What Does the EU Actually Fund — and What Not? The Legal Pitfalls of Heat Pump Investments

If a business or private individual wants to cut the cost of heating, cooling and domestic hot water production for their building, a heat pump is one of the best alternative heat-generation options available. But when it comes to energy-saving grant applications, understanding the legal framework is critical. In Hungary, EU-funded eligibility for renewable energy systems is governed by decree 55/2016 (XII. 21.) of the Ministry of National Economy (NFM).

Under the decree, biomass, biogas, solar, wind, hydro, geothermal and heat pump systems are, in principle, eligible for funding. The expected efficiency requirements (minimum SCOP values) for the equipment are listed in Annex 2 of the decree.

The critical exclusion: no water as the heat-transfer medium

There’s one clause in the regulation, however, that hides a serious trap for MEP design: “only connection to a heating system operating exclusively with water as the heat-transfer medium is eligible for support.”

In practice, this half-sentence means that a large share of technologies that are popular and highly efficient in building services are completely excluded from EU funding:

• Air-to-air heat pumps (split A/C units): the most affordably priced split units, even ones optimized for heating, cannot apply for funding.
• Hydronic hub systems: air-to-water heat pumps connected to a shared water loop — popular in shopping centers — aren’t eligible either, since the central supply loop is often kept at temperature by a conventional gas boiler.
• VRF systems: the state-of-the-art climate technology widely used in hotels and office buildings doesn’t circulate water but refrigerant directly to the indoor units — so even though its SCOP is 20–30% higher than water-based systems, it cannot receive funding.
• Rooftop units: the compact air-handling units that heat, cool and ventilate high-ceiling halls and shopping centers are also ineligible, since they lack water as the heat-carrying medium.

Our design recommendation

If you intend to finance a heat pump investment through EU or state funding, the MEP concept must be strictly limited to systems that operate with water as the heat-transfer medium (e.g. air-to-water or ground-to-water systems).