climate zones.
• Digitalization and smart controls: Integration of smart controls, remote monitoring, and connectivity features is becoming standard, allowing for optimized operation, energy management, and integration with smart home systems.
• Role of Natural refrigerants: The market is actively adapting to F-gas regulations, with a growing interest in natural refrigerants for higher efficiency and lower GWP (Global Warming Potential) solutions. Norway has a CO₂-tax on refrigerants, which has contributed to increased demand for natural refrigerants in commercial buildings. The use of R290 in air-to-water heat pumps in residential buildings is already common, and the use of natural refrigerants for several types of heat pumps is expected to grow rapidly.

Expected Sales Outlook: Despite the recent dip, the long-term outlook for heat pump sales in Norway remains positive and robust. Electricity prices are expected to settle at a higher level than in previous years, which will contribute to increased demand for heat pumps. However, the government has introduced a new scheme where households can choose a state-subsidized low electricity price that can drive down demand somewhat.

Enova, a state-owned entity, has for many years promoted heat pump adoption through support schemes for residential, commercial, and industrial sectors. The design and funding levels of future support initiatives will remain crucial factors impacting heat pump sales.  

In recent years, households have only received support for brine-to-water heat pumps, with a modest 855 euros. In 2023, new support programs were introduced for commercial buildings and housing cooperatives, as well as an improved support program for larger heat pump systems. There are separate programs for innovative large heat pump projects, as well as for heat pumps in industrial processes.

Enova is expected to introduce strengthened support programs for heat pumps in households for the period 2025-2029.

As the large number of heat pumps installed over the last 15-20 years reach their end-of-life, a significant replacement market will emerge, ensuring a steady baseline for sales. It is expected that new building regulations with increasingly stringent energy performance requirements for new buildings will favour heat pump installations.

Growth in the commercial, industrial, and district heating sectors for larger heat pump solutions will contribute significantly to overall installed capacity, even if individual household sales stabilize.

A huge potential lies in the extensive renovation market, where many older buildings still rely on less efficient heating systems. Targeted incentives or information campaigns could accelerate this transition.

The continued integration of large-scale heat pumps into district heating networks and their broader application in industrial processes for heating and cooling represent significant growth areas for decarbonization.

Heat pumps can play a crucial role in providing demand response services, shifting consumption to periods of lower prices or higher renewable energy availability, thereby supporting grid stability.

Conclusion and Future Outlook

Norway’s heat pump market serves as a compelling success story, underpinned by its distinct energy history and proactive policy landscape. Alongside Sweden and Finland, it highlights a successful model for decarbonizing heating through early electrification and the avoidance of gas dependency. While the recent sales trends indicate a market normalization after an exceptional boom, the fundamental drivers for heat pump adoption remain strong.

Author Contact Information

Reference

[1]. (European Heat Pump Association, EHPA) https://www.ehpa.org/news-and-resources/press-releases/heat-pump-sales-14-times-greater-in-lead-countries/