Time to rein in the heat pump cowboys

The hard sell of green heating solutions could penalize consumers, the Competition and Markets Authority (CMA) is expected to warn in a report to be published today.

The regulator whose role is to stamp out anti-consumer practices is concerned that a government target for the country to reach ‘net zero’ by 2050 is being exploited by a number of unscrupulous companies, leading to consumer harm.

The report covers all the key points of the government’s plan to make our homes greener – from encouraging the installation of home insulation to greater use of solar panels, heat pumps, biomass boilers and hydrogen boilers.

It will highlight the lack of reliable advice available to consumers and will focus on selling electric air and ground source heat pumps that draw natural heat from outside and underground respectively to provide heating and hot water.

The CMA is concerned that some firms — pump suppliers and installers — are exaggerating the benefits of these eco-friendly heating systems for homeowners, potentially fueling a major misselling scandal.

Money Mail warned of this looming crisis three months ago, after seeking evidence from readers who had already replaced their gas boiler with an electric heat pump – or moved into a building that already had a pump.

Hundreds contacted us and confirmed widespread problems with the new technology. Some, enraged at the failure of the pumps to adequately heat their homes, have now ripped them out or installed additional heating systems to turn on when the pumps fail to generate enough heat.

Since September, the CMA has been seeking evidence from both consumers and businesses about how green heating solutions have been bought and sold.

When it launched its call to action, chief executive Sarah Cardell said it was imperative that companies “understand and comply with their legal obligations when selling and installing [green heating]’. Consumers, she added, should be “assured that they are being treated fairly” and that any problems should be resolved “at an early stage.”

The report’s emphasis on the potential misselling of heat pumps is largely a result of government support for these heating systems. It says that the sale of traditional gas boilers will be banned from 2035, which means that when these boilers reach the end of their life, they will have to be replaced with an alternative.

More directly, from 2025 no new home may be built with a gas boiler.

To push homeowners towards heat pumps, the government launched a £450 million boiler upgrade program just over a year ago. It offers grants of £6,000 and £5,000 respectively if homeowners take out their gas boilers and install a ground or air well pump.

Before the grant is applied, the price to install an air well pump can be between £7,000 and £13,000, while ground pumps can cost up to £30,000 (hence the more generous grant). But cheaper versions are being introduced by British Gas and Octopus Energy, among others.

While the use of the subsidies is excruciatingly slow, the scheme has attracted some unwelcome companies looking to take advantage of consumers.

Mike Foster is CEO of Energy and Utilities Alliance, an energy trade association with members drawn from the heating and hot water industries. He believes that heat pumps, placed in the right premises by highly professional installers, can be a great way to heat a home.

Research published this week shows that 80 percent of households that have replaced their gas boiler with an electric heat pump are satisfied with their new heating system.

Still, Mr Foster warns: ‘When a government pushes a technology so hard with generous subsidies available, it’s no surprise that the cowboys move in and abuse people. We need to nip this problem in the bud now.

“The reality is that a heat pump will reduce your carbon footprint, but it will probably cost you a five-figure sum to install and add to your energy bill, not reduce it. Any advertisement or sales pitch suggesting otherwise should be treated with extreme caution.

“Let’s hope the CMA sends a hard message to companies along the lines of, ‘Don’t mislead the consumer; and if you do, prepare for the consequences.” ‘

Ads seen by Money Mail confirm what Mr. Foster says. For example, one ludicrously claims that a heat pump “uses free energy from the air or the ground,” while another makes the false claim for air source pumps that they will help a homeowner “avoid rising energy costs.”

These advertisements have been passed on to CMA officials.

Andrew Kerr is the founder of Boxt, which installs boilers as well as solar panels and radiators. He says: ‘Given all the hype surrounding heat pumps, it is essential that governing bodies crack down on those who are simply out to make ‘quick money’ without considering whether a heat pump is the right choice.’

Peter Thom, director of energy-saving company Groene Warmte, agrees. He says: ‘There are too many rogue installers and too many training courses for rogue people. This problem must be solved.’

He adds about heat pumps: ‘The elephant in the room is the high installation costs. This is unaffordable for most – and you have to question the morality of providing subsidies to the affluent market while millions of households are in fuel poverty.’

Bill Griffiths bought a four-bedroom new build house in a village near Alfreton, Derbyshire, four years ago. It came equipped with an air source heat pump.

Like many such pumps, it’s a noisy beast, especially when you’re working hard to draw in air for heating. Despite this slight annoyance and the cost of maintenance, Bill, a former chemist at nearby engineering giant Rolls-Royce, says he’s generally happy with the two-fan heat pump behind his garage.

This in turn heats a 400 liter water tank. But he says it’s a lie for any supplier or installer to suggest that a heat pump can save homeowners money on their energy bills.

Bill says the current price differential between electricity (which heat pumps depend on) and gas is working against heat pumps. He says: The price of gas per kilowatt hour (kWh) is much cheaper than electricity. That means that a heat pump has to run very efficiently in order to benefit financially.’

Energy regulator Ofgem says that from July this year the respective gas and electricity price caps will be 8p and 30p per kWh.

Over the past year, Bill has painstakingly compared the cost of electricity used to heat and heat his home to what it would have cost if he had a gas boiler.

In general, he says when the outside temperature is below 8°C, the cost of electricity used by the heat pump to provide the hot water and heating it needs makes it a much more expensive option than gas. Conversely, the heat pump is most effective when the outside temperature is higher – and least needed.

The financial arguments for heat pumps are even weaker in homes that are less well insulated than new construction, or that have insufficiently large radiators to provide sufficient heat.

Bill adds, “If the government is serious about heat pumps, it needs to address the discrepancy between gas and electricity prices.”

Barbara Moore, a retired personal assistant in her 60s living in Berkshire, believes heat pumps remain an “experimental and unproven form of heating, available only to the wealthy.” She also claims that they are not suitable for many homes, particularly terraced houses and flats.

But her main problem, which she hopes the CMA will address, is making sure they are installed correctly. Her neighbor had an air well pump installed 18 months ago – and on occasion it has made her life hell.

She says, “When the hot water cycle comes on, it makes a horrible buzzing, booming noise that gives me a terrible headache. Recently they timed the heat pump to run at night when it can use cheaper electricity. That’s why I haven’t slept well for weeks.’

Barbara says it’s bizarre that the rules for installation differ depending on where someone lives. In England and Scotland, for example, an air source pump must be placed at least one meter away from the property boundary. But in Wales it is at least ten feet.

Barbara has considered filing a complaint with the council, but she knows that if she does she will have to disclose it if she were to sell her home in the future. “The industry needs more regulation,” she says.

The Microgeneration Certification Scheme aims to raise the bar for the companies involved in the introduction of green heat. The latest data shows that nearly 8,800 heat pumps were installed in the first three months of this year. Yet this is only a scratch on the surface compared to the government’s target of installing 600,000 heat pumps per year by 2028.

“For the vast majority of UK homes, heat pumps are not the right solution,” says Foster. “It will be fascinating to see if the CMA admits so much when its report is published.”

For the record, the CMA declined to give Money Mail specific details about its report. Citizens Advice also declined to comment.

In September, however, it backed the CMA in saying homeowners should have confidence in installing green heating technology, such as solar panels and heat pumps.