More funds released to help boost UK heat pump market

Unveiled within a package of proposals designed to drive more investment in green energy and reduce reliance on fossil fuels, the government has extended its heat pump incentive scheme and announced a new £30m Heat Pump Investment Accelerator to help boost production

The government has extended the Boiler Upgrade Scheme (BUS) for an additional three years, to help households and small nondomestic property owners across England and Wales invest in low carbon, energy efficient heating.

The scheme, which launched in May 2022, offers grant funding of £5000 off the cost of an air source heat pump or £6000 off the cost of a ground source heat pump or biomass boiler. With this extension, people will now be able to access funding until 2028.

The announcement was made as part of the government’s energy security strategy, released under the banner of Powering Up Britain, to support the growth of the heat pump market to around 600,000 installation per year by 2028.

Energy secretary Grant Shapps also unveiled ‘The Great British Insulation Scheme’, a policy designed to step up insulation installation in the least energy efficient homes in Council Tax bands A to D, while more funds (£240m) have also been set aside to support hydrogen production projects under the Net Zero Hydrogen Fund.

The Heat Pump Association (HPA) welcomed the announcement, saying that the proposed plans, if implemented effectively, will succeed in providing much needed clarity for the heat pump industry to invest in the technology and will help to drive heat pump rollout across the country.

The Association says it is also pleased to see details of the new £30m Heat Pump Investment Accelerator to boost the heat pump manufacturing and supply chain. By unlocking investment in the supply chain it is hoped that businesses can better gear up for increased heat pump demand in the UK and unlock the economic benefits of net zero.

Phil Hurley, chair of the HPA, comments: “The announcements follow our recommendations for transforming Britain’s heating by tackling heat pump investment and affordability challenges. The government has today doubled down on placing heat pumps at the forefront of the switch to low carbon heating, and we are pleased to see further progress on specific policies to drive the pathway to an installation rate of 600,000 heat pump systems per year.”

Missed opportunity

The Ground Source Heat Pump Association (GSHPA), however, was less enthused by the proposals, describing them as a missed opportunity and “underwhelming” for the UK’s ground source heat pump sector.

“Although we welcome the commitment to heat electrification, the £30m heat pump accelerator fund and announcements on ‘rebalancing’ bills and the BUS, much uncertainty remains,” says GSHPA chair Laura Bishop. “Long overdue changes to energy levies for example are not expected for at least another 20 months, which may yet be affected by General Election timing.”

The GSHPA argues that there has been a disappointing lack of urgency around the limited amount of measures designed to boost the heat pump sector and that the government has failed to grasp the potential of proven technology that has been widely adopted elsewhere in Europe.

Speaking on behalf of heat pump manufacturer Daikin, Henk van Den Berg, the company’s strategic business manager shares concerns that the latest proposals will fall short of what is really needed to drive market growth.

“While it’s reassuring to see the government taking steps to get the UK onto the path to net-zero, the latest announcements are missing a clear timescale for the important shift of the Climate Change Levy away from electricity,” he says.

“The government continues to split the nation’s focus on renewable heating, with further investment in hydrogen, which lacks the technology and infrastructure to make a meaningful and immediate impact. Couple this with not bringing forward a ban on fossil fuel boilers in UK homes, and the government is missing a huge opportunity to decarbonise homes in the short to medium term.”

Daikin argues that while extending the Boiler Upgrade Scheme is a positive step, there is a real need to promote transition technologies, such as hybrid heat pumps, as these can be retrofitted into UK homes quickly and easily, allowing homeowners to take a first step into renewable heating.