Accelerating heat pump adoption in Switzerland: An agent-based policy assessment

From the paper

Abstract

Decarbonizing residential heating via heat pumps is expected to be crucial for reducing emissions in the Swiss residential building sector, yet their adoption remains insufficient. This study employs an agent-based model (ABM) to evaluate the effectiveness of policy interventions in accelerating heat pump adoption at the household level. The ABM simulates the heat pump adoption by single- and multi-family houses using the implicit discount rate (IDR) as a measure for the agents’ willingness to invest. We analyze the impact of a carbon tax (120 CHF/ton CO2), a 20 % investment subsidy, and a combination of both on heat pump adoption rates by 2035. In the absence of policy support, heat pump adoption is projected to reach 40 %, missing the national target of 55 %. The introduction of either policy measure increases adoption to 46–47 %, and their combined implementation achieves national targets. Policies reducing upfront investment costs are more effective than those targeting operational costs due to individuals’ high IDRs of 50.3 %. We find that households systematically undervalue long-term financial benefits and are reluctant to make investments. A comprehensive policy mix integrating financial incentives with mechanisms to lower the IDR, including targeted low-interest loans, heating-as-a-service business models, and information campaigns would help overcome these barriers.