Heat pump demand may mean government scheme runs out of vouchers

A government scheme that subsidises replacing gas boilers with electric heat pumps could run out of cash by 2024 – years ahead of schedule.

The Government’s Boiler Upgrade Scheme offers vouchers worth up to £6,000 for each home fitting a heat pump – devices that help cut energy bills.

Getting an air source heat pump fitted – the cheapest option – averages £13,000, meaning government discounts have been vital to get homeowners interested.

The Boiler Upgrade Scheme has been slow to take off, with heat pump installations currently a third behind government targets.

Not all hot air: Analysis of Government data has found that the Boiler Upgrade Scheme could run out of vouchers as demand for heat pumps increases

But that is now changing, thanks to new cut-price heat pumps being offered by energy firms British Gas and Octopus. 

These cheap pumps seem to be convincing more and more households to take the plunge and replace their old gas boilers.

Government figures show heat pump installations rising by 10 per cent every month since the Boiler Upgrade Scheme launched in May 2022, according to the Energy and Climate Intelligence Unit pressure group.

That comes after trade body the Energy and Utilities Alliance argued last month that the scheme was failing to deliver for many people living in energy inefficient homes.

If this rise continues at the same pace, around 150,000 heat pumps would be installed by year three of the scheme, the Energy and Climate Intelligence Unit says.

If the demand for heat pumps grows at its current pace, government vouchers would run out by next year, the body 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 cash.

A Department of Energy Security and Net Zero spokesperson said: ‘We are completely confident vouchers will be available through the Boiler Upgrade Scheme for everyone who wants a heat pump. 

‘The scheme will be extended for 2025 with new, additional funding in each year until 2028.

‘Heat pumps are a proven, scalable option for decarbonising heat and we’re making heat pumps a more attractive option by working to lower the price of them.’

Jess Ralston, energy analyst at the Energy and Climate Intelligence Unit said: ‘It’s still relatively early days for the scheme, but if demand continues to grow as it has, government will need to choose between boosting the scheme so that it reaches its full potential, or not – which could leave us more dependent on gas imports.’

Why are heat pump installations rising?

The average cost of installing an air source heat pump under the scheme is £13,000, according to the Energy and Utilities Alliance.

The Government subsidy is capped at £5,000 for an air source heat pump, meaning a homeowner has to typically find £8,000 for installation.

But in the UK, Octopus Energy and British Gas have recently announced that they will reduce the costs of fully installed heat pumps, including the Boiler Upgrade Scheme grant, to as low as £2,500 and £2,999 respectively – a huge saving. 

In addition, after pressure from the heating industry the government launched a heat pump advertising campaign this year, which could further boost uptake.

Are heat pumps really suitable for any property?   

A new government report says ‘there is no property type or architectural era that is 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 fitted complain that they do not 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, chief executive of the Energy and Utilities Alliance, argues some homes are just not suitable for heat pumps.

He said: ‘For example, four to five million modern homes have microbore piping to move heat between the boiler and radiators. This does not work effectively with a heat pump.’ 

During government heat pump trials, 93 per cent of homes needed new radiators and 81 per cent needed a new hot water tank.

Have you had a heat pump fitted by British Gas or Octopus Energy? Email: [email protected]

This post first appeared on Dailymail.co.uk