The International Energy Agency says heat pumps could be cheaper to operate than gas boilers in almost all EU countries, with potential annual energy savings of up to €800 for some households. The finding forms part of the agency’s wider analysis of electrification in Europe, where energy costs, grid charges and policy design vary sharply from one market to another.
The IEA’s assessment should be read as a source-backed claim from the agency rather than an independently verified market result. Its central argument is that heat pumps are already close to, or below, gas boilers on lifetime cost in several European markets, but adoption remains uneven because the economics do not depend on equipment efficiency alone.
Upfront installation costs, electricity-to-gas price ratios, access to financing, local climate, building condition and grid fee structures all affect whether a heat pump looks attractive to a household or industrial buyer. That makes the headline comparison useful, but not universal.
Industrial Heat Pumps Depend on Power Prices and Grid Rules
In industrial settings, the IEA focuses on low-temperature heat, which it defines as heat below 150 C. The agency says this portion of industrial energy demand could be a strong candidate for electrification, and argues that heat pumps may be among the most cost-effective technologies for many of those applications. That cost claim has not been independently verified here, so it is best treated as the IEA’s analysis rather than a settled market fact.
According to the agency, heat pumps have lower lifetime costs than gas boilers in 17 EU countries when assessed against 2025 prices. Those countries are said to represent about 40% of the EU’s low-temperature thermal energy demand. The IEA also says low-temperature heat accounts for about 15% of industrial energy demand and could be served largely by heat pumps, though the practical result would depend on site-by-site engineering, electricity contracts and connection capacity.
The agency argues that tariff design is one of the main reasons the same technology can look economical in one country and marginal in another. Industrial users that can shift demand may benefit when electricity tariffs pass through low day-ahead or intraday power prices. In contrast, flat network charges can keep end-user electricity prices high even when wholesale electricity prices fall sharply.
The IEA points to Denmark, Germany and the Netherlands as examples of markets where reduced grid fees for flexible demand are being introduced to improve the economics of electrification. That claim has not been independently verified here, but it reflects the agency’s broader view that flexible users need price signals that reward them for using power when the grid can support it.
The agency also links industrial heat pump deployment to wider grid policy. It says the EU Grids Package could help reduce barriers such as high capital costs, infrastructure limits and long grid connection delays. Again, the degree to which that package resolves these problems will depend on implementation in individual countries.
Residential Adoption Is Uneven Across Europe
The IEA says residential heat pumps could support building electrification across the EU, but adoption is far from evenly distributed. It identifies the Nordic countries, Portugal, France and Austria as stronger markets for deployment, while other large heating markets remain more difficult on total ownership cost.
The agency also reports that residential heat pump sales across 11 major European markets, including France, Germany and Poland, rose 17% in the first quarter of 2026. That figure is presented as the IEA’s reported market reading and has not been independently verified here.
For households, the agency’s analysis says heat pumps are cost-competitive with gas boilers over their lifetime in 16 countries, representing about one-third of EU residential space-heating demand. It attributes that advantage partly to more favorable electricity-to-gas price ratios in those markets.
Outside the Nordic region, the IEA estimates that owning a heat pump can be 15% to 30% cheaper than owning a gas boiler in the Netherlands, Portugal and Bulgaria. In 11 other countries, it says heat pumps are either similar in cost or more expensive than gas boilers at 2025 prices. That group includes Germany, Poland and France, which the agency describes as major heating markets.
| Area | IEA-reported finding | Important caveat |
|---|---|---|
| Industrial low-temperature heat | Lower lifetime costs than gas boilers in 17 EU countries | Based on the agency’s 2025 price analysis, not independently verified here |
| Residential heating | Cost-competitive with gas boilers in 16 countries | Results depend on electricity and gas price ratios, installation costs and building conditions |
| Household running costs | Potential annual energy savings of up to €800 | Actual savings would vary by country, tariff, home efficiency and usage |
Lower Running Costs Do Not Remove the Upfront Barrier
The IEA’s analysis draws a clear distinction between operating cost and purchase decision. Even where heat pumps are cheaper to run, gas boilers often remain cheaper to buy and simpler to install. That matters because households usually face the installation bill before they see any annual energy savings.
The agency says appropriate installation and operation can allow heat pumps to last longer, improve thermal comfort, reduce exposure to fossil-fuel price swings and cut local air pollution. It also says air-to-air units can improve indoor air quality and support comfort during warmer months. Those broader benefit claims are not independently verified here, and outcomes will vary with system design, maintenance and building layout.
Because the upfront cost gap remains a practical obstacle, the IEA recommends measures such as low-interest financing and project management support for building renovations. The point is not simply to subsidize equipment, but to reduce the complexity that can make homeowners default to a familiar boiler replacement.
That same pattern applies to industrial buyers. A factory may have a good technical case for electrifying low-temperature heat, but still face connection delays, capital constraints or tariff structures that weaken the business case.
No Single Price Ratio Solves the Question
The IEA also places heat pumps in a wider electrification discussion that includes electric vehicles. It says battery electric cars are expected to become more affordable as lower-cost models enter the market and supportive policies expand adoption. That outlook is the agency’s analysis and should not be read as a guarantee for every market.
A broader conclusion from the report is that there is no single electricity-to-gas price ratio at which electrification becomes cost-competitive everywhere. Heat pumps and electric vehicles may be among the more promising electrification options, but the economics depend on the application, local climate, consumer behavior, financing costs and baseline energy prices.
For buyers and policymakers, that makes the IEA’s findings both encouraging and conditional. Heat pumps may already beat gas boilers on running costs in much of Europe, according to the agency, but wider adoption still depends on making installation easier, financing less painful and electricity pricing more responsive to real system conditions.