A critical area of the energy transition is the demand for thermal energy, as heating and cooling account for around half of global final energy demand and are expected to increase further in the coming years due to climate change. In this context, heat pumps powered by low-emission electricity emerge as one of the most critical technologies for achieving climate targets and facilitating the transition to a sustainable energy future. By harnessing low-temperature renewable sources, heat pumps offer high energy efficiency and can significantly reduce dependence on fossil fuels. Their ability to be integrated with renewable energy systems, thermal storage, and smart grids makes them a strategic technology for the decarbonisation of both the building and industrial sectors. One of the main challenges in the energy transition concerns the electrification of systems and their smooth integration into energy grids, due to the variability of production and the mismatch between supply and demand. In this context, digitalisation emerges as one of the key enablers for transforming energy systems, as it can address these issues by facilitating energy management, improving energy efficiency, and reducing CO₂ emissions. Against this background, Europe remains one of the world's leading heat pump markets, yet deployment continues to face significant barriers that are largely unrelated to the technical maturity of the technology.

Heat pumps are now widely viewed as one of the most important technologies for achieving deep decarbonisation. This importance is closely linked to the role of thermal energy use, since heating and cooling represent roughly half of global final energy demand, and their significance is likely to grow further as climate change increases cooling needs and alters overall energy consumption patterns. Under these conditions, heat pumps supplied by low-carbon electricity offer a highly promising pathway for supporting climate mitigation objectives and enabling the transition to more sustainable energy systems. Because they can exploit low-grade renewable thermal sources, they are capable of delivering high efficiency while reducing dependence on fossil-based energy. Their ability to interact with renewable electricity production, thermal storage systems, and smart grids also enhances their value as a critical decarbonisation option for both buildings and industrial processes.

_{Figure 1. Heat pump stock (units)}

According to the European Heat Pump Association (EHPA) statistics, there is a clear long-term expansion of the heat pump market, with annual sales increasing substantially over the period 2005–2024 (Figure 1). Growth is relatively moderate in the earlier years, but it accelerates after the mid-2010s and especially after 2018. The most pronounced increase occurs between 2020 and 2022, when total sales rose sharply and reached their highest level in the series. Although sales declined somewhat after the 2022 peak, they remain well above the levels observed in previous years, indicating that the market has expanded structurally rather than temporarily.

A second important observation is the dominant contribution of air-air and air-water heat pumps, which account for the largest share of total sales throughout the period. In particular, air-water heat pumps show very strong growth in recent years, suggesting increasing demand for systems suitable for space heating and the broader electrification of buildings. Air-air heat pumps also remain a major segment, reflecting their widespread use and relative ease of installation. By contrast, ground source/water-water, hybrid, and sanitary hot water heat pumps represent smaller shares of the market, although some of these categories also show gradual growth over time.

Overall, the heat pump market has moved into a phase of rapid development, driven mainly by air-based technologies. The strong increase in sales in recent years suggests growing interest in low-carbon heating solutions, supported by decarbonisation policies, higher fossil fuel price volatility, and the push for building electrification. At the same time, the drop after the peak may indicate a partial market correction, changing economic conditions, or the effect of policy and price uncertainties. Even so, the market remains at a much higher level than in earlier years, confirming the increasing importance of heat pumps in the energy transition.

The heat pump market in Greece remains modest relative to other EU countries, but shows a measurable installed base and recent sales activity. According to the Joint Research Centre (JRC) of the European Commission, approximately 40,000 heat pumps were sold in Greece in 2022, while the total installed stock reached about 362,194 units, with air-to-air systems representing the dominant technology. More recent data from the European Heat Pump Association (EHPA) estimates that around 18,000 heat pumps were sold in Greece in 2024. At the household level, official ELSTAT statistics indicate that in 2022, only 0.6% of households used an electric heat pump as their main heating system, while 0.2% used a geothermal heat pump, suggesting that market penetration in primary heating is still limited despite the broader installed base of heat pump-type equipment. Overall, Greece has an emerging but still underdeveloped heat pump market, with significant room for further deployment in the context of building decarbonisation and smart-grid flexibility.

_{Figure 2. Electricity-to-gas price ratio in EU countries (residential) in 2024}

A crucial parameter that affects the heat pump market is the electricity-to-gas price ratio across EU countries in 2010, 2017, and 2024, highlighting substantial differences both across countries and over time. In several countries, electricity remains significantly more expensive than gas, while in others the ratio is comparatively lower. This variation indicates that the economic conditions for electrified heating are far from uniform across Europe. Figure 2 also shows that the ratio has changed over time, meaning that the relative competitiveness of electricity-based heating technologies is not stable but strongly influenced by broader developments in energy markets and pricing structures.

