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HEAT PUMP GUIDE Heat pump market – what needs to be done?
Heat pumps are a scarcely known technology in this country but are already well-established across the world. Designed to work in colder climates and proving to be the best and cheapest long-term sustainable heating solution, there is no doubt they will continue to play a huge role on the Net Zero path
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bserving fi gures obtained within Gemserv’s running cost analysis for the Heat Pump Association (HPA), even based on boilers performing with relatively high effi ciencies, it is evident that heat pumps can save consumers on average
£500-600 per year. As fossil fuel costs rise and Net Zero policies continue to be seen as economically benefi cial, heat pump technology will continue to be increasingly cost competitive, with heat pumps only needing seasonal COP levels of 2.53 to be achieving cost parity with gas boilers. It was also observed that meeting government heat pump targets will contribute towards two thirds of government plans to reduce energy consumption in the UK by 15% by 2030. Without going into too much detail, it’s clear that heat pumps are an economically and sustainably sound solution to decarbonisation methods in the UK. So, after all this, why are heat pumps so hard to come across in the UK and why are people so unfamiliar with the technology? Analysis by The Eco Experts, helping consumers reduce energy costs through green energy advice, has revealed how far behind the UK has fallen on heat pump sales, and how much more needs to be done for us to catch-up with our European counterparts (See fi gure 1). Heat Pumps are largely dismissed in this country and raise the same comments when mentioned at the dinner table. They’re so expensive or heat pumps don’t work in this country. Many also want to stay clear of the technology for fear that installation may take too long or result in the complete gutting of their existing radiator systems, raising costs further. These comments are not falling on deaf ears, and the thoughts and feelings coming from consumers towards the technology must be listened to and engaged with. The HPA recognises that heat pumps will only fulfi l their purpose and play a part in the Net Zero transition if all stakeholders, suppliers, installers, and end users fully appreciate and understand their function and capabilities. Up-front costs of heat pumps are certainly higher than replacing a fossil fuel boiler alone. However, there are two balancing factors. Part of the diff erence in cost is because heat pump installation costs often include upgrades to radiators to allow the system to operate at better effi ciencies. The same should be true for boilers, but often is not, with the consequence that consumers’ bills can be higher than necessary, and this is acknowledged by the Government in its recent consultation on boiler effi ciencies. It’s clear that if boilers are to perform to their full effi ciencies, installation practises will have to change to make system changes that allow lowering of operating temperatures, and this will generally add cost to boiler installations by requiring the same changes as are needed for heat pumps. Some examples could include a routine discipline of room-by-room heat loss calculations and making hydraulic balancing compulsory whenever a boiler is changed. Once these changes start to happen, we will have a more realistic comparison between the up-front price of boilers compared to heat pumps, as part of the diff erence in up-front cost is artifi cial because it does not compare like with like. Moreover, a £500-£600 saving in fuel bills can be observed with heat pump installations, a cost saving that makes at least a reasonable chunk of up-front cost diff erence worthwhile. People do after all invest to save money, especially where they have reasonable certainty the savings will happen. It’s also certain that as the market transforms towards the volume targets, costs
are likely to come down; this will however be a knock-on eff ect that will only be achieved if the Government works with industry to lower costs through subsidy schemes and awareness campaigns to drive this volume increase. Subsidies such as the Boiler Upgrade Scheme (BUS) and zero-rated VAT currently have a role, but BUS’s
Figure 1: The Eco Experts - Heat Pumps per 100,000 people
slow rollout is a sign that the policy framework just isn’t ambitious enough, either in subsidy level or in volume. Statistics show that the BUS grant for Ground Source Heat Pumps falls short by £7,765 when compared with its predecessor the Domestic Renewable Heat Incentive (DRHI) and it is clear that the scheme is nowhere near its £450 million funding target. The Government has recently chimed in on this too, with a report from the House of Lords stating that the scheme is failing to deliver due to ineffi cient grant levels and lack of public awareness of the scheme. With typical household bills under the Government’s Energy Price Guarantee rising to £2,500, it is understandable why consumers are hesitant to make the switch. Rising energy costs like these combined with volatile energy supplies provide a situation where greener, domestic energy is needed more than ever, and yet is more inaccessible for consumers, particularly for vulnerable households. Financing the transition is but one of the HPA’s 4 pillar vision to transforming Britain’s heating, developed with, and informed by the HPA’s wealth of manufacturers who supply 95% of the UK heat pump market. A consensus was largely placed on the need to expand the installer base when accelerating heat pump rollout in the UK too. Training support schemes, recognisable qualifi cations and apprenticeship programmes will have a domino eff ect for heat pump awareness and greater green skills will ensure the technology is less daunting for both the consumer and installer. The HPA’s member base already has the capacity to train up 40,000 installers per year, and the over 100,000 registered gas engineers in the UK will give more than suffi cient demand for the transition to net zero. Further to this, the policy framework must be clear and reassuring for the
industry. With confi dence in the direction the market is heading, installers will want to capitalise on the shift to installing heat pumps, particularly once the Government has confi rmed a backstop date for phasing out the sale of 100% fossil fuel boilers for the whole market. Government reassurance and perceived heat pump backing will incentivise interest in Ofqual training courses, and more must be done to achieve this. The Heat Pump Association will continue to work with industry and Government closely to create a partnership airtight to make this remarkable transition a reality.
20
April 2023
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