Dusseldorf There is turmoil in the heating market: “People are extremely nervous when it comes to oil and gas,” says Nicholas Matten, Managing Director of heating contractor Stiebel Eltron. Since Russia invaded Ukraine, twice as many customers have asked him as before.
Others are also watching the development. The German contract agency, which has more than 500,000 users per month on its websites such as heizungsfinder.de, has recorded an extreme increase in demand for renewable heating systems – here, too, inquiries have doubled since the beginning of the war.
For decades, oil and gas heating were the measure of all things in Germany. Now homeowners are reorienting themselves en masse. The war in Ukraine is accelerating change. The already high energy prices rose to a new record level at the beginning of March – and the discussions about a possible stop to oil and gas supplies from Russia are doing the rest.
Companies like Stiebel Eltron are feeling the effects. The manufacturer mainly produces heat pumps. “In 2021 we had 30 percent more inquiries than in 2020,” says Stiebel Managing Director Matten. In the first few months of this year, inquiries rose again by 50 percent – and have doubled from this level since the beginning of the war.
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In view of the war, Matten is visibly uncomfortable with the high increase in demand. But he also says that what is currently happening in the heating market is a great opportunity for his company. “We’re just hiring non-stop,” he says. New employees in sales and customer service are to be added every year at least until 2027.
From 2024, 65 percent of new heating systems should be operated with renewables
The demand for alternatives to oil and gas heating had already grown in previous years: from the beginning of 2019, the Fridays for Future movement gave some people a green conscience and a desire for change. When the former federal government then decided on its climate package at the end of 2019, there was also a new subsidy for environmentally friendly heating systems.
Then Corona came and with the pandemic numerous lockdowns. Expenses for travel, restaurants and leisure fell away. Money that many people invested in their own four walls. “This factor has prompted people across Europe to replace heaters,” Matten recalls.
Most recently, the Greens took over the Federal Ministry of Economics, from 2024, according to the will of the new federal government, every newly installed heating system should be operated with 65 percent renewable energies. And with the war in Ukraine, homeowners who have so far been unconvinced by ecological arguments are also considering changing their heating systems.
The trend is giving the entire industry a strong development: According to the Federal Association of the German Heating Industry, the entire heating market grew by ten percent last year. But renewable energies benefited disproportionately. Sales of pellet heating systems grew by 51 percent and heat pumps by 28 percent.
“Demand for fossil fuel heating has collapsed completely”
Actually, change is nothing new for German heating engineers: family companies like Viessmann and Vaillant have been around for more than 100 years. They have seen how oil heating replaced wood and coal, and how the cleaner gas then increasingly prevailed. The next innovation is now entering the market.
But for the industry giants Viessmann, Vaillant and Bosch, the transition is more complex. They are also benefiting from the boom in climate-friendly types of heating. After all, they have been investing in heat pumps themselves for years and can actually exploit their economies of scale. Viessmann can also produce indoor units for heat pumps on the assembly lines for wall-mounted gas appliances, said the Chief Technology Officer when presenting the annual figures for the 2020 financial year.
However, the broad-based heating engineers are also feeling a second trend: gas heating is becoming less popular. Since 2019, their share of sales has decreased year after year. The decline could be particularly pronounced this year. Michael Hilpert, President of the Central Association for Sanitary, Heating and Air Conditioning (ZVSHK), says: “The demand for heating systems that run exclusively on fossil fuels has collapsed completely.”
In addition, Economics Minister Robert Habeck announced at the beginning of April: “We are ending an anachronism and will no longer promote the installation of gas heating systems in the future.”
Companies like Viessmann and Vaillant cannot like that. They do not disclose how high the share of gas heating in their business is. But Viessmann board member Klausner described wall-mounted gas appliances last year as the “largest number of units”. In addition, an industry expert says that heat pumps are only a small part of the business of the large heating contractors. And another thinks that sales are much higher for gas wall units than for heat pumps.
The companies are therefore relying on a dual strategy to establish themselves in the growing heat pump market. Vaillant is currently advertising with the slogan “It doesn’t work – it works”. In the campaign, craftsmen show that heat pumps can also be installed in houses that do not appear suitable at first glance.
Training courses for tens of thousands of craftsmen
In addition, heating engineers traditionally train craftsmen to install their heating solutions. Many craftsmen still have considerable reservations about the new technology. The heating engineers want to change that. Vaillant Germany boss Tillmann von Schroeter says: “Historically we train 10,000 craftsmen per year, we will expand that massively. The industry is now setting out to learn something new.”
Tillmann von Schroeter also remarks: “We grew up with gas heaters. Heat pumps will be our most important business tomorrow.” However, the competition in the heat pump market is more diverse than in the classic heating market. Companies that have traditionally also focused on business areas such as air conditioning, such as Mitsubishi Electric or Daikin, also play a role here.
The large heating contractors are investing in the heat pump business area, but they are also repeatedly calling for openness to technology – more specifically: openness to heating with the help of hydrogen. Finally, under certain circumstances, gas heaters can also be operated with hydrogen.
>> Read also: Gas heating, heat pump or wood pellets? This is the best way for consumers to heat in the future
However, some experts have strong doubts that hydrogen is useful for combustion in the heating sector. Detlef Stolten, Head of the Institute for Techno-Economic Systems Analysis at Forschungszentrum Jülich, says with regard to climate-friendly, “green” hydrogen: “It is unlikely that green hydrogen will prevail economically in households compared to heat pumps.”
In the short term, many people think that blue hydrogen – i.e. hydrogen produced from natural gas – is more economical for heating. However, Stolten says: “It is questionable whether, in the current energy crisis, one wants to set up a complete generation infrastructure for blue hydrogen, which in ten years will no longer meet the high climate protection requirements and will not ease the supply situation with natural gas.”
Most recently, Viessmann boss Max Viessmann spoke out in the Handelsblatt podcast in favor of “decarbonization through hydrogen in the building sector”. In fact, according to the unanimous opinion of experts, the heat pump is not yet suitable for directly equipping all houses with it – so other solutions are also likely to be needed. However, there is also speculation in the industry: For Viessmann and Co., their commitment to hydrogen is about defending market leadership.
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