The Unbelievable Rise of Heat Pumps in the Coldest Places on Earth

By Leon Stille - Dec 17, 2025

• Heat pumps are now thriving in some of the world’s coldest regions, with Norway, Sweden, Finland, and even Canada seeing record adoption.
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• Modern systems—using variable-speed compressors, better refrigerants, and hybrid designs—deliver strong efficiency even below –20°C.
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• Their rise depends less on physics than on economics and policy.

For years, heat pumps were seen as the fragile heroes of mild climates, efficient in theory but unreliable when the mercury dropped. That narrative has now collapsed under the weight of experience. From the frozen lakes of Finland to the prairies of Canada, heat pumps are thriving where they were once thought impossible.

The data from the multiple past winters tells the story clearly. Even in subzero temperatures, installations are growing faster than almost any other clean heating technology. This shift is more than a technical achievement; it is a cultural one. It challenges long-held assumptions about what works in the cold, and it signals that the electrification of heating is no longer limited by geography.

Yet the success story comes with an important caveat. As I wrote earlier in “Heat Pumps Face Their Toughest Test Yet”, the technology’s long-term viability depends on its economics and on system-level readiness. The latest boom in cold climates shows what is possible when incentives align and grids are strong, but it also reminds us how uneven that progress remains across Europe and beyond.

The cold-climate myth

The idea that heat pumps do not work in cold climates has been one of the most persistent myths in the energy transition. The logic seemed simple, if the air is freezing, how can an air-source system extract heat from it?

That assumption made sense two decades ago, when most commercial units were designed for temperate regions. But technology has moved on. Today’s high-performance systems, particularly those using variable-speed compressors and advanced refrigerants, can operate efficiently down to minus 25 degrees Celsius.

In Norway, where winter temperatures often hover around minus 10, heat pumps have become the dominant source of home heating. More than 60 percent of households now rely on them, the highest penetration rate in the world. In Sweden and Finland, the numbers are not far behind.

Even in Canada, long seen as the frontier of fossil-fueled heating, the tide is turning. Federal and provincial programs have accelerated adoption, with installations rising sharply across Quebec, British Columbia, and even the colder prairie provinces.

Technology that learned to adapt

The modern heat pump is not the same machine that skeptics dismissed a decade ago. Manufacturers have invested heavily in systems specifically designed for cold conditions. Two-stage compressors, variable refrigerant flow, and hybrid systems that combine air-source units with backup electric or biomass heaters have redefined reliability.

Ground-source heat pumps, which draw from the steady temperature of the earth rather than the fluctuating air, are also experiencing renewed interest in northern latitudes. Although their installation cost is higher, their performance in deep winter remains unmatched.

Perhaps the most striking development is the rise of inverter-driven systems that automatically adjust output to maintain efficiency in real time. These innovations mean that the efficiency advantage of heat pumps over fossil systems now extends well into the coldest weeks of the year.

The result is that consumers who once doubted the feasibility of heat pumps in harsh climates are now becoming their biggest advocates. In Finland, surveys show customer satisfaction above 90 percent, even in rural and remote regions.

A success built on incentives and infrastructure

The rapid rise of heat pumps in cold climates did not happen by accident. It was built on the foundations of strong policy, reliable electricity grids, and long-term consumer trust.

In the Nordics, governments began supporting electrified heating decades ago through carbon taxes and consistent regulatory frameworks. In Canada, the shift has been accelerated by the Greener Homes program and a combination of rebates and low-interest financing.

These policies do more than lower upfront costs, they send a signal to manufacturers, utilities, and installers that the market is durable. Once the ecosystem matures, the cost of equipment and installation begins to fall.

But this is precisely where Europe’s wider market faces its greatest test. As discussed in my earlier analysis, costs remain a major barrier in many regions. Even with falling equipment prices, electricity tariffs, installation complexity, and system design all determine whether households and industries can justify the switch. Where grids are weak or tariffs remain high, enthusiasm can easily turn to frustration.

The economics behind the headlines

The underlying economics of heat pumps are both their strength and their vulnerability. A well-designed system can deliver three to four units of heat for every unit of electricity consumed, even in cold weather. This efficiency is unmatched by any other heating technology.

Yet the upfront cost remains substantial. Installation, insulation upgrades, and grid connection can add thousands of euros to the investment. Without predictable policy support or low-cost electricity, payback times stretch, and adoption slows.

That tension mirrors what we see across the broader energy transition. When conditions align, electrification scales rapidly, as the Nordics demonstrate. But when they do not, as in parts of Central and Eastern Europe, even the best technologies struggle.

Heat pumps may have conquered the physics of cold, but they are still at the mercy of economics and policy design.

A tale of two transitions

What makes the rise of heat pumps in cold climates so striking is that it reveals two energy transitions happening at once. In countries like Norway and Finland, the heating sector is electrifying faster than anyone predicted, while in others the same transition is still caught in planning and pilot phases.

The difference is not technological, it is structural. Where electricity is cheap, grids are stable, and policy is consistent, consumers respond. Where these conditions are absent, fossil heating systems continue to dominate.

In that sense, the heat pump revolution in the North is both an inspiration and a warning. It proves that decarbonizing heat is possible even in extreme climates, but it also shows that scaling it continent-wide will require reforms far beyond the technology itself.

The real test ahead

Heat pumps have passed their technical test in the coldest regions of the world. The question now is whether they can pass the systemic one.

In my earlier piece, I argued that the next phase of the heat pump story will be defined not by engineering, but by economics, infrastructure, and policy coherence. That remains true. The success of the Nordics and Canada shows what works, but also what it takes to make it work.

As Europe pushes to electrify heating on a continental scale, the lessons from these cold climates should be front of mind. Technology can defy temperature, but policy must defy inertia.

By Leon Stille for Oilprice.com