10 December 2021

Denmark: Strategic Market Outlook

---

The number of heat pumps sold per year has doubled since 2016. In new build, a ban on gas and oil boilers is a key driver for heat pumps. In existing buildings, a ban on replacement oil boilers, as well as available subsidies to switch from gas or oil to heat pumps, are driving a shift towards heat pumps. A large number of heat pumps (particularly air/air) are also being sold without subsidies, driven by the running cost savings achievable and the simplicity of the heating system (especially compared to wood/biomass). In relation to consumers’ running costs, the price of electricity in relation to other forms of heating such as gas, oil, district heating or biomass (wood/pellets) is critical, and Denmark has had some of the highest electricity prices in Europe. To counteract this, a reduction in the tax on electricity for heating was introduced in 2016, and by 2021, this tax has been reduced almost to zero. In recent years, the drop in gas prices has made it more challenging for electric heating, so hydronic heat pump sales did not increase as much as anticipated, but the gas price rises in 2021 have been positive for heat pumps.