The choice of heating system is a crucial decision that commits you for 15 to 25 years. In Luxembourg, the energy transition is accelerating and the rules are changing. Gas and oil are disappearing for new installations. Heat pump or pellets: which to choose in 2025?
This guide compares the options to help you make the right choice.
The 2025 Context in Luxembourg
Luxembourg has made strong commitments to the energy transition. Since 2023, new constructions can no longer be equipped with oil boilers. Gas is following the same trend with increasing restrictions.
For renovations, replacing a fossil fuel boiler with a heat pump or pellet system is heavily subsidised by Klimabonus.
The message is clear: the future is renewable energy.
The Heat Pump: The Future Choice
The heat pump (HP) extracts calories from air, ground or water to heat your home. It’s the most subsidised technology in Luxembourg.
The operation is simple: for 1 kWh of electricity consumed, a heat pump produces 3 to 5 kWh of heat. This is called the COP, the coefficient of performance.
There are three types of heat pumps. The air-water HP is the most common as it’s easy to install and costs €12,000 to €18,000. The geothermal HP offers the best performance but requires drilling, costing €20,000 to €35,000. The air-air HP is cheaper at €5,000 to €10,000 but less suited to Luxembourg’s climate.
The annual running cost for a 150m² house is €800 to €1,500 in electricity.
Available grants: The heat pump grant can reach 50% of the cost, up to €12,500 in grants.
The advantages of the HP are the lowest running cost, very generous grants, decarbonised energy, and the ability to cool in summer for some models.
The disadvantages are high initial investment, reduced efficiency in very cold weather for air-water models, noise from the outdoor unit, and the need for good home insulation.
Pellets: The Biomass Alternative
Pellet heating, or wood pellets, uses a renewable and local resource. It’s an interesting alternative for less well-insulated homes.
The system includes a pellet boiler and a storage silo. The boiler operates automatically with programmed supply.
The installation cost includes the boiler at €10,000 to €15,000, the silo at €1,500 to €3,000, and installation at €2,000 to €4,000, totalling €13,500 to €22,000.
The annual running cost for a 150m² house is €1,200 to €2,000 in pellets, approximately 4 to 6 tonnes per year.
The advantages of pellets are comfort similar to oil or gas, local and renewable resource, good adaptation to older less insulated houses, and independence from the electricity grid.
The disadvantages are storage space needed of 2 to 4m³, more frequent maintenance with ash emptying, pellet price can fluctuate, and grants less generous than for HPs.
Gas: Still Relevant?
Natural gas remains an option for renovations, but its future is limited in Luxembourg.
The installation cost of a condensing gas boiler is €5,000 to €10,000. The annual running cost for a 150m² house is €1,500 to €3,000, with an upward trend.
Warning: no Klimabonus grant is available for gas boiler installation. You won’t benefit from subsidies.
The advantages are low initial investment, mature and reliable technology, and no storage needed.
The disadvantages are no grants, fossil fuel destined to disappear, gas price trending upward, and possible future renovation obligations.
Gas can be a transitional solution if your budget is very limited, but it’s not a future investment.
Complete Comparison Table
For a 150m² house in Luxembourg, here’s the comparison of the three systems.
Installation cost is €12,000 to €25,000 for HP, €13,500 to €22,000 for pellets, and €5,000 to €10,000 for gas.
Klimabonus grants reach 50% for HP up to €12,500, 40% for pellets up to €8,000, and €0 for gas.
Net cost after grants is €6,000 to €12,500 for HP, €8,000 to €14,000 for pellets, and €5,000 to €10,000 for gas.
Annual cost is €800 to €1,500 for HP, €1,200 to €2,000 for pellets, and €1,500 to €3,000 for gas.
Over 15 years, total cost with installation and running is €18,000 to €35,000 for HP, €26,000 to €44,000 for pellets, and €27,500 to €55,000 for gas.
How to Choose Based on Your Situation
For new construction or major renovation with good insulation, the heat pump is the obvious choice. Grants cover up to half the investment and running costs are unbeatable.
For an older house with average insulation, pellets may be more suitable. A HP requires good insulation to be efficient. With poorly insulated walls, it will consume much more.
For a very limited budget while waiting for a comprehensive renovation, gas can be a temporary solution. But plan for replacement in the next 10-15 years.
Ideally, combine the heating change with insulation improvement to maximise grants and savings.
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FAQ
Does the heat pump work in very cold weather?
Yes, modern HPs work down to -15°C or even -20°C. In Luxembourg, temperatures rarely drop below -10°C. In case of prolonged severe cold, an electric backup takes over.
How much space is needed for a pellet silo?
Allow about 2 to 4m³ to store a heating season. This can be in a cellar, garage or dedicated utility room. The silo must be accessible for delivery.
Can heat pump and solar panels be combined?
Yes, it’s even ideal. Photovoltaic panels can produce part of the electricity needed for the HP, further reducing running costs. Both are eligible for Klimabonus grants.
What is the best time to change heating?
Summer and early autumn are ideal. Heating engineers are less busy and you’ll be ready for winter. Be aware of equipment delivery times which can reach 2-3 months.
