The UK Heat Pump Market

Written by Phil Hurley, Chair of the Heat Pump Association

We know that most UK homes rely on gas boilers for heating and hot water. But we also know that this can’t continue if we are going to meet UK climate targets.

The End of the Fossil Fuel Era

The need to shift away from fossil fuel heating has rightly been recognised, with the Government planning a phase out date for oil and LPG heating in homes from 2026 and an ambition to phase out gas boilers from 2035. But as the fossil fuel era approaches its end, attention has turned to low carbon alternatives – and heat pumps are the centre focus. 

The Heat Pump Policy Landscape

Over the last few years, the Government has indicated that heat pumps will be the technology of choice when it comes to replacing gas boilers in new homes. A target to install 600,000 heat pumps per year by 2028 was introduced as part of the Prime Minister’s Ten Point Plan for a Green Industrial Revolution, and we also saw a firm commitment to the use of the technology within the Heat and Buildings Strategy published last Autumn. 

Why Heat Pumps?

The focus on heat pumps as a low carbon heating solution is no coincidence. They offer huge carbon savings now at around 65% versus a natural gas boiler and have the potential for further reductions as the grid continues to decarbonise over time. To put this into perspective, the projected savings of a heat pump in comparison to a gas boiler would be around 95% by 2050.

New Build Homes – Changes to the Building Regulations

New build homes are essential for the growth of the heat pump market this decade, and it looks like this will be driven by the changes to the Building Regulations. From 2025, when the Future Homes Standard (FHS) is introduced, an average home will be required to cut carbon by at least 75% compared to current standards, with interim changes due to come into force from June this year requiring a 31% carbon reduction. These changes combined with the Government’s ambition to build 300,000 homes per year by the mid-2020s mean that new builds alone could take us halfway to meeting the 600,000-deployment target. This makes perfect sense given that the installation of the technology is easier and less disruptive, whilst avoiding the need for costly retrofits at a later date. Research by the Climate Change Committee has also shown heat pumps to be cost comparable to gas boilers in new builds already.

The Government has also thankfully stated that newly installed or fully replaced heating systems in new build homes should operate at a flow temperature of 55°C or lower (unless ‘it is not feasible’). This is an important interim step in the preparation for the implementation of the FHS in 2025, not just because it will minimise the installation cost of heat pumps in future and limit barriers to uptake, but because it will improve the efficiency of any heating system put in place at the time.

Retrofitting Existing Homes

Whilst heat pumps are an ideal solution for future-proofing new build homes from the get-go, we can’t forget that most of the homes that will be around in 2050 have already been constructed. However, it is essential that government support is provided to tackle the upfront cost barrier in existing homes.

Financial support has of course been provided to households since 2014 through the domestic Renewable Heat Incentive (RHI) but this scheme issued back payments to households once the technology was installed – remaining out of reach to those without the means to pay for an installation initially.

The Boiler Upgrade Scheme

The Boiler Upgrade Scheme (BUS) due to launch on 23rd May will instead provide upfront grants to support the initial cost of a heat pump. The Heat Pump Association has long been calling for a financial incentive such as this and is hopeful that the high demand for heat pumps already demonstrated through RHI will continue.

The Gap Between RHI and BUS

We do however have a big concern around the timings of the scheme and gap between RHI and BUS. We have estimated that there would have been around 1,700 installations under the RHI between 31st March and 23rd May – when BUS officially begins. The scheme is open to any installation commissioned and MCS certificate issues from 1st April. However, it is unfair for installers to be expected to shoulder the cash flow burden that the gap poses, and many may hesitate to undertake heat pump installations under the new scheme due to concerns that they could be declined once the voucher application can eventually be submitted some six weeks later. We can only hope that the initial hesitation from installers will be temporary, and that confidence builds throughout the scheme’s duration.

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