Boiler manufacturers are resisting government efforts to force them to quickly make thousands of heat pumps, at a new flashpoint on the pace of the shift to low-carbon heating.
The government plans to fine companies from next year unless they meet strict quotas for the production and installation of heat pumps. But bosses are lobbying Whitehall to delay and change the plans.
They argue the quotas are unrealistic given slow demand for heat pumps and pressure on installers, claiming fines of £5,000 per missing heat pump could drive up costs for consumers and jeopardize investment and jobs.
Vaillant UK, a leading boiler manufacturer that invested £4 million in a new heat pump production line at its Derbyshire plant, warned it would review its UK investment plans if the plans go ahead.
Henrik Hansen, Managing Director of Vaillant UK & Ireland, said: “In total we employ around 1,000 people in the UK. If fines are imposed on us, we will review our investment plans. We believe there is a risk that this could not only hold back investment, but potentially lead to job losses in Derbyshire.”
The planned quotas and fines reflect proposals to encourage the switch to electric cars, and supporters argue the mechanism is needed to stimulate the market and reduce costs for consumers.
“We believe that the scheme design proposed by the government is fair to the obligated parties,” added a spokesperson for Electrify Heat, a campaign group to promote heat pumps.
The spat, however, highlights the complications the government faces as it attempts to radically overhaul residential heating to help meet its legally binding target of net zero carbon emissions by 2050.
The vast majority of homes in the UK are heated by gas boilers, but ministers want to rapidly increase the use of heat pumps. These extract heat from the outside air and run on electricity, which is increasingly generated from low-carbon sources.
Around 8,790 heat pumps were installed in the UK in the first three months of this year, but the government wants installation rates to reach 600,000 a year by 2028, requiring a major overhaul of supply chains and demand.
The introduction of heat pumps is hampered by the relatively high cost of the devices, while estimates from Nesta last June suggest that the number of heat pump installers should increase by about 800 percent, from about 3,000 to 27,000 by 2028.
Under the plans to kick-start the market, which are currently under discussion, from next year manufacturers will have to sell a certain proportion of heat pumps versus gas or oil boilers or face fines.
The UK industry is consolidated around a handful of major European groups that already make and sell heat pumps in addition to boilers. Vaillant, Baxi and others have raised concerns with the government.
Mike Foster, CEO of the lobbying group Energy and Utilities Alliance, said there was now a “deadlock between the industry and Whitehall. . . Whitehall is separate from how the industry works.”
An industry executive said: “We want to get this market going as well, but you have to take the consumer with you. The penalties are significant and commercially material.”
Colm Britchfield, a policy advisor at E3G, an environmental think tank that manages the Electrify Heat campaign, argued that the policy would help develop the supply chain, and had widespread support in the energy industry.
“The fines are at the level they are because the cost of compliance should be less than the cost of non-compliance,” he said.
The Department of Energy Security and Net Zero said heat pumps are a proven means of decarbonising heating in the UK and are critical to boosting the country’s energy security.
“We are discussing proposals to give the industry greater incentive to invest in ways to make heat pumps a more attractive and convenient choice for more UK households,” it said.