Demand for heat pumps in the Czech Republic plunges by 60 percent year on year

Demand for heat pumps fell sharply. Czech manufacturers sold 20,029 heat pumps last year, a year-on-year decline of around 60 percent. Interest in the equipment thus returned to normal levels seen before the energy crisis. Average equipment prices fell by around 15 percent last year. The weaker demand is mainly due to lower energy prices. This follows from an analysis by the Heat Pump Association (AVTČ) and consultancy EY. The decline in demand in the Czech Republic is among the steepest in Europe.

According to the association, the difference between currently set electricity and gas prices is key to the development of domestic demand. While interest in heat pumps rose to more than 60,000 units in 2022 during the energy crisis due to high electricity and gas prices, it has fallen significantly following the decline in energy prices.

The trend was not reversed even by the gradual fall in pump prices. According to the association, equipment prices are on average 15 percent lower than in 2023, with price declines even more pronounced in some cases. The reasons include last year's inclusion of pumps in the reduced VAT rate, while clearance sales of inventory by Asian distributors are also putting pressure on prices.

Overall, more than 26,000 heat pumps were installed last year. According to the association, the figure reflects delayed installations as companies caught up with high demand from the previous year. „Slow installations are inevitably affected by the labour market situation. While manufacturers often invested hundreds of millions, and the largest companies even billions, in expanding their capacity to meet extreme demand, such an injection is unfortunately not enough for installation companies and the search for qualified workers,“ said AVTČ chairman Radek Červín.

According to him, the Czech market is currently stable, with delivery and installation times of several weeks. Even given weaker demand, he does not expect a similar situation with installation delays to recur, at least until any major increase in gas prices.

The decline in interest in heat pumps in the Czech Republic is among the steepest in Europe. A number of domestic manufacturers are therefore seeking to offset fluctuations through sales abroad. „The energy crisis drove up demand for heat pumps across Europe, especially in countries dependent on Russian gas imports. However, the situation now differs fundamentally between individual countries, as the key factors are electricity prices for heat pumps compared with gas prices and support from individual governments,“ said Tomáš Habel, head of AVTČ's strategy section.

According to the analysis, Belgium is now in a similar position to the Czech Republic, with sales down 52 percent, while demand in neighbouring Germany fell by 48 percent. In contrast, sales in the United Kingdom rose 63 percent year on year, partly thanks to strong government support.

The capacities of Czech manufacturers are significantly higher, and following their expansion in recent years, they can produce hundreds of thousands of units annually, according to the association. Manufacturers say demand is strongest in new-build projects, while owners of family homes are currently reluctant to buy them as part of renovations. A large share of domestic production is therefore exported, according to the association, while some companies are cutting production.

Air-to-water heat pumps have long been the most popular type in the Czech Republic, accounting for around 80 percent of the market, according to the association. Czechs bought around 15,000 of them last year. By contrast, 819 more efficient but also more expensive ground-to-water units were sold last year, accounting for five percent of demand.