High Costs Still a Barrier to Heat Pump Uptake, Price Unlikely to Go Down, Experts Say

Money | Science & Health

14 hours ago

Originally posted by: The Epoch Times

Experts say the high cost of installing heat pumps remains a significant barrier to adoption, and the technology is unlikely to become much cheaper in the future.

Mike Foster, CEO of the Energy and Utilities Alliance (EUA), told The Epoch Times that the high cost is partly because of the complexity of converting a home from a combi boiler system to one that is electric.

He added that the price of the heat pump unit itself “is never going to realistically become cheaper than it is,” as the technology is inherently more complex than that of a traditional boiler.

British Gas says the starting price for one of its heat pumps is £7,999. But the company estimates that the average customer will have to spend an additional £5,690 to retrofit their homes.

The government has said that switching from a gas boiler to an electric heat pump could save homeowners £100 a year on their energy bills, when used with a “smart tariff” which requires a smart meter being installed.

Foster noted that smart tariffs “are not the most common tariffs that people use” and the running cost of a heat pump remains an issue, particularly with electricity currently being around four times the price of gas per kilowatt-hour.

Boiler Upgrade Scheme

Designing an all-electric heating system involves more than just installing the main air-source unit. Homeowners also need a large hot water tank and bigger radiators to distribute heat effectively, as heat pumps operate at lower temperatures than traditional gas boilers. Homeowners may also need better insulation.

There is help for people wanting to switch to low-carbon heating, through the government’s Boiler Upgrade Scheme (BUS) which was introduced under the former Conservative administration. It offers consumers up to £7,500 to replace their boiler with a heat pump, but that can still leave households with more than £6,000 to pay for the retrofit.

A poll by the Heating Trading Networks also highlighted costs being a barrier to switching to heat pumps, with more than half (56 percent) of people believing that the heating system is too expensive for most households.

“We have to acknowledge that heat pumps do reduce your greenhouse gas emissions, and we should be looking to do that. But the price that people are willing to pay towards that goal is not £13,000. That is the challenge that government has to try and address,” Foster said.

Benefitting Wealthier People

Foster said that heat pump sales were up last year, thanks in large part to the BUS.

However, he said that the scheme is “fundamentally flawed” because “only the well off can afford to take part in the scheme and get the benefit of the taxpayer funded subsidy.”

The EUA chief cited the previous government’s assessment of the upgrade scheme, which found that 41 percent of those who benefited from the subsidy said they would have bought a new low-carbon heating system even without financial support.

Harry Wilkinson, head of policy at The Global Warming Policy Foundation, said that heat pumps are still not being chosen by most consumers.

He told The Epoch Times: “It’s worthy of reflection of how green policies often benefit the wealthiest. This is a wealth transfer to very wealthy households. The government has to be thinking about whether that’s a sensible use of its funds.”

No 2035 Boiler Ban

Domestic heating accounts for 14 percent of the UK’s carbon emissions, and the government is encouraging homeowners to switch to electrified heating as part of its efforts for the UK to meet its net zero emissions pledge by 2050.

The challenges of meeting this target appear to have been reflected by policy changes in the past year, such as the government cutting the fines for boiler manufacturers who fall short of heat pump sales targets.

In January, Energy Secretary Ed Miliband confirmed there would not be a boiler ban in 2035, saying he was “very wary of saying that we will stop people having gas boilers at a point when we cannot guarantee that heat pumps will be cheaper for people.”

Similarly, the Scottish Government cited affordability in its decision to scrap plans to make home buyers switch to low-carbon heating systems.

Foster said these recent shifts showed that there is “greater realism about the challenge of domestic heat and how you decarbonise it.”

He noted that policy always evolves as circumstances change—both domestically and nationally—and that greater clarity on the government’s stance will probably come when the Warm Homes Plan is published later this year.

Make Electricity Cheaper

Wilkinson said that when done right, heat pumps can reduce emissions and save money.

However, those outcomes would become more viable if the government focused on the cost of electricity, rather than paying people to buy boilers, he said.

“The cost of electricity is pushing people away from heat pumps,” Wilkinson said.

Wind turbines adorn the landscape in the Southern Lake District, in Lambrigg, England, on Nov. 25, 2022. (Christopher Furlong/Getty Images) — Wind turbines adorn the landscape in the Southern Lake District, in Lambrigg, England, on Nov. 25, 2022. Christopher Furlong/Getty Images

He continued: “There has to be a realisation about the fact that we’ll be using gas boilers for a very long time to come. There is a growing sense that getting the cost of electricity down is a key factor, and one policy makers should be focusing on.”

Foster added that policy makers should diversify energy plans, which could include bio-methane, hydrogen, and hydrogen blending.

“It makes the potential of achieving net zero more realistic than the more dogmatic approach where everything should be electric. But that’s for policymakers to determine,” he said.

Blair’s Criticisms

Earlier this week, former Prime Minister Sir Tony Blair appeared to deviate from Labour Party policy, when he argued that the current climate approach “isn’t working.”

In the forward to a report published on Wednesday by his think tank, the Tony Blair Institute for Change (TBIC), the former prime minister said that the “current state of debate over climate change is riven with irrationality” and as a result, people are “turning away from the politics of the issue because they believe the proposed solutions are not founded on good policy.”

“In developed countries, voters feel they’re being asked to make financial sacrifices and changes in lifestyle when they know that their impact on global emissions is minimal,” he wrote.

File photo of former Prime Minister Sir Tony Blair during an interview on March 27, 2023. (Victoria Jones/PA Wire) — File photo of former Prime Minister Sir Tony Blair during an interview on March 27, 2023. Victoria Jones/PA Wire

The TBIC later clarified that its report is clear that the think tank supports the government’s 2050 net zero targets, “and it is vital that we keep the public’s support for how we do it.”

Responding to a question over the apparent criticism from Blair, Prime Minister Sir Keir Starmer told MPs on Wednesday: “What Tony Blair said is that we should have more carbon capture. We have invested in carbon capture—that is many jobs across different parts of the country.”

“Tony Blair is absolutely aligned with what we are doing here. These are the jobs and the security of the future,” he said.

Changing the System

This week, the Department for Energy Security and Net Zero (DESNZ) launched a consultation on expanding the BUS to include other electric systems, such as heat batteries and air-to-air heat pumps.

Measures also being considered include new purchase and ownership models which could spread the cost over a number of years or allow consumers to lease them for a monthly fee.

Minister for energy consumers Miatta Fahnbulleh said the proposals would “give working families more choice and flexibility to pick the low-carbon upgrades that work best for them.”

The department said the BUS had seen its best month since the programme opened, with 4,028 applications in March, up 88 percent on the same month last year.

The Epoch Times contacted the DESNZ for comment, but the department did not respond by time of publication.