Heat pumps will be the primary technology for decarbonising the way we heat our homes, but currently the UK lags behind European and American peers – frequently finishing ‘bottom of the league table’ for the number of heat pumps installed. This report considers a range of viable routes to market for heat pumps and sets out the financial offers needed to underpin them.
Despite the challenges, the UK has a proud history of nationally co-ordinated heating system transitions. With the right coordination and leadership from government, the UK can make similar strides towards cleaner, and even more efficient heating systems.
A range of challenges are hindering the development of a mass market for heat pumps in the UK. Heat pumps remain more expensive than gas boilers, which frustrates uptake. Although heat pumps are three times as efficient as gas boilers, electricity unit prices are around three times higher, effectively eliminating the efficiency benefits from a running cost perspective.
Policy changes can make heat pumps the most cost-effective option for consumers, without the need for expensive and permanent subsidies. This report sets out what can be done to accelerate the heat pump market, focused on this twin challenge of upfront and running costs.
Summary of Recommendations
- Lower the cost of electric heating, and of electricity more generally, to improve heat pump running costs.
- Support the development of new business models for heat pump purchase, including leasing and service options and more flexible tariffs.
- Unlock private and public finance options, such as property-linked finance, demand aggregation, and attractive retrofit loan offers.
Read the full report here.
