ᐅ Air source heat pump electricity price increased as of January 1, 2022

WilderSueden schrieb:

The government can only spend money that it has collected elsewhere, for example through taxes.

I came across an interesting perspective this week: According to MMT (Modern Monetary Theory), it is actually the opposite.

WilderSueden schrieb:

But nobody wants to pay those.

According to MMT, money is created (through the issuance of government bonds), and because it then circulates, those bonds are simply paid off. (Contracted companies make profits and then invest themselves or pay their workers → everyone pays taxes).

There is something to this, but I am still not convinced about the implications regarding inflation. I need to read and think a bit more about it.

@WilderSueden:

You are looking at it from the wrong perspective!
The government is pushing for electrification and green energy (which makes sense).
If people suddenly wake up and have to catch up quickly on everything that was neglected or done wrong over the past decades, then the government has to support the implementation. Unfortunately, there is no other way.

Even after an energy-efficient renovation without changing the systems, I still heat with fossil fuels. So it doesn’t help...
Luckily, according to you, I am fortunately Austrian and not German 😉

Edit: I can also imagine an energy surcharge for higher earners.
Nothing is set in stone, but I hope you agree that the expansion of heat pumps needs to be promoted.
Electricity prices naturally play a major role in this.

The problem is especially the supply situation with the heat pumps. Do you have any insights into the reasons (since you’re still in the industry, right)? Is it still the chips? Or is it skilled labor? Or something completely different?

In terms of measures, beyond my far-fetched utopian ideas, I would first consider renovating existing buildings. That seems to have the biggest impact right now, at least from a cost-benefit perspective.

MMT is basically Keynesian countercyclical fiscal policy applied at the level of central banks. During bad times, the central bank acts expansively and provides cheap money. In good times, it reverses this and makes money more expensive to save resources for the next crisis. In practice, this faces the same problems: responses take a long time, and to truly act countercyclically, you almost need clairvoyant abilities. It is very easy to be expansive but much harder to reverse it. We can see that clearly right now. Southern European debt crisis, COVID-19, Ukraine war. Interest rates should have been raised years ago after the first crisis. The zero interest rates during COVID-19 probably should have been scaled back already at the beginning of 2021. Nobody did that back then. All these massive stimulus packages fueled inflation. You can create money out of nothing, but not value. If the money supply increases but the existing goods and services remain the same, inflation results. Now, the central bank has to tighten the money supply to slow inflation and is in fact acting cyclically.

Alessandro schrieb:

The state is calling for electrification and green energy.
And if you suddenly wake up and have to catch up within a very short time on everything that was neglected and done wrong in recent decades, the state must support the implementation. Unfortunately, there is no other way.

The state can support, but in the right areas. Simply handing out money drives prices up and, in the end, nothing is gained. It would be more effective to create the conditions for good economic activity: training skilled workers, faster building permit/planning permission processes, less bureaucracy. Creating the conditions so that people don’t just get infrastructure handed to them but also benefit from it. And yes, in some cases money can be paid out, but only precisely targeted, not with a broad brush. And yes, it all simply takes time. Using brute force only makes things more expensive, not faster, and certainly not better. Instead of forcing a heat pump into every building from the 1970s that then has to cover a heating demand of 200–300 kWh/sqm (square meter) with a seasonal performance factor of 2, the focus should be on energy demand. If I reduce from 300 to 80 kWh, I save a very large portion of gas/oil.

Tolentino schrieb:

The problem right now is the supply situation for heat pumps. Do you have any insight into the reasons (since you’re still in the industry, right)? Is it still the chip shortage? Or a lack of skilled workers? Or something else entirely?

In terms of measures, from my somewhat idealistic point of view, I would first focus on renovating existing buildings. That seems to offer the biggest leverage right now, at least following a minmax principle.

The supply situation is improving. However, there will continue to be shortages of materials and skilled labor in the future. We will shift our capacity to 90% heat pump production. It just takes a bit of time...
The heat pump summit with Robert Habeck was the day before yesterday, where a number of decisions were made. You can find the document and the video on the BMWK website.
The biggest challenge with retrofitting existing buildings, in my view, lies in large cities. Where do you install the large heat pumps? Not to mention the heritage protection issues in cities like Munich, Hamburg, etc.

WilderSueden schrieb:

Support is allowed, but it has to be directed properly. Simply handing out money pushes prices up and ultimately achieves nothing. It would make more sense to create the conditions for good economic activity: training skilled workers, faster approval processes (building permits/planning permission), less bureaucracy. Creating the conditions so that people don’t just have infrastructure imposed on them but also benefit from it. And yes, in some cases, money can be paid out, but only targeted, not with a broad brush. And yes, all of this simply takes time.

That’s true, but these are also political issues, and only some of the costs should be passed on to the end consumer.
Everyone looks after their own wallet first. That’s why a reduced heat pump tariff and targeted subsidies for investment are very effective levers to encourage people to participate.
Past investments and subsidies were more like a scattergun approach—I’m just thinking about the child benefit for homebuilders alone 🙄
A reduced heat pump tariff, on the other hand, would be targeted and far from a scattergun approach.