Introduction

The transition to clean heating is a central pillar of Europe’s decarbonisation pathway, and heat pumps are emerging as a critical technology for reducing emissions, lowering energy demand, and strengthening energy security. The HP SUBSCRIBE project, funded under the LIFE Clean Energy Transition programme, aims to accelerate the large-scale deployment of high-quality heat pump installations in leased commercial and public buildings by introducing an innovative Heat Pumps on Subscription (HPoS) model. This service-based approach tackles long-standing barriers to heat pump adoption, particularly the landlord-tenant split-incentive and high upfront investment costs. Under the HPoS model, specialised service providers finance, install, operate, and maintain heat pumps, while end users pay a predictable subscription fee, removing the need for capital expenditure and ensuring access to reliable, energy-efficient heating.

By targeting leased buildings, where traditional ownership structures often hinder energy efficiency upgrades, HP SUBSCRIBE aims to create a mutually beneficial solution: property owners maintain or improve building value, while tenants benefit from lower energy costs, enhanced comfort, and reduced exposure to energy price volatility. The project will validate this model through pilot projects in France, Austria, and Greece, and support uptake in Ireland by linking market actors, financing institutions, and heat pump providers. The project equips policymakers, energy agencies, industry actors, and consumers with practical insights and decision-support resources that can accelerate heat pump deployment through integrated modelling tools, socio-economic assessments, and user-centric research. Through collaboration with public authorities, ESCOs, manufacturers, and investors, the project aims to unlock private capital, streamline contractual frameworks, and scale the HPoS model across Europe, contributing directly to the EU’s climate and energy efficiency objectives.

_{Figure 1: Conceptual illustration of the Heat Pumps on Subscription (HPoS) model.}

Moving from technology to service in clean heating

Decarbonising Europe’s heating sector is no longer a niche technical challenge, it is a strategic imperative for climate mitigation, energy system resilience, and industrial competitiveness. Heating and cooling account for a substantial share of final energy consumption in buildings, and fossil fuel-based systems continue to dominate in many parts of Europe. In this context, heat pumps have emerged as one of the most promising solutions for reducing greenhouse gas emissions while improving system efficiency and enabling greater use of renewable electricity.

Yet the case for heat pumps, however strong in technical and environmental terms, does not automatically translate into market uptake. Deployment remains uneven across Member States and building segments, particularly in leased commercial and public buildings, where investment decisions are shaped by fragmented ownership structures, budget constraints, and the uncertain allocation of costs and benefits. In many such buildings, the entity that would need to invest in a heat pump is not the same entity that would benefit most from lower energy bills. This split-incentive barrier has long slowed energy upgrades, even where lifecycle economics are favourable.

The HP SUBSCRIBE project is designed to address this challenge by shifting the value proposition from equipment ownership to energy service provision. Its core innovation is the Heat Pumps on Subscription (HPoS) model: rather than requiring landlords, tenants, or public building users to purchase and manage a heat pump system directly, the model enables a third-party service provider to deliver heating as a managed service through a recurring subscription arrangement.

This is not only a financing innovation, it is a market design innovation. It reframes heat pumps from a capital-intensive technology purchase into a service-based offering that can align incentives, reduce transaction barriers, improve installation quality, and create a more investable business case. For a market that still faces trust gaps, affordability concerns, and operational uncertainty, this service logic may be as important as the technology itself.

Policy and market context: why new models are needed

Across Europe, heat pump deployment is increasingly supported by the broader policy architecture for building decarbonisation, energy efficiency, and renewable integration. Revisions to the Energy Performance of Buildings Directive (EPBD), the Energy Efficiency Directive (EED), the Renewable Energy Directive (RED), and national climate and energy planning instruments all point towards the need to accelerate the replacement of fossil-based heating systems with efficient electric solutions. The direction of travel is clear: building stock decarbonisation will require a sharp increase in the pace and quality of heat pump deployment.

However, market reality remains more complex. While some countries have seen significant growth in residential heat pump adoption, other segments, especially non-residential leased buildings, remain underdeveloped. Adoption rates vary widely due to differences in electricity-to-gas price ratios, building typologies, climatic conditions, installer capacity, public support schemes, and consumer familiarity. In addition, high upfront costs continue to limit investment, especially where decision-makers operate on short budget cycles or cannot easily recover their investment through rent or service charges.

