Europe’s geothermal heat pump market is recovering, with sales increasing by 10 percent in 2025 and more than 2.5 million units now installed across the European Union. However, faster permitting procedures, stronger policy support and greater investment are needed to accelerate deployment and unlock the sector’s full potential. These are the main conclusions of The Geothermal Heat Pump Market in Europe 2026, published by the European Geothermal Energy Council (EGEC).
Building on the findings of the annual EGEC Geothermal Market Report 2025, the new publication focuses specifically on geothermal heat pumps, examining market developments, technological innovations, regulatory challenges, and future growth opportunities.
Favourable EU policy context
According to EGEC, the EU policy context is increasingly favourable to geothermal heat pumps, but further action is needed to translate Europe’s decarbonisation ambitions into market growth.
The revised Renewable Energy Directive (RED) and Energy Efficiency Directive (EED) set a stronger framework for renewable heating and cooling, while the EU’s broader electrification and energy-efficiency objectives reinforce the role of highly efficient geothermal solutions.
The implementation of these policies, alongside the forthcoming EU Electrification Action Plan and measures to simplify permitting, improve access to finance and strengthen skills and manufacturing capacity, will be critical to accelerating deployment.
Unlocking the full potential of geothermal heat pumps will also require greater recognition of their ability to provide efficient heating and cooling and underground thermal energy storage, supporting both building decarbonisation and more flexible energy systems.
Some of the key findings contained in EGEC’s latest report include:
- The geothermal heat pump market returned to growth in 2025, following the sharp contraction observed in 2024. Approximately 123,000 units were sold across the EU in 2025, representing a 10 percent increase compared with the previous year. The total installed stock has now surpassed 2.5 million units, with a combined capacity of 39.2 GWth. Geothermal heat pumps supplied approximately 88 TWh of heat in 2025, providing heating and cooling to more than 10.6 million people.
- Larger geothermal heat pump systems are gaining importance, particularly in multi-family buildings, commercial and public facilities, industrial applications, and district heating and cooling networks. Growing demand for renewable heating and cooling, combined with the development of fifth-generation district heating networks and underground thermal energy storage, is creating new opportunities for geothermal deployment across Europe.
- Technological innovations are expanding the potential of geothermal heat pumps. Advances in drilling technologies, passive cooling and underground thermal energy storage are opening new applications, including in data centres and industrial facilities. Innovative business models, such as Heat-as-a-Service (HaaS), could also help reduce upfront investment costs and encourage larger-scale projects.
- Permitting barriers continue to constrain market growth. Despite the revised Renewable Energy Directive (RED) introducing measures to accelerate permitting procedures, implementation remains slow and inconsistent across Member States. Lengthy administrative processes, regulatory uncertainty and shortages of skilled professionals continue to delay projects and discourage investment.
- Geothermal heat pumps offer competitive long-term heating and cooling solutions. Although initial investment costs remain relatively high, their efficiency, low operating costs and long infrastructure lifetimes make them an attractive alternative to fossil-fuel heating systems. According to a 2024 study published by the French energy agency ADEME, geothermal heat pumps represent the most affordable renewable heating solution for apartment blocks and commercial buildings.
Opportunities for continued growth
Looking ahead, the report highlights significant opportunities for continued growth.
Under an accelerated growth scenario, Europe’s installed geothermal heat pump stock could reach approximately 4.5 million units by 2030 and exceed 10 million by 2040.
However, achieving this expansion will require stronger policy frameworks, faster permitting procedures and continued investment in skills, infrastructure and supply chains.
Geothermal heat pumps are a key technology for Europe’s transition towards secure, affordable and decarbonised heating and cooling. The recovery of the market in 2025 is encouraging, but we must now build on this momentum by addressing persistent barriers, particularly permitting, financing and skills. With the right policy framework, geothermal heat pumps can make a much greater contribution to Europe’s energy independence, competitiveness and climate objectives. This new report provides policymakers and industry with the market insights needed to turn that potential into tangible progress, said Philippe Dumas, Secretary General of EGEC.
