Heat pump support welcomed but is it enough?

The launch of the UK’s Heat and Buildings Strategy today met with an initial warm welcome from the industry with the hope that it will encourage exceptional market growth over the next few years.

The unveiling of phased out dates for the installation of fossil fuel heating, increased funding support for households purchasing heat pumps, and the rebalancing of environmental levies on electricity, will all be vital to growing the heat pump market and reducing emissions from the home energy sector.  

But as the measures are considered in detail, key figures from across the UK’s green economy are asking if the strategy offers enough. The general conclusion is that, while the ambition is welcome, the measures outlined will not be enough to meet future climate targets.

The right direction but not enough

Ian Rippin, chief executive of MCS commented: “For our installers, it’s encouraging to see the launch of this grant being lined up to follow the closure of the Domestic Renewable Heat Incentive (RHI), which ends in March 2022. This should provide much-needed policy support that we hope is part of a longer-term commitment from the Government.

“The £450m allocated over three years is more than the rumoured £100m, and this should deliver up to 90,000 new heat pump installations over the period – a boost for the sector.

“However, when you look at the figures, this sum is still nowhere near enough to transform the heating of 29 million properties across the UK. Government funding must increase exponentially if we are to achieve the government’s target of 600,000 total heat pump installations a year by 2028 – of which half will be retrofit. Effectively, from 2025 there will be just three years to make this jump happen in line with this current policy.”

Ministers say the subsidises will make heat pumps a comparable price to a new gas boiler. But the £450m being allocated for the subsidies over three years will cover a maximum of 90,000 pumps.

REI asked Samantha Shea, head of policy insights at Gemserv, whether she considered the measures to be of sufficient scale.

“Whilst we are happy to see the government showing a clear direction and welcome the new grant scheme, the funding only allows for 90,000 installations over a number of years,” Samantha replied. “Given the market in the first half of 2021 has installed over 20,000 heat pumps, this would suggest the financial backing is not sufficient to drive significant growth.”

“A total of 90,000 supported installations is not sufficient. The Government has set out a target to reach 600,000 units per year by 2028. To achieve this more will need to be done.”

But whilst there are concerns over the scale of the backing Samantha feels the Government is not being overly optimistic with regard to the improvements in efficiency of heat pump solutions as well as the fall in cost of the technology over the next few years commenting: “We are confident that reductions to the installation cost can achieved as the market grows towards 600,000 units per year.

Heat pump targets will not be met

Mike Childs, head of science at Friends of the Earth, said the number of heat pumps that the grants would cover “just isn’t very much” and meant the UK would not meet its aim of installing 600,000 heat pumps a year by 2028.

“Investment will drive down the cost of heat pumps, and technical innovation plus skills training is a part of this, but so is scale. These grants will only incentivise the best-off households.”

Greenpeace UK’s climate campaigner, Caroline Jones, said the government needed to provide more money to speed up the switch from gas boilers to heat pumps.

“A clearer signal would have been a phase-out of new boilers before 2035,” she added.

A boost for confidence and jobs

While there is disappointment over the size of the investment, Phil Hurley, chair of the HPA highlighted the significant positive impacts for the heat pump industry and welcomed the boost to confidence: “Today’s announcement will give industry and installers a huge confidence boost that now is the time to scale-up and retrain in preparation for the mass roll out of heat pumps, as well as making heat pumps more affordable.”

Key highlights for the heat pump industry include:

  • The extension of the Clean Heat Grant scheme. Going beyond earlier proposals, the scheme will now run for three years from April 2022 with an increased funding pot of £450 million. Consumers will receive government grants of up to £5,000 for the purchase of heat pumps.
  • The rebalancing of the environmental levies on electricity and gas. This will help to reduce fuel bills for consumers switching to heat pumps and is likely to further stimulate demand.
  • Phase out dates for fossil fuel heating. Regulation is vital for instilling confidence in industry and commitment to phase out fossil fuel systems by 2035 is a major milestone for the low carbon heating market

Despite the limited numbers who will benefit from the grant the belief of Government is that ‘kick starting’ heat pump uptake in this way will lead to more rapid commercial investment in the development of more efficient, lower cost technology.

Business and Energy Secretary Kwasi Kwarteng said the grants to support the adoption of heat pumps, available from next April, would help to bring down the cost of the relatively new technology by 2030 with Scottish Power’s chief executive, Keith Anderson, saying it would kick-start demand for electric heating: “Allowing the industry to accelerate the delivery of electrification and quickly bring down upfront costs”.