Heat and Buildings Strategy seeks to drastically cut heat pump installation costs

Households will be offered £5,000 government grants from next year to install heat pumps as part of a £450m scheme to replace their current natural gas boilers.

The funding, which will be offered over a three-year period, has been announced as part of several broad commitments that will make up the government’s long delayed Heat and Buildings Strategy.

A total of £3.9bn is expected to be invested to support the decarbonisation of buildings and how they are heated. Heat is viewed as one of the key challenges and most significant contributors of carbon emissions from the country’s buildings.

The proposed grants are expected to be made available from next April as a means to reduce the overall cost of heat pump technologies compared to natural gas boilers.

On a wider policy level, the government has committed to work closely with the industry to try and ensure that heat pumps are equal in terms of costs to install and run as fossil fuel boilers by 2030.

Significant cost reductions compared to existing prices are expected to be realised by 2025 as the market and technology develops, according to the government.

No mention is made so far of how energy subsidies and charges may be reformed to help meet these aims.

A statement on the strategy said, “This will support the government’s new target for all new heating systems installed in UK homes by 2035 to be either using low-carbon technologies, such as electric heat pumps, or supporting new technologies like hydrogen-ready boilers, where we are confident we can supply clean, green fuel.”

A total of £60m will be made available to support the ‘Heat Pump Ready’ programme that will be launched to drive further innovation in the development of lower cost, smaller and more efficient systems in the longer-term.  The funding will be part of the £1 billion Net Zero Innovation Portfolio and be split into three different focuses for delivery.

The first area will see up to £30m spent on high-density heat pump deployment. A second delivery stream will offer £25 in grants to look at how existing barriers to install heat pumps can be overcome with tools and technology.

A final focus will look at trial support and learning to help expand take up in line with the government’s previously stated target of installing 600,000 heat pumps a year from 2028. The Heat Pump Ready programme is expected to launch from spring next year.

Another aim of the strategy will be to tackle recent media headlines suggesting a strategy was being considered to have fossil fuel boilers ‘ripped’ out of homes at scale.

Instead, the government claimed it will seek to transition homes always form using fossil fuel boilers over the next 14 years.

Hydrogen potential

Although the new commitments are largely focused on heat pump adoption, the Heat and Buildings strategy will also focus on the longer-term potential of using hydrogen among a mix of lower carbon heat technologies.  The statement has reiterated a commitment within the recently published Hydrogen Strategy to support ongoing trails and innovation work looking at hydrogen boilers.

It added, “We will make a decision on the potential role for hydrogen in heating buildings by 2026, by learning from our Hydrogen Village pilot. Heat pump technology will play a key role in all scenarios, so for those who want to install them now, we are supporting them to do so.”

Business and Energy Secretary Kwasi Kwarteng said that the importance of UK aims to move away from natural gas boilers had been highlighted by recent volatility in energy costs.

The new grant scheme would serve to ensure more homes would be able to adopt heat pumps as the market develops through the 2020s.

He said, “As the technology improves and costs plummet over the next decade, we expect low carbon heating systems will become the obvious, affordable choice for consumers.”

Heat pump specialists respond

Heat Pump Association Chair Phil Hurley said the government’s pledges were welcomed in a year where heat pump sales in the UK were shown to have doubled.

He said, “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 as affordable as boilers, so all consumers can soon access and enjoy the benefits of affordable, reliable low carbon heating that stands the test of time.”

Mr Hurley said the association had also launched a training course that it expected to train up to 40,000 installers a year to ensure there were sufficient skills to introduce the systems effectively and at scale.

Laura Bishop, Chair of the Ground Source Heat Pump Association, said that the body welcomed the announcement of commitments from the strategy that it hoped would create policy to ensure growth of the industry.

She said, “Ground source heat pumps represent a long-term infrastructure asset which delivers unrivalled efficiencies in generating clean heat, and we hope the policy will underpin the mass market roll out we have been anticipating for some time.”

Ms Bishop was among the high profile speakers at the 2021 H&V News Low Carbon Heating Summit last week who noted that a range of different heat technologies all had a role in the move to net zero heat within the UK.

She argued that heat pumps would be particularly important in the domestic sector at a time when hydrogen was still very much in the trail and development stage.

Energy suppliers

News of the funding and grant support was welcomed by some energy specialists working in the UK.  Greg Jackson, the founder of renewables-focused Octopus Energy, said it expected the strategy to help bring down the prices of heat pumps.

Mr Jackson said the company was seeking to install heat pumps at a price that would be similar to installing a natural gas boiler.

He said, “Octopus has already committed £10 million investment to its research and development and training centre dedicated to the decarbonisation of heat, and has begun training engineers at the rate of 1,000 per year.”

“But this is just the beginning. By scaling up the technology and supply chain in Britain, innovative companies like ours will soon be able to fit and run heat pumps without any government support.”