The Effects of a Local Subsidy on the Heat Pump Market : A Study Examining how a Subsidy for Heat Pumps in Bergen Municipality has Affected Price, Demand and Energy Consumption

Abstract

In this thesis, we investigate a municipal heat pump subsidy. We examine the subsidy in two ways: how demand and price is affected, and whether the subsidy achieves its goal of reduced energy consumption. Through interviews with market participants across the supply chain we contribute with new understanding of subsidy effects. The subsidy is studied through a new theoretical framework and then compared to the findings from the interviews. The findings show that the subsidy effects do not fully correspond with general economic theory, indicating special market characteristics for heat pumps. We find that there are contrasting views regarding the subsidy’s effect on changes in demand between market participants. Additionally, the market for heat pumps has historically had consistent prices and has not changed due to the subsidy. Finally, we cannot conclusively state that the subsidy has reduced total energy consumption.