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

Households are not replacing 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 fitting of new gas boilers in most homes by 2035, and instead is encouraging households to fit heat pumps.

Heat pumps use air, water or ground heat to generate electricity, and the Government wants to see 600,000 a year fitted from 2028 – an elevenfold increase from just 55,000 in 2023.

But the National Audit Office (NAO) said that the high cost of heat pumps and a lack of consumer understanding were holding back more households choosing to fit heat pumps.

Elevenfold increase: The Government wants to see 600,000 heat pumps a year fitted from 2028 – up from just 55,000 in 2023

The watchdog said that ‘a key issue behind lower-than-expected heat pump uptake is their cost to use and install’ and that the Government has no ‘long-term plan to address the low levels of awareness’ about moving away from gas-powered heating.

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

But the NAO said the Boiler Upgrade Scheme ‘has also underperformed’, fitting just 18,900 of the 50,000 heat pumps the Government had hoped to fit between May 2022 and December 2023.

In October 2023 the Government raised the maximum Boiler Upgrade Scheme grant from £5,000 to encourage more Britons to fit them.

At the moment a heat pump costs four times more to fit than a like-for-like gas boiler.

But the Government thinks the cost of heat pumps should fall as firms compete to fit them, and that the devices should have fallen in price by up to 50 per cent by 2025.

The NAO said that the Government is ‘relying on optimistic assumptions about consumer demand and manufacturer supply of heat pumps increasing substantially’ to meet its target of fitting 600,000 of the devices by 2028.

Hydrogen hold-up 

The watchdog also said the Government needs to hurry up and decide if UK homes will be able to use hydrogen to heat their homes or not.

Hydrogen can be used to power boilers in the same way that natural gas does now. In fact, switching a boiler from natural gas to hydrogen is a simple process per household – but still a major headache for the UK as a whole, as 86 per cent of homes are on the gas network.

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

In October 2023 the Department for Energy Security and Net Zero (DESNZ) said there could be a ‘limited’ role for hydrogen heating, although heat pumps should be the major focus.

The Government is due to give an update on using hydrogen for home heating by 2026, including how safe and viable it is.

In the meantime the Government was meant to test out hydrogen heating in Whitby in July 2023, but cancelled the plan as residents were not keen on changing their heating systems.

A smaller trial in Redcar was also cancelled in December 2023 as the Government could not find enough hydrogen nearby for the project to work.

The uncertainty around possible hydrogen heating is putting some households off picking heat pumps, the NAO said.

That is because it would be far cheaper to modify an existing gas boiler to burn hydrogen rather than fit a heat pump.

A spokesperson for the DESNZ said: ‘By helping rather than forcing families to install heat pumps, with a 50 per cent bigger heat pump grant, we have boosted applications by nearly 40 per cent.

‘Almost half of homes in England now have an Energy Performance Certificate of C or above, up from just 14 per cent in 2010. We are investing billions in home upgrades including insulating around 700,000 properties.

‘Our Welcome Home to Energy Efficiency campaign is running on tv, radio and newspapers, reaching 16.6 million households with advice and information about how heat pumps, insulation and solar panels can cut their emissions and energy bills.’

This post first appeared on Dailymail.co.uk