The market is also constrained by practical bottlenecks: shortages of skilled installers, limited standardisation in contracting and performance communication, and varying levels of confidence in long-term operation and maintenance. For many building owners and tenants, the challenge is not only ‘Can a heat pump work here?’ but also ‘Who pays, who benefits, who maintains it, and how is performance guaranteed?’.

These questions are particularly acute in leased buildings. A landlord may be unwilling to invest if the tenant captures most of the energy savings; a tenant may be unable or unwilling to invest in an asset they do not own; and both may hesitate if the installation involves technical disruption, uncertain returns, or unclear contractual obligations. In this environment, the growth of heat pumps depends not only on technology maturity but also on business model innovation that can bridge institutional, financial, and behavioural barriers.

HP SUBSCRIBE: building a service-based market for heat pumps

The project’s central premise is that heat pumps can become significantly more attractive when bundled into a subscription-based service offer. In this model, the provider assumes responsibility for system design, financing, installation, operation, maintenance, and, where relevant, performance monitoring. The customer, whether the owner, tenant, or building operator, pays a recurring fee linked to service delivery rather than equipment ownership.

This shifts several barriers at once. First, it removes or reduces upfront capital expenditure, which remains one of the most visible adoption barriers. Second, it reallocates technical and performance risk to an actor better positioned to manage it. Third, it creates a structure in which maintenance, optimisation, and monitoring are embedded from the beginning rather than treated as optional add-ons. Finally, it opens the door to new financing arrangements and private capital participation because subscription revenues can be modelled, aggregated, and potentially securitised over time.

At this early stage, HP SUBSCRIBE’s ambition is not to claim market transformation through completed results but to establish the essential foundations for that transformation. These foundations include:

• a clear and bankable HPoS business model,
• a practical toolkit to support replication,
• a revenue-stacking approach that strengthens investor attractiveness,
• a robust monitoring and verification framework to validate technical and economic performance.

The HPoS model: redefining the economics of heat pumps

The strongest distinguishing feature of HP SUBSCRIBE is the economic architecture of the HPoS model. Traditional heat pump deployment generally relies on a one-time purchasing decision: a building owner invests capital in the system, procures installers, manages the works, and carries ongoing performance and maintenance responsibilities. In leased buildings, this structure often fails because the incentives are misaligned and the risks are poorly distributed.

The HPoS model addresses this by converting a capital investment into a service contract. Instead of paying for the asset upfront, the customer pays for access to heating system performance, comfort, reliability, and service continuity over time. This ‘heat-as-a-service’ or ‘equipment-as-a-service' logic is increasingly relevant in clean energy markets because it is better aligned with how many customers make decisions: they care less about owning the technology than about receiving a dependable, affordable service.

Economically, this model can improve adoption in several ways:

• Lower entry barriers. By avoiding upfront capital expenditure, the model makes heat pump adoption accessible to building users who may not have capital expenditure budgets available, even if operating savings are attractive.
• Better risk allocation. A specialist provider is often better positioned than the end user to manage design risk, installation quality, maintenance scheduling, and system optimisation.
• Predictable cost structure. A recurring subscription fee can provide greater budget certainty for public and commercial users, especially in environments of energy price volatility.
• Long-term performance orientation. Because the provider’s revenue depends on ongoing service, the model creates a stronger incentive to ensure proper sizing, installation quality, and efficient operation.
• Market standardisation potential. Subscription contracts can support more standardised technical specifications, performance clauses, and reporting requirements, thereby reducing transaction friction.

The challenge of course is to ensure that the subscription fee remains attractive relative to conventional alternatives. This is where revenue stacking becomes central.
 

Revenue stacking: strengthening the investment case

A central innovation within HP SUBSCRIBE is the concept of revenue stacking, which enhances the financial viability of the HPoS model.