This ratio is particularly important for the heat pump market because it directly affects the operating cost competitiveness of heat pumps compared to gas boilers. Although electricity is generally more expensive per unit of energy than gas, heat pumps can still be economically attractive because they operate with much higher efficiency, often delivering several units of heat for each unit of electricity consumed. However, when the electricity-to-gas price ratio becomes too high, the financial advantage of heat pumps is reduced, especially in households where investment decisions are strongly driven by expected energy bill savings. In contrast, a lower ratio improves the economic case for heat pumps and can support faster market adoption.

Therefore, the heat pump market depends not only on technological performance but also on national energy price structures and policy frameworks. In countries where electricity is relatively expensive and gas remains comparatively cheap, heat pump uptake may be slower unless additional support measures are introduced, such as subsidies, tax reforms, carbon pricing, or incentives for renewable self-consumption. Overall, the electricity-to-gas price ratio is a key factor shaping the market potential of heat pumps, as it influences whether electrified heating is perceived as an economically viable alternative to fossil-fuel-based systems.

At the same time, the broader energy transition depends heavily on the electrification of end-use sectors and on their successful connection with evolving energy networks. This process is not straightforward, largely because renewable generation is variable and often does not coincide with the timing of energy demand. In this setting, digitalisation has become an essential driver of change, providing new opportunities to improve system operation, optimise energy use, and lower CO₂ emissions. As digital tools and artificial intelligence continue to develop rapidly, growing research interest is focused on the management and optimisation of heat pump systems in order to increase their effectiveness and contribute to a cleaner energy future.

Heat pumps offer major advantages as a low-carbon heating and cooling technology. Their main strengths include high energy efficiency, low direct CO₂ emissions, and the ability to provide both heating and cooling within a single system. They can also use renewable ambient energy and integrate well with photovoltaic systems, storage technologies, and smart controls, which makes them highly relevant for decarbonisation and the electrification of buildings. At the same time, several opportunities support their further growth, including strong policy backing, the expansion of renewable electricity, advances in digitalisation and artificial intelligence, and their growing role in demand response and flexibility services. Their potential is also reinforced by large-scale renovation needs and the replacement of conventional boilers in residential and industrial applications.

Despite these advantages, heat pumps also face important barriers and risks. Their main weaknesses include high upfront investment costs, lower performance in very cold climates, dependence on proper sizing and installation, and the possible need for retrofits in older buildings. Additional concerns may relate to noise and refrigerants. Externally, several threats may affect their broader deployment, such as high electricity-to-gas price ratios, grid constraints under mass electrification, policy uncertainty, reduced subsidies, and consumer hesitation due to initial costs. A shortage of skilled installers and competition from alternative technologies may further slow market uptake.

_{Figure 3. SWOT Analysis.}

Demand response (DR) is among the most important mechanisms for providing energy system flexibility. As a key element of demand-side management, DR allows electricity consumption to be adjusted in line with grid requirements by making use of the flexible operating characteristics of energy technologies. Through strategies such as load shifting and temporary load reduction, DR can help maintain system stability. Heat pumps are particularly suitable for such services because their electricity use can be controlled with a relatively high degree of operational flexibility.

For residential heat pump applications, delivering this flexibility depends on the implementation of suitable control approaches and effective communication between the heat pump itself, the building energy management system, and the power network. The extent of flexibility that can be provided is determined by several parameters, including the building’s thermal needs, the sizing of the heat pump, the availability of storage, and the dynamic response of the system as a whole.

In this context, advanced control methods are expected to become increasingly important for mitigating real-time grid imbalances. Current research is therefore focused on artificial intelligence–driven control and optimisation techniques for heat pump operation, together with broader developments in digitalisation and the use of digital twins.

Conclusion

Heat pumps emerge as a key technology for the decarbonisation of heating and cooling, combining high efficiency with the ability to use low-carbon electricity and renewable ambient energy. Their growing market presence in Europe confirms their increasing strategic importance, although deployment remains uneven across countries and still limited in markets such as Greece. At the same time, their economic attractiveness is strongly shaped by electricity-to-gas price ratios and policy conditions. 

Beyond their role in replacing fossil-fuel systems, heat pumps can also provide valuable flexibility to power systems through demand response and smart energy management. As Europe advances the implementation of the revised EPBD, heat pumps are expected to play a central role in improving the energy performance of buildings, supporting building electrification and accelerating the transition towards smart buildings.

For this reason, digitalisation, advanced control strategies and AI-based optimisation will be essential for unlocking their full potential. Together, these solutions can enhance the smart readiness of buildings, increase system flexibility and resilience, and help create a more efficient, integrated and sustainable energy system.