Go-slow on heat pumps could see the UK hand over £9bn for foreign gas, ECIU warns

If the government is slow to push heat pumps, the UK could spend an additional £9bn on gas imports from abroad between 2024 and 2035, the Energy and Climate Intelligence Unit claims.

Postponing or scrapping policies to support heat pump installations would make the UK less energy secure, the think tank claimed, highlighting declining oil and gas production in the North Sea.

The huge push for heat pumps, which is not without criticism, stems from the government’s legally binding target of reaching net zero by 2050.

But this week boiler makers have opposed plans to fine them if they fail to meet strict quotas for heat pump production and installations from next year.

Under current guidelines, the sale of new boilers will be banned from 2035 and households will be forced to install heat pumps instead under the Boiler Upgrade Scheme.

The government currently offers households a grant of £5,000 for the installation of an air source heat pump, or £6,000 for a ground source heat pump.

According to the ECIU, a less ambitious ‘heat pump mechanism’ requiring manufacturers to provide heat pumps, as well as enabling gas connections to new homes, could lead to the UK purchasing an additional 200 TWh of foreign gas from countries such as Qatar between 2024 and 2024. 2035.

This is the equivalent of the annual gas consumption of more than 16 million households.

The ECIU added: ‘A new build home built in the next few years with a gas boiler could spend around £3,500 more on gas in 2035 than a new build home with an electric heat pump, and an existing home still draining. using a gas boiler could spend around £4,000 on gas by 2035.”

The government has not yet confirmed its position on whether new homes can be connected to the gas network, after the sale of new gas boilers was banned.

Jess Ralston, an energy analyst at the ECIU, said: ‘Those calling for heat pump production to slow down are effectively locking the UK into greater foreign gas dependence and the sort of price volatility we’ve seen over the past year. This turned out very badly for British bill payers.

‘The government faces a choice; continue to subsidize oil and gas, and expose households to volatile gas prices, or instead invest directly through bold policies in renewables.

Sales of electric heat pumps are booming in Europe and the US, which they call “freedom pumps” in light of Russia’s meddling in the international gas market.

“Every heat pump we install means less gas has to be bought from places like Qatar, with the revenue instead going to renewable energy sources on UK soil or seabed.”

The ECIU’s findings say the cost of additional gas imports for heating could rise to more than £9bn by 2035, based on current forecasts suggesting gas prices will remain two to three times higher for the rest of the year than before the energy crisis. decade.

Heat pumps are ‘noisy and expensive’, says MP

Heat pumps remain a matter of debate and concerns about cost, maintenance and complexity persist.

Speaking exclusively to This is Money, Craig Mackinlay, Conservative MP for South Thanet, said: ‘The latest attempt by Net Zero groups to “push” households towards heat pumps is to link gas use to the further enrichment of foreign jurisdictions on the back of the import of gas.

‘This begs the question – the UK has enough North Sea and shale gas reserves to be self-sufficient and even become a net exporter of natural gas again in the medium term; there is no need to increase dependence on imported gas, be it fracking from the US or more traditional resources from Qatar, and we should focus on a policy that puts domestic supply first.

“I am a strong proponent of insulation and have no ideological objection to heat pumps or other low or zero emission energy sources, but heat pumps are expensive, noisy and inefficient and require a high electricity input which can add to overall bills.”

He added: “Additionally, and perversely, installing a heat pump can negatively impact EPC scores, further highlighting the shortcomings of the EPC rating system, which highlights the potential for property rentals or even sales. increasingly depend.

“If heat pumps can prove themselves over time, both in terms of cost and performance, households will buy them. Threatening to ban existing proven technology does not prove that unproven technology is inherently better, that is for the market and consumer choice to decide.’

Costs and practical questions

In February, the Lords Environment and Climate Change Committee published a report following an investigation into the effectiveness and viability of the Boiler Upgrade Scheme.

The committee states: ‘The upfront costs are too high for many households, even with the help of the subsidy, so that it is not possible for low-income households to benefit from the scheme.’

The commission also said that while heat pump operating costs were becoming competitive, progress was urgently needed through electricity market reform to ensure operating costs became affordable.

It said it was highly unlikely that the government’s 2028 target of 600,000 installations per year would be met. In the first three months of this year, less than 9,000 heat pumps were installed.

This week, boiler manufacturers began to oppose government plans to fine them if they fail to meet strict quotas for heat pump production and installations from next year.

Some affected boiler manufacturers argue that the £5,000 fine per missing heat pump could drive up costs for consumers and jeopardize investment and jobs.

Valliant UK, which has plowed £4 million into a new heat pump production line in Derbyshire, claimed it would review its UK investment plans if the fine proposal came into effect, according to the Financial Times.

Heat pumps generally cost between £8,000 and £30,000 to buy and fit, with the hefty price range reflecting the different models and ease of installation in someone’s home.

However, in February Octopus Energy unveiled an air source heat pump that can be fitted for just £2,500. Octopus said its heat pumps cost just £2,500 per household, and no more than £4,000 for most homes

Last month, This is Money revealed that the average cost of an air source heat pump service is between £125 and £150. The Heating and Hotwater Industry Council sets this figure at £200 for an air source heat pump and £250 for a ground source heat pump.

Meanwhile, the average cost of a boiler service for a gas boiler is around £80, according to Checkatrade. Since heat pumps are located outdoors, they are at greater risk of damage from the elements.

The repair costs of heat pumps also remain unknown. If your air to water heat pump is more than 20 years old and has stopped working properly, a replacement pump may be required.

Responding to cost and practical concerns, Ralston from the ECIU told This is Money: ‘Heat pump units now start at £2,500, including the government subsidy, and could fall further as the UK industry grows.

‘Anyone who argues against heat pumps is essentially arguing for more dependence on gas – that will increasingly come from abroad now that the North Sea continues to deteriorate.

“Two out of three heat pump owners are satisfied with their operating costs, which is more satisfied than owners of gas boilers, and more than 85 percent are satisfied with their reliability and safety.”

She added: ‘The UK could look like a fool if it continues to be sluggish with heat pumps, with 20 million pumps already installed in Europe as other countries try to end their reliance on gas for heating.’