Heat pump prices + cost of installation was so high the last time I looked 2years ago, that it wasn't worth it even with free electricity (rooftop solar).

Have the costs dropped for that as well?

Air to water heat pumps (which usually are used in Germany) should be quite cheap nowadays. Maybe they tried overcharging you or a significant rework was required?

Obviously that's impossible to answer without knowing your specific situation, nevermind even knowing which country you are speaking of. Heat pump prices aren't high here, heat pumps are just aircons with some extra cheap parts after all.

I was thinking in general. But specifically: I'm in Croatia (so prices should not be that far off from German ones - equipment perhaps more costly but manual work a bit cheaper) and was quoted (two years ago) for a €15k total installation cost for the size I needed, which would be 15-20 years' worth of my natural gas usage.

Even at zero electricity host (I have rooftop solar), the investment didn't make a lot of sense at the time, assuming the costs would be falling in the next few years.

I just have been quoted 40k for an installation. So, no.

I'm not deep into electricity pricing dynamics, but based on my intuition, shouldn't that rather have a dampening effect on electrification, as the gap widens?

High gas prices + gap is small -> Big opportunity to undercut via cheaper methods like solar -> attractive investment -> more new builds

High gas prices + gap is wide and widening -> Smaller and smaller opportunity to invest in solar, as the market is already dominated by solar prices -> less attractive investment -> less new builds

Am I missing something here?

With electrification, I meant electrification of energy consumption.

Ah, of course. Thanks for the clarification!

High volatility -> Invest in storage.

Occasional negative prices -> Invest in intermittent consuming applications.

Heat pump installations are far too expensive in Germany to make any sense economically.

That's more of a political and tax decision than anything else.

Quite frankly, Germany already has a lot of renewables in the mix. Why did it take so long for the effect to appear and why is it still so modest? What should be renewables share be (vs ~60% today), for complete decoupling?

Germany is interconnected with other markets.

Essentially it's not an isolated market, but part of a bigger whole.

As an example imagine a village that constituted 1% of the population of a country. The village was 100% renewable, and the country was 0% renewable. If the village disconnected its grid, in isolation its prices would be dictated by its renewables. But if its connected, its renewables just get traded on a market with marginal prices. If a person elsewhere in the country has more expensive generation, they'll but your cheap renewables at their price level. Thus the village will experience high prices like everyone else.

Now suppose Germany is that village in an interconnected EU market. Of course the numbers from my example are exaggerated, but the point remains: Germany's renewables aren't enough, if pricing is set at a much larger market, with fewer renewables.

Today about 20% of Germany's electricity was exported. While only about 6% of its demand came from gas. In other words if Germany was disconnected, it'd have needed no gas, and thus prices would've been lower.

Of course disconnecting isn't a good idea for other reasons, as on other days Germany imports. And Germany's ability to export its renewable excess generates significant revenues, creates incentives to build more renewables, and offsets emissions and pollution in other countries, too.

But long story short, it'll take more for one part of the whole to go renewable. As the EU is generally transitioning towards renewables we see a decoupling happen.

You need quarter-hours where renewables set the price for power. That's only happening now that renewables have reached sufficient penetration of the market. And it will get more as batteries come online.

In a commodity market, the price is always set by the most expensive producer that is still able to sell. That's natural - why would I sell my apples cheaper than the other farmer if you need so many apples that you have to by from both of us?

... because you may have signed a longer term contract that might in turn guarantee offtake from you rather than the other farmer?

This marginal price is only for the spot market right? So the key question is more what % of the mix is spot vs longer term. And thus what the overall impact is on total blended price.

That exists as well it’s called PPA in the power market, a power purchase agreement.

But ultimately, due to arbitrage, PPA prices will converge towards expected spot market prices.