High cost of heat pumps is putting customers off, watchdog warns

Households are not replacing their gas boilers with heat pumps due to high costs and a lack of awareness, the government’s spending watchdog has warned.

The government wants to end the installation of new gas boilers in most homes by 2035 and instead encourage households to install heat pumps.

Heat pumps use heat from the air, water or ground to produce electricity, and the government wants to install 600,000 of them per year from 2028, an eleven-fold increase from 55 000 only in 2023.

But the National Audit Office (NAO) said the high cost of heat pumps and lack of consumer understanding was deterring more households from choosing to install heat pumps.

The watchdog said “a key issue behind the lower-than-expected uptake of heat pumps is their cost of use and installation” and that the government does not have a “long-term plan for address low levels of awareness about switching away from gas. Electric heating.

The government’s main tool for encouraging households to choose heat pumps is its Boiler Upgrade Scheme, which offers grants of up to £7,500 to install air source and ground source heat pumps.

But the NAO said the boiler upgrade program “also underperformed”, equipping only 18,900 of the 50,000 heat pumps the government had hoped to install between May 2022 and December 2023.

In October 2023, the government increased the maximum Boiler Upgrade Scheme grant by £5,000 to encourage more Brits to install them.

Currently, installing a heat pump costs four times more than a comparable gas boiler.

But the government estimates that the cost of heat pumps is expected to fall as companies compete to install them, and the price of these devices is expected to have fallen by up to 50 percent by 2025.

The NAO said the government is “relying on optimistic assumptions about substantial increases in consumer demand and supply from heat pump manufacturers” to meet its target of installing 600,000 heat pumps. here 2028.

Hydrogen retention

The watchdog also said the government must hurry and decide whether or not British households will be able to use hydrogen to heat their homes.

Hydrogen can be used to power boilers in the same way natural gas currently does. In fact, switching from a natural gas boiler to hydrogen is a simple process for every household, but it remains a major headache for the whole of the UK, with 86% of homes connected to the grid. gas.

The green advantage of hydrogen is that when burned it produces only heat and water, whereas natural gas produces heat and greenhouse gases including carbon dioxide. carbon.

In October 2023, the Department of Energy Security and Net Zero (DESNZ) said hydrogen heating could have a “limited” role, although heat pumps should be the priority.

The government is expected to take stock of the use of hydrogen for domestic heating by 2026, including its safety and viability.

Meanwhile, the government was supposed to trial hydrogen heating in Whitby in July 2023, but canceled the plan because residents were unwilling to change their heating systems.

A smaller trial at Redcar was also canceled in December 2023 because the government could not find enough hydrogen nearby to make the project work.

Uncertainty around possible hydrogen heating is deterring some households from choosing heat pumps, the NAO said.

Indeed, it would be much cheaper to modify an existing gas boiler to burn hydrogen rather than install a heat pump.

A DESNZ spokesperson said: “By helping rather than forcing families to install heat pumps, with a 50 per cent larger heat pump grant, we have increased applications by almost 40 per cent. hundred.

“Nearly half of homes in England now have an energy performance certificate of C or above, up from just 14% in 2010. We are investing billions in improving homes, including insulating around 700 000 properties.

“Our Welcome Home to Energy Efficiency campaign is broadcast on TV, radio and newspapers, reaching 16.6 million homes with advice and information on how heat pumps, insulation and solar panels can reduce their emissions and energy bills.”