Heating up European ABS: Heat Pump Finance and Securitisation

Heat pumps, particularly air-source systems, are central to Europe’s building-sector decarbonisation under the Renewable Energy Directive and the Energy Performance of Buildings Directive. As of March 2025, approximately 26 million units were in operation across Europe, with the stock continuing to expand, positioning the technology as a cornerstone of the European Union’s (EU) climate goals. Although sales declined in 2024, the longer-term trajectory remains positive.

Beyond policy support, heat pump deployment also depends on supply-chain capacity and consumer economics. Rising equipment and labour costs, variations in national subsidy design, and the electricity-gas price spread all shape adoption rates. Installer availability and uneven certification standards remain limiting factors in several markets, while manufacturers are scaling production capacity to stabilise costs. For households, the value proposition blends expected bill savings with available incentives, though subsidy…