Calm after storms

Europe’s heating market enters 2026 from a different starting point than many expected twelve months ago. The sharp correction seen in 2024 was felt across the market – in heat pumps and also across heating technologies. The period triggered understandable caution and raised questions about whether energy prices, geopolitical uncertainty, and uneven policy execution would derail Europe’s energy transition.

But developments through 2025 suggest otherwise. It would be safe to say that the market adjusted rather than retreated, settling into a scale that appears more sustainable in the long run. The exceptional growth years of 2022 and 2023 may be behind us, but we are still on track even if it is at a different pace.

2026 looks set to be a year defined by stability, which may set the trajectory for the industry’s climate and energy goals.

Signals shaping the market in 2026

The outlook for 2026 is best understood through a small number of market signals that, taken together, point toward a more balanced operating environment for HVAC OEMs.

More stable energy prices and planning conditions

Energy prices have eased compared to the peaks of recent years, even if electricity remains more expensive than gas in many markets. While prices continue to influence heating choices and consumer behaviour, reduced volatility creates a more level playing field.

Gas boilers vs heat pumps is still a discussion dominating the heating landscape especially for existing buildings. But with fewer sudden swings, heating choices are less driven by urgency and more by longer-term considerations. For HVAC OEMs, this translates into greater confidence in planning as development cycles stabilise and demand is driven by purposeful choice. 

Construction and renovation regain momentum

In the building industry, both construction and renovation are showing renewed momentum with new builds making up a larger portion of the market. However, renovation drives the retrofit market in Europe’s heating transition.

For HVAC OEMs, this creates a dual reality. New developments favour standardised, highly efficient systems designed for predictable conditions. Renovation demands flexibility, compatibility with existing systems, and robust performance in more constrained environments. Heating portfolios that can serve both remain a defining challenge for 2026.

Regulation sets direction, not uniformity

Regulatory ambition across Europe remains high, but execution continues to vary by market. Differences in national implementation create uneven dynamics and ongoing complexity for OEMs operating across borders.

In this environment, OEMs benefit from solutions designed with regulatory diversity in mind. Systems that can adapt across frameworks without extensive redesign become more valuable, increasing the importance of integration, documentation, and close collaboration across the value chain.

What this means going into 2026

These signals suggest that 2026 is likely to be a year that allows the industry to consolidate, refine, and prepare. Economic indicators point to modest growth and easing inflation across Europe, supporting a stable but cautious market outlook for 2026.

As Europe’s heating transition progresses, heat pumps play a critical role as the technology driving this shift forward. They are increasingly the default choice in new buildings and are capturing a growing share of renovation projects. For OEMs, this reinforces a move away from standalone components toward complete system performance under real-world conditions.

This is also a period of opportunity for a market undergoing consolidation amid shifting global dynamics and ongoing geopolitical uncertainty. At Grundfos, our global presence gives us firsthand insight, enabling us to work closely with partners across diverse markets to strengthen system performance, ensure reliable and scalable supply, and build competitiveness for continued growth.

Optional white paper reference

To explore the heat pump transition in greater depth, we will soon publish a dedicated white paper examining how the market is evolving and what it means for HVAC OEMs across Europe.
Register now to be notified when it becomes available.