More UK households are opting for heat pumps, spurred by Government grants that make the transition more affordable. Despite this assistance, the uptake is still not on track to meet ambitious environmental targets. The goal? To reach 600,000 heat pump installations per year by 2028. But high upfront costs continue to deter many potential adopters, suggesting that even with financial support, the road to this target is fraught with challenges.
Falling Short of Expectations
The UK’s Boiler Upgrade Scheme (BUS), which provides grants of up to £7,500 for households to install heat pumps, is a cornerstone of the government’s strategy. Yet, despite these incentives, heat pump installations have consistently missed government targets. In the fiscal year 2023/24, the scheme disbursed £88.8 million, significantly under the allocated £150 million budget. This underutilisation marks a continuation from the previous year’s £51 million payout, underscoring ongoing challenges.
Grant Adjustments and Public Response
In an attempt to boost participation, last October the government increased the grant amount from £5,000 to £7,500 for both air and ground-source heat pumps. Following this change, there was a notable increase in applications—a 52% surge in the month following the grant increase. Yet, despite these encouraging signs, the high overall cost of heat pump installation remains a formidable obstacle for many.
The Price Dilemma
According to Mike Foster, chief executive of the Energy and Utilities Alliance, the expense involved in installing a heat pump is a significant barrier. “The average installation cost under the BUS is £33,300. Even with a £7,500 grant, the remaining cost is still too steep for many households,” Foster explains. This financial burden makes it challenging for average consumers to justify the switch, particularly when other spending priorities compete for their limited funds.
Optimism Among Energy Providers
Despite these hurdles, there is optimism that costs could decrease. Energy companies, including British Gas and Octopus Energy, are striving to offer more affordable heat pump options. However, Foster remains skeptical about significant price reductions, pointing out that “heat pumps are globally traded items, and the prices are similar across markets like France or Germany.”
Future Outlook and Government Commitment
The Department for Energy Security and Net Zero remains optimistic, citing a 75% jump in applications for February compared to the previous year. “We are steadfast in our commitment to install 600,000 heat pumps annually by 2028, with nearly £2 billion backing to achieve this goal,” a department spokesperson stated.