Declaring that people’s homes will be heated by ‘British electricity not imported gas’ the government wants to ‘make heat pumps as cheap to buy and run as fossil fuel boilers’ to deliver its ambition of phasing out the installation of the latter by, latest, 2035.
To achieve this, the government has extended the Boiler Upgrade Scheme until at least 2028, to give the industry long term certainty about availability of public funding to support heat pump deployment, and has also announced further details of the £30 million Heat Pump Investment Accelerator Competition, set to open in the Summer, which will scale up investment in heat pump and component manufacturing in the UK ‘to a level never seen before’.
Having previously called for a longer-term support mechanism, NIBE welcomed the extension of the Boiler Upgrade Scheme (BUS) suggesting that ‘increasing cost competitiveness and savings with heat pumps will further increase consumer appetite for decarbonising’.
Rebalancing gas and electricity levies
In a significant move to address concerns over running costs, Matthew Aylott, senior policy advisor at DESNZ announced a commitment to ‘rebalance gas and electricity prices before the end of 2023/24’ in order to lower the price of electricity relative to gas, making heat pumps cheaper to run.
The move was welcomed by Peter Spurway, national sales manager for LG Electronics who commented: “We welcome the news of the forthcoming consultation around how the Department for Energy Security and Net Zero plan to shift unfair levies away from electricity bills to drive the electrification of heat.”
Commenting on today’s announcements, NIBE also welcomed the plans to rebalance energy levies: “With green levies currently being placed on electricity bills, the cost savings for consumers when installing heat pump systems are often artificially lowered. By ensuring electricity prices are decoupled for gas prices and the levies redistributed, heat pumps will become an increasingly attractive option for households and businesses.
Phil Hurley, managing director of NIBE Energy Systems, added: “Today’s announcements have provided much needed clarity for the UK heat pump industry.
“We hope the Government continues this momentum and drives more resources into heat pump awareness for consumers whilst improving consumer incentives to drive the uptake of heat pump systems across the UK. We look forward to working with the industry and Government to see these plans come to life to enable households to access affordable, low carbon heat.”
Mr Aylott also confirmed the government’s intention to mandate smart functionality for all heat pumps sold in the UK from 2026/7, following the consultation on smart heating, and announced a review of heat pump planning rules and noise emissions, to inform possible changes to permitted development rights and planning guidance later this year.
Today’s announcements were less warmly received by the GSHPA who, despite welcoming the commitment to heat electrification, the £30 million accelerator fund and announcements on ‘rebalancing’ energy bills and extending BUS, described ‘Green Day’ as a missed opportunity and “underwhelming” for the UKs ground source heat pump sector.
With the representative body for the ground source sector regarding the technology as ‘critical to delivering the Government’s existing heat pump target’ it suggested the government has failed to grasp the potential exhibiting ‘a disappointing lack of urgency around the limited measures announced’.
Faster action needed
Highlighting continuing uncertainty, Laura Bishop, Chair of the GSHPA said: “Long overdue changes to energy levies for example are not expected for at least another 20 months, which may yet be affected by General Election timing.”
“It’s vital that the Government acts much more quickly on key issues such as the rebalancing of domestic energy bills, more support for ground source heat pumps in the BUS to 2025, and the treatment of our technology in building regulations, if the UK is going to get anywhere close to delivering its 600,000 heat pumps per year target.
“Sadly, there was little in today’s announcements to reassure the sector that the Sunak government is really serious about delivering that major target in just five years.”
Heat pump roadmap
With the Government’s original Net Zero strategy having been described by many as a ‘bucket list’, lacking detailed strategy and time frames, today’s Growth Plan has also committed to delivering net-zero aligned roadmaps for key sectors and technologies, including heat pumps, that will “articulate investment needs by sector and summarise the relevant government policy and opportunities to support investment decisions”.
Additionally, a full consultation on the Future Homes Standard and Future Building Standard will be issued at some point this year, while a regulatory framework for heat networks and zoning will be introduced by 2025.