Competition in Building Heating — The Techno-Economic Case for Decentralized Heat Pumps in Germany up to 2045

Decarbonizing the German building sector by 2045 requires a rapid transformation of the heating technology stock, in which decentralized heat pumps (HPs) compete with district heating (DH) and green-gas-based solutions. Yet, the existing literature has not sufficiently resolved which segments of the building stock are most appropriately served by which low-carbon technology. This paper addresses this gap through a bottom-up, dynamic analysis using the agent-based building stock model RENDER-Building, which combines building-specific environmental heat-source potentials with DH and gas distribution infrastructure availability across Germany. Three explorative techno-economic scenarios are evaluated, differing in their electricity network charge development, DH expansion, and gas infrastructure trajectories. The modeling results show that HPs are cost-competitive over their lifetime in most building stock segments, delivering unit heat at an average cost of 11–15 ct/kWh. Between 11 and 15 million units are projected to be heated by HPs by 2045, covering 25 to 30% of building heating demand. Settlement type and local heat-source availability are found to be the primary determinants of feasibility and adoption. The findings underline the importance of ensuring the availability of energy carriers and stable long-term policies for a cost-effective and climate-friendly transformation of heating in buildings.