Proposed Law to Place a Cap on Heat Pump Electricity Costs Using Braking Mechanisms

Draft law: Heat pump electricity costs should also be capped by braking

Heat pump operators have found themselves in a tricky situation in recent months as the government pushes for heat pump installations and replacements while electricity prices have been slow to decrease, making the operation of heat pumps less viable. The cabinet has since responded by proposing price adjustments, capping the price of electric heating and heat pumps at 28 cents per kilowatt hour for part of the consumption. The new plan applies to heat pumps that are already billed using their own meter and tariff. If a household only has an electricity meter and uses a low and high tariff, a weighted average of 28 cents for the low tariff and 40 cents per kilowatt hour for the high tariff would be used. The heat pump electricity price brake is expected to apply to grid extraction points consuming less than 30,000 kilowatt hours per year.

The adjustment to heat pump prices follows a series of relief measures by the government such as the gas and electricity price brake. The caps set the electricity price at 40 cents per kilowatt hour and the gas price at 12 cents per kilowatt hour for 80 percent of the forecast consumption volume with the remaining consumption at the otherwise valid tariff. These measures apply retrospectively from January 2023 and were billed for the first time in March.

Details on the implementation of the heat pump electricity price brake are not yet clear, but it is assumed that the electricity provider will continue to bill automatically while customers may only have to take action in exceptional cases. The cabinet’s proposed changes will be reflected in the natural gas heat price brake law, the electricity price brake law, and other energy and social laws. The heat pump electricity price brake is expected to last until April 2024.

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