Getting warmer: Have heat pumps finally cracked the mainstream market?
A price war for heat pumps was triggered last month, when British Gas owner Centrica unveiled a £3,000 product for households, comparable in cost to a gas boiler.
This offer is well below current trading expectations – with installations typically clocking in at £8,000-£14,000 on the retail market, according to Uswitch data.
Big Six rival and fellow heat pump advocate Octopus Energy has since challenged Centrica’s bid for customer value, offering the nascent home-warming technology for £2,500.
Heat pumps are considered by the energy sector to be a vital tool in the race to net zero, warming homes without carbon emissions, and theoretically providing cheaper and more efficient power – with devices lasting 20 years (twice as long as a gas boiler) and taking at least 25 per cent off heating costs.
They work by compressing air to heat up and then circulating it through buildings, ultimately providing a greener solution to boilers.
Downing Street is targeting 600,000 heat pumps a year fitted by 2028 to lower UK carbon emissions and cut energy usage by 15 per cent, offering £5,000 grants in England and Wales through the £450m Boiler Upgrade Scheme – which has enabled Octopus and Centrica to slash their prices.
Yet, the government’s biggest hurdle appears to be public apathy.
Public sceptical over heat pump proposition
Earlier this week, the House of Lords’ environment and climate change committee slammed the government’s incumbent boiler scheme as “seriously failing”.
Since its launch last May, official figures reveal that only 7,600 of the first 30,000 heat pump vouchers had been redeemed by the end of January, using up just £38.4m of the first year’s £150m budget.
The committee has called for more practical benefits for households installing heat pumps, such as improved certificate ratings for energy efficiency – making properties more desirable to buy at a later date – and a public information campaign about the benefits of heat pumps.
Jess Ralston, energy analyst at climate group ECIU, argued such a low take-up was damning as households grappled with record energy bills – with UK homes among the most gas reliant in Europe, relying on the fossil fuel to heat 85 per cent of homes.
“Heat pumps offer homes the chance to get off gas, insulate themselves from this volatility while also avoiding the air pollution that gas boilers generate,” she said.
Adam Bell, head of policy at Stonehaven and ex-BEIS head of energy, said heat pumps were “critical to the future of our energy system”, but conceded they would also require behavioural change from customers.
He explained: “Heat pumps are most efficient when they’re left to run themselves; many consumers, however, like the controllability that comes from gas boilers. This is a challenge for anyone selling heat pumps to people who’ve only used gas boilers their entire lives.”
However, Octopus remains optimistic about the take-up of heat pumps and its potential.
Rebecca Dibb Simkin, chief product and marketing officer at Octopus, believed it would be like any adoption cure, comparing it to the initially sluggish growth of electric vehicle sales before its recent embrace into the mainstream – when people became more familiarised and at ease with the concept.
She said: “You embrace those early adopters – people who want to get one, while reassuring those people who aren’t ready yet they don’t have to have one yet. We’ll start with them, and then everyone else can just get used to this kind of permeating as being the norm, maybe they see a neighbour who’s got one. It’s not scary. It’s just heating your home.”
Since Octopus started offering heat pumps last year, around 50,000 of its three million plus customers have registered their interest in getting one.
Heat pump opportunity poses challenges
Charles Wood, deputy director policy at trade body Energy UK, also argued public awareness of the benefits of heat pumps was a key factor in boosting installations.
He said: “We need to engage with consumers on what is a heat pump? Who can they call in order to figure out if it is the best option for them? Where can they go for trusted advice?”
However, he additionally pointed to other pinch points in the growth of heat pumps which could prevent them entering the mainstream, such as a lack of skilled technicians.
“The number of installers who can put these in and the cost of installation are actually very heavily linked. As we get more people trained to install heat pumps, we’ll also see just more choice and more competition. So, it makes it easier for consumers to find a lower cost deal,” he explained.
Last year, social welfare charity Nesta revealed that the UK was home to just 3,000 heat pump engineers, with the country needing at least 27,000 qualified engineers by 2028 to meet the government’s target.
Another key factor is the poor quality of the UK’s housing stock, which jeopardises the value of heat pumps, with British homes among the least energy efficient in Europe.
An EDF study last year revealed more than half the country’s households only meet the insulation standards of 1976 or older.
For heat pumps to offer value for customers, the government will need to boost the insulation of the country’s housing. While Downing Street has committed nearly £13bn over the next five years to making homes more energy efficient, concerns remain that the government has moved too slow on the issue.
Such hurdles suggest a full embrace of heat pumps remains some way off – but the competitive price points from Octopus and Centrica are encouraging.
With the industry regarding the technology as so integral to the energy transition, it will be incumbent on the government to find realistic ways of boosting take-up if it is sincere in its climate goals.