Heat pump demand may mean government scheme runs out of vouchers
A government scheme subsidizing the replacement of gas boilers with electric heat pumps could run out of money by 2024 – years ahead of schedule.
The government’s Boiler Upgrade Scheme offers vouchers worth up to £6,000 for every home with a heat pump – devices that help reduce energy bills.
Fitting an air source heat pump – the cheapest option – costs an average of £13,000, meaning government rebates have been vital to interest homeowners.
The boiler upgrade scheme is slow to take off, with heat pump installations currently a third behind government targets.
Not all hot air: Analysis of government data has shown boiler upgrade scheme vouchers may run out as demand for heat pumps increases
But that’s now changing, thanks to new low-cost heat pumps being offered by energy companies British Gas and Octopus.
These cheap pumps seem to be convincing more and more households to take the plunge and replace their old gas boiler.
Government figures show that the number of heat pump installations has increased by 10 percent since May 2022 since the launch of the Boiler Upgrade Scheme in May 2022, according to the action group Energy and Climate Intelligence Unit.
That comes after trade body the Energy and Utilities Alliance argued last month that the scheme was not working for many people living in energy-inefficient homes.
If this increase continues at the same rate, about 150,000 heat pumps would be installed by the third year of the scheme, says the Energy and Climate Intelligence Unit.
If demand for heat pumps grows at the current rate, government vouchers could run out next year, the agency added.
The government has promised to put more money into the scheme – but not until 2025.
Still, a government spokesman said the scheme would not run out of money.
A spokesperson for the Department of Energy Security and Net Zero said: ‘We are confident that vouchers will be available through the Boiler Upgrade Scheme for anyone wanting a heat pump.
The scheme will be extended for 2025 with new, additional financing every year until 2028.
“Heat pumps are a proven, scalable option for decarbonising heat and we are making heat pumps more attractive by lowering their price.”
Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit said: ‘It is still relatively early days for the scheme, but if demand continues to grow at this rate, the government will have to choose between boosting the scheme so that it reaches its full potential. , or not – which can make us more dependent on gas imports.’
Why are heat pump installations increasing?
According to the Energy and Utilities Alliance, the average cost to install an air source heat pump under the scheme is £13,000.
The government grant is capped at £5,000 for an air source heat pump, meaning a homeowner will typically need to find £8,000 for installation.
But in the UK, Octopus Energy and British Gas recently announced they will reduce the cost of fully installed heat pumps, including the Boiler Upgrade Scheme grant, to £2,500 and £2,999 respectively – a huge saving.
In addition, under pressure from the heating industry, the government launched an advertising campaign for heat pumps this year, which could further boost adoption.
Are heat pumps really suitable for every building?
A new government report says that “there is no type of property or architectural era unsuitable for a heat pump,” from “Victorian mid-terraces to pre-WWII semis and a 1960s block of flats.”
But some people who have had heat pumps installed complain that they don’t heat their homes to a comfortable temperature.
Many require expensive upgrade work such as new radiators and insulation to get the most out of their new heat pump.
Mike Foster, CEO of the Energy and Utilities Alliance, says some homes just aren’t right for heat pumps.
He said: ‘For example, four to five million modern homes have microbore pipes to move heat between the boiler and radiators. That doesn’t work well with a heat pump.’
During government tests of heat pumps, 93 percent of homes needed new radiators and 81 percent needed a new hot water tank.
Have you had a heat pump installed by British Gas or Octopus Energy? Email: helen.kirrane@thisismoney.co.uk
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