Rather than relying on a single revenue stream, the model combines multiple value drivers, including:

• subscription revenues from end users
• energy cost savings
• reduced maintenance and operational costs
• public incentives where applicable
• increased property value and regulatory compliance
• portfolio aggregation benefits for investors
   

This matters because heat pumps create value across several dimensions, but those value streams are often fragmented or captured by different actors. A core task of HP SUBSCRIBE is therefore to identify how these streams can be structured into a contractual and financial model that is both transparent and investable.

Revenue stacking is particularly relevant in leased buildings because a single economic metric, such as simple payback, rarely captures the full value proposition. The HPoS model allows value to be redistributed more effectively among landlords, tenants, service providers, and financing institutions. For example, a landlord may benefit from a more future-proof asset; a tenant may benefit from lower and more predictable operating costs; and a provider may benefit from long-term service revenue and portfolio expansion. If this alignment is properly designed, the model can turn a difficult investment case into a viable service market.

Toolkit development: enabling replication at scale

To ensure that the HPoS model can be deployed widely, HP SUBSCRIBE is developing a comprehensive toolkit designed to support different stakeholders.

The toolkit will include:

• Technical assessment tools for heat pump suitability
• Financial modelling tools for subscription pricing and lifecycle analysis
• Contractual templates to standardise agreements and risk allocation
• Guidance materials for building owners, tenants, and public authorities
• Training modules for installers, energy agencies, and advisors

The goal is to reduce complexity and provide a practical, ready-to-use framework that can be adapted across countries and building types.

At this stage, the project’s progress is reflected in early-stage KPIs such as:

• development of modular decision-support tools,
• engagement of market actors across multiple countries,
• preparation of pilot implementations,
• alignment with national regulatory contexts.

Monitoring and verification: building trust through evidence

A robust monitoring and verification (M&V) framework is essential for the success of subscription-based models. HP SUBSCRIBE places a strong emphasis on ensuring that the performance of installed systems can be measured, validated, and communicated transparently.

The M&V framework will support:

• performance tracking (energy consumption, efficiency, emissions)
• service validation (uptime, reliability, maintenance response)
• financial transparency (cost savings and subscription value)
• user satisfaction assessment.
   

These elements are critical for building confidence among users, providers, and investors.

Indicative KPIs for validation include:

• More than 1,300 heat pump installations supported through the model.
• Around EUR 40 million in triggered investment.
• Estimated CO₂ reduction of between 2,000 and 10,000 tonnes annually.
• Measurable improvements in system efficiency and user comfort.
• Replication potential across multiple European markets.

The emphasis on M&V aims to ensure that the HPoS model is not only theoretically sound but also demonstrably effective in real-world conditions.

Implications for policy and market development

HP SUBSCRIBE highlights the importance of business model innovation in achieving Europe’s climate goals. While policy frameworks provide direction and incentives, scalable deployment depends on solutions that work in practice across diverse building contexts.

The project offers several insights for policymakers and market actors:

• Service-based models can complement subsidies by reducing upfront cost barriers.
• Standardised contracts and tools can reduce transaction complexity.
• Data-driven approaches improve confidence and enable better policy design.
• Private capital mobilisation becomes feasible when revenue streams are predictable.

For the industry, the project signals a shift towards integrated service provision, where long-term performance and customer value are central.

Conclusion: from concept to scalable solution

HP SUBSCRIBE enters the European heat pump landscape at a moment when the need for clean, efficient, and scalable heating solutions has never been clearer. Its contribution lies not only in promoting heat pumps but in rethinking how they are financed, delivered, and validated in one of the most challenging building segments: leased commercial and public buildings.

By placing the Heat Pumps on Subscription model at the centre of its work, the project addresses structural barriers that have long limited uptake, especially split-incentive barriers, high upfront costs, and uncertainty around responsibility for performance. Its focus on service-based delivery, toolkit development, revenue stacking, and monitoring and verification gives it strong and distinctive market relevance.

At this early stage, the value of the project should be understood in terms of readiness, design quality, and replicability. If these foundations are successfully established and validated through pilots, HP SUBSCRIBE could help demonstrate that the path to large-scale heat pump deployment is not only technological but institutional and financial. In that sense, it contributes to a broader European transition: one in which decarbonised heating becomes not merely possible but practical, investable, and accessible.