  Residential demands for space heating and hot water account for 31% of the
total European energy demand. Space heating is highly dependent on ambient
conditions and susceptible to climate change. We adopt a techno-economic
standpoint and assess the impact of climate change on decentralised heating
demand and the cost-optimal mix of heat pump and gas boiler technologies.
Temperature data with high spatial resolution from nine climate models
implementing three Representative Concentration Pathways from IPCC are used to
estimate climate induced changes in the European demand side for heating. The
demand side is modelled by the proxy of heating-degree days. The supply side is
modelled by using a screening curve approach to the economics of heat
generation. We find that space heating demand decreases by about 16%, 24% and
42% in low, intermediate and extreme global warming scenarios. When considering
historic weather data, we find a heterogeneous mix of technologies are
cost-optimal, depending on the heating load factor (number of full-load hours
per year). Increasing ambient temperatures toward the end-century improve the
economic performance of heat pumps in all concentration pathways. Cost optimal
technologies broadly correspond to heat markets and policies in Europe, with
some exceptions
