IEA says heat pumps are cheaper than gas boilers in most EU countries, with savings up to $900
Heat pumps could save households hundreds of euros a year while helping Europe reduce its reliance on imported fossil fuels, but a new analysis suggests those benefits still vary widely depending on where people live.
For many buyers, the biggest hurdle is not the monthly energy bill. It is the higher upfront cost of making the switch.
What’s happening?
According to pv magazine coverage of the International Energy Agency report, households in nearly every EU country can now pay less each year to run a heat pump than a gas boiler, with savings reaching as much as €800, or about $924, in some places.
The same analysis found that in 16 countries, residential heat pumps meet or outperform gas boilers on total lifetime ownership cost, covering roughly one-third of the EU’s residential space-heating demand.
Sales of residential heat pumps in 11 major European markets — including France, Germany, and Poland — rose 17% in the first quarter of 2026.
For industrial users, the IEA said heat pumps are the lowest-cost option for electrifying most heat demand below 150 degrees Celsius (302 degrees Fahrenheit).
It found that 17 countries, representing about 40% of the EU’s low-temperature thermal demand, already show better lifetime economics for heat pumps than for gas boilers.
Still, adoption remains uneven in both homes and factories. The IEA linked that gap to differences in policy design, market structure, and energy pricing from one country to the next.
Why does it matter?
Because the EU imports about 80% of its fossil fuels, shifting more buildings and industrial processes to electricity could do more than just lower energy bills.
It could also reduce dependence on imported fuel and help buffer consumers from swings in gas prices.
In some non-Nordic markets, the financial case is already strong.
The IEA estimated that lifetime ownership of a heat pump is 15% to 30% cheaper than owning a gas boiler in the Netherlands, Portugal, and Bulgaria, while also pointing to benefits such as lower operating costs, longer equipment life, and, in some cases, better comfort.
The agency’s analysis said heat pumps may also reduce local air pollution, and air-to-air models can support better indoor air quality as well as summer productivity and wellbeing.
That advantage is not dramatic everywhere. In major heating markets such as Germany, Poland, and France, the lifetime cost gap is often small, and many buyers still opt for gas because boilers are cheaper to purchase and easier to install.
What’s being done?
The IEA said stronger policy support could help accelerate adoption. That could include low-cost financing and help manage renovation projects for residential customers, both of which could make the upfront investment easier to handle.
On the industrial side, the agency pointed to electricity pricing reform as a major opportunity. The agency said industrial customers that can shift demand may fare better under tariffs that reflect cheaper day-ahead or intraday electricity, instead of flat network charges that keep power expensive even when wholesale prices fall.
Some countries are already moving in that direction. Denmark, Germany, and the Netherlands have begun rolling out lower grid fees for flexible demand to improve the economics of electrification.
The IEA also pointed to the EU Grids Package as one way to address high capital costs, infrastructure bottlenecks, and long grid-connection delays.
“Heat pumps are cheaper to operate than gas boilers in almost all EU countries, with annual energy savings of up to €800 ($924),” the IEA stated. “With appropriate installation and operation, heat pumps also last longer, improve thermal comfort and increase property values, while reducing exposure to fossil-fuel price volatility and local air pollution.”
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