How can we plug the heat pump funding gap?

The need for government subsidies to plug the heat pump funding gap and how policy framework can improve heat pump rollout are currently hot topics. We spoke with the Heat Pump Association (HPA) chair to gather his thoughts about how this vital gap can be addressed. 

HPA - how to plug funding gaps

“When we think of funding, it is easy to speak about financial help for consumers when buying a heat pump. This is important, and the present higher upfront costs of heat pump systems need addressing if we are to meet decarbonisation goals and if heat pumps are to play a large part in making this happen. However, the HPA is keen to highlight the need for cash support for early-bird training of installers in combination with a clear policy framework backing the transition to low-carbon domestic heating.  

“Strong commitment from the Government in the form of direct funding of installer training is likely to be more effective at drumming up interest in heat pumps from the 130,000-strong workforce already regulated by Gas Safe.  

The training and work balance 

“Installers can often feel as if the time spent training to become a certified heat pump engineer will be to no avail due to the slow demand for heat pumps across the country, and even those who are interested may not consider it worthwhile. After all, time spent training can be less time spent installing and therefore earning. This needs to be addressed, particularly in the context of the Government wanting to install 600,000 heat pumps per year by 2028. With around 4,000 MCS-accredited heat pump installers currently in the UK, this figure seems miles away.  

“Nesta’s analysis of heat pump installers found gas boiler engineers see little incentive to take up heat pump installation training and warn that upskilling won’t happen because there is a risk that engineers will spend more on training than they will make from it.  

“Whilst the HPA member base currently provides the capacity to train up to 40,000 heat pump engineers per year with many providing subsidies and vouchers for installers training with their schemes, the change cannot purely come from the industry. Nesta’s report calls for the Government to look at trailing cash incentives to get more people and companies to train heat pump engineers, and the HPA echoes these calls by adding that as the market transforms and capacity increases, initial costs are likely to come down.  

No-regrets system 

“Consumer support should also be focused not just on heat pump installation costs but on lowering the operating temperature of heating systems irrespective of the heat source. This is a no-regrets step that will ensure boilers operate more efficiently, as well as prepare many heating systems, even those that fit a boiler in the next few years, to be more compatible with heat pumps the next time the heat source needs replacing.  

“The HPA is therefore calling for improved training and financial support to achieve lower flow temperatures for households to improve efficiency and make households heat pump ready. Schemes focused on wider heating policy, such as the Energy Company Obligation (ECO), help with this transition and provide a neutral approach that will unlock fuel bill savings for large amounts of households as well as reduce carbon emissions on a larger scale.  

“One of the major reasons why the UK is lagging so far behind our European counterparts for heat pump sales is largely due to the end user incentives that do not go far enough to cover the up-front costs of installing a heat pump, despite the well-established technology proving to be the cheapest long-term sustainable heating solution on the route to net zero.  

BUS – slow at attracting interest 

“The Boiler Upgrade Scheme (BUS), which provides grants of up to £6,000 for the cost of a heat pump installation, has been slow at attracting applicants, and this, in part, is due to the dramatic drop in incentives from its predecessor, the Domestic Renewable Heat Incentive (DRHI). Current rates suggest that almost 3,000 vouchers need to be redeemed per month to reach the £450 million funding target by April 2025, with the latest statistics suggesting an increase of just over 1,000 vouchers issued in a 3-month period. 

“Funding gaps like this are not the only barrier to accelerating the rollout of heat pumps through schemes such as the Boiler Upgrade Scheme (BUS), with many households not aware of the available help to ease the cost burden on consumers.  

“With around 40% of MCS-certified heat pump installers not engaged with BUS, there needs to be a more proactive government marketing campaign to raise awareness of the funding, and this will, in turn, create greater noise around the benefits of heat pumps, improving the likelihood of the technology becoming more mainstream.  

Being responsive to changes 

“The Boiler Upgrade Scheme currently only covers 39% of the cost of air source heat pumps and 28% of the costs of ground source heat pumps, and support must be targeted and responsive to changes in economic circumstances, with the current energy crisis resulting in higher energy bills and smaller amounts of disposable income for many households. 

“Heat pumps are effective and important, but as well as addressing measures needed to boost the Boiler Upgrade Scheme, strong signals and funding for installer training from Government would help get back on track with ambitions for heat pump up-take, a key part of the journey to net zero.”