Is the Government doing enough to drive the uptake of heat pumps?
Heat pumps are expected to play a key role in decarbonising heat. As part of its 2021 Heat and Buildings Strategy, the UK Government introduced an ambitious target of 600,000 installations per year by 2028, and has unlocked significant funding to support this ambition. Yet, heat pump uptake remains slow – annual installations amount to only around 35,000 heat pumps.
There is scope for Government to do more. It could scale-up to help fund further heat pump installations and home retrofitting, and tackle other barriers such as workforce and skills shortages and low consumer engagement. In parallel, Government could explore alternative options for decarbonising heat, including hydrogen and district heating - there will not be a “one-size-fit-it-all” approach.
1. Heat pumps will play an essential role in the decarbonisation of heat
With 35,000 heat pumps currently being installed per year, heat pumps are a proven technology which can heat buildings without generating carbon emissions (at the point of use).
A key advantage of heat pumps is that they are more efficient than gas boilers, operating at an average efficiency of 300-400%. This compares to around 95% efficiency for the most efficient gas boilers. This makes them cheaper to run and saves energy. Some commentators consider that air source heat pumps could save households an average of £350 per year if they switch from a gas heating system.
2. The Government’s plans
The uptake of heat pumps is constrained by the upfront cost of installation and cost of retrofitting. The UK Government has rightly focused its efforts on addressing these barriers and easing the burden on businesses and households.
On average, an air source heat pump costs between £6,000 and £8,000, whilst ground source heat pumps cost between £10,000-£18,000. The Government has unlocked over £510 million of funding to support deployment. Notably, the Boiler Upgrade Scheme provides households with £5,000-£6,000 towards a heat pump. However, at best, this funding would only provide support for 90,000 households over three years, which is significantly below the Government’s target of 600,000 installations per year.
Furthermore, heat pumps are only effective in relatively energy efficient environments. Given the UK has a poorly insulated housing stock, this means that many homes will need to improve their energy efficiency before a heat pump can be installed. The Government has also unlocked funding to help with this investment. For example, the £3.8 billion Social Housing Decarbonisation Fund (SHDF) looks to improve the efficiency of fuel poor homes.
3. Yet, deployment remains slow
Nonetheless, heat pump uptake remains much slower than the Government’s target. In fact, the UK has one of the slowest installation rates in the whole of Europe, with only 1.48 heat pumps sold per 1,000 households in 2021.
Installation rate of heat pumps in European countries (2021)
4. The UK Government may need to scale-up its efforts
We think the UK Government may need to take a more aggressive approach to driving deployment of heat pumps, including by scaling-up its current initiatives and by targeting other barriers, in particular supply chain capabilities and consumer awareness.
For example, Government could invest in training and upskilling delivery professionals to develop the supply chain. Currently there are only around 2,000 certified heat pump installers compared to over 100,000 gas safe engineers. Sales of heat pumps in France per 1,000 households are more than ten times that of the UK, and it is notable that 25% of gas boilers installers in France are already qualified to work with heat pump technologies.
We also think there may also be a need to boost consumer engagement, including by signalling that all buildings will require a low-carbon heat system in the near future. The Government could go as far as implementing a progressive ban on gas boilers across existing buildings, rather than just new builds, as is currently the case. For example, Norway has banned oil boilers in all buildings since 2020, and in turn has been able to lead Europe in heat pump installations.
5. In parallel, it is crucial to keep exploring and developing the potential of alternative technologies
Although heat pumps have a large potential for decarbonising heat, it is likely that a “one-size-fits-all’ approach is not realistic. Heat pumps remain costly, and their installation is disruptive. They are also not suitable for all buildings and needs. Other technologies, such as heat networks, bioenergy, and hydrogen boilers, are likely to be needed. For example:
• heat networks are particularly well-suited to densely populated areas;
• bioenergy could be well-suited to off-grid areas and could help phase out heavily emitting oil heating, wood stoves and coal; and
• hydrogen, if it is developed into a proven and safe heat source, could power some energy intensive businesses. It could also become a substitute for heat pumps for some households.
While it makes sense today to prioritise heat pumps to decarbonise heat, it is important we fully explore our options and opportunities. It is too early to close-out options.