According to figures from the UK Department for Energy Security and Net Zero, applications for a government heat pump grant rose by 45% from 2023 to 2024. The former Conservative government labelled this as “a significant surge in demand for heat pumps [that shows] the government’s net-zero plan is working”.
Despite this, the heat pump market has struggled to make a decisive impact in the UK.
Go deeper with GlobalData
Reaching the UK’s 2050 net-zero target requires fossil fuel heating systems such as gas boilers to be replaced with heat pumps in approximately 1.6 million homes each year by 2035. This is in addition to an objective under the Climate Change Act to install 600,000 heat pumps per year by 2028.
The UK currently has approximately 412 heat pumps installed per 100,000 people, compared with a European average of 3,068 per 100,000 people. Data from the Microgeneration Certification scheme shows 250,000 certified installations as of mid-2024, which will need to be more than doubled within the next three years to meet the government’s target.
Government grants and legislative efforts to roll out heat pumps have fallen short, with a recent industry survey finding the biggest barriers to be costs as well as a lack of customer demand and experienced engineers.
Industry experts tell Power Technology that government action is essential to overcome these challenges and secure the long-term viability of the UK heat pump market.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataUK Government policy on heat pumps
Government investment into residential heating is driven by the planned phasing out of fossil fuels and reduction of carbon emissions, of which gas boilers are a major source. UK non-profit innovation agency Nesta has found that an average household gas boiler emits greenhouse gases equivalent to approximately 2.2 tonnes of CO₂ per year.
The government initiated the transition to low-carbon heating by proposing a ban on gas boilers in newly built homes in the UK after 2025, which was delayed to 2035. Now, this plan may be drawn out further, if not scrapped completely, following a backlash over the perceived high cost of alternative options such as heat pumps.
The question of affordability is one that the government has attempted to tackle with its Boiler Upgrade Scheme (BUS), which provides applicants in England and Wales with £7,500 ($9,789) for the installation of an air source, ground source or water source heat pump.
While the BUS is one of the most generous heat pump subsidies in Europe, it still leaves consumers to pay thousands. An air source pump can cost between £7,000 and £14,000 to buy and install, while a ground source pump costs between £15,000 and £35,000.
While the government’s efforts have stimulated market growth, the UK continues to connect more homes to the gas grid than deploy heat pumps. Installations have failed to keep pace with government targets and significant barriers to consumer adoption remain.
UK consumers lukewarm on heat pumps
Daniel Särefjord, CEO of Swedish clean energy start-up Aira, confirms that “the penetration of heat pumps in the UK is 1–2%, even though they are four to five times more efficient than gas boilers and last five years longer”.
The barriers to consumer adoption of heat pumps are multifaceted, ranging from a lack of awareness to prohibitive costs.
Heat Pump Association (HPA) head of policy and communications Olivia Smalley cites failings in the government’s communications strategy to familiarise homeowners with heat pumps and their efficiency.
Särefjord agrees: “In reality, a heat pump and a gas boiler are the same thing – a heat source for a central heating system – but consumers have no idea about this.”
This is exacerbated by conflicting information on the costs and savings from heat pumps. For instance, according to the Energy Saving Trust, replacing an old gas boiler could allow homeowners to save £340 a year on energy bills. Meanwhile, Octopus Energy states that for a two-to-three-bedroom home, a heat pump can cost around £80 more a year than gas on average.
In reality, heat pumps in their current form do not offer a quick financial fix for energy bills as electricity itself remains more than three times as expensive as gas, due in part to electricity paying nine times more environmental levies.
However, energy suppliers such as British Gas and EDF offer incentives through electricity tariffs for heat pumps. Nesta’s senior mission manager of sustainable future Oliver Zanetti calls this a “gamechanger” for the industry.
Richard Lowes, senior associate at the Regulatory Assistance Project, believes otherwise, saying that “consumers will only see negligible savings on energy bills” from this fix.
For Lowes, electricity prices must be addressed via government action before the country can see a successful heat pump rollout. “But the government are overly worried about the politics of it,” he says. Smalley concurs that issues around heat pumps have become “quite politicised and controversial, which they shouldn’t be”.
In addition to issues surrounding costs, the rigorous heat pump installation process disincentivises homeowners from making the switch, compounded with current legislation not requiring removal of existing gas boilers.
Even if one decides to invest in a heat pump, the hurdle of planning applications often rears its head with variances under different local authorities. Särefjord says that waiting for permission from councils can “lock consumers into 10–15 years of using a gas boiler until it breaks again, and the cycle continues”.
The HPA tells Power Technology that it is waiting on a response from a government consultation organised earlier this year to make planning application processes smoother.
Lack of skilled professionals
Further aggravating the consumer journey is the fluctuating supply of engineers available in the UK for heat pump installation.
Data from the HPA shows that as of the first half of 2024, almost 5,000 people have taken a heat pump training course. This trajectory is set to surpass 2023’s annual total of 7,854.
While this appears to be a steady increase, it is not enough to meet the government’s target of 600,000 installations per year by 2028, which would require the training of at least 27,000 engineers, as highlighted in parliamentary research from January 2024.
The research also affirms that building a heat pump workforce will be challenging partly due to low numbers of training practitioners.
The government has attempted to address this gap in the green skills movement with its Heat Training Grant, which offers £500 towards the cost of heat pump training for engineers. The HPA urges the government “to continue that support and monitor how well it is doing as capacity in the supply chain is there”.
Additionally, as part of a £300m investment in the UK, Aira has opened heat pump training academies in Sheffield, Manchester and London for existing gas engineers, plumbers or electricians to become heat pump specialists.
“The UK gas network is among the most advanced in the world. So, there are plenty of people who know their way around plumbing and can be quite easily converted into the future workforce,” says Särefjord.
Consumer and engineer awareness of heat pumps are interlinked, he adds. “When a consumer calls their plumber and asks for their gas boiler to be fixed, the plumber has spent their whole life reinstalling. So, they have absolutely no incentive to tell the customer that what they really need is a new central heating system.”
Optimistic outlook for heat pump market despite current setbacks
In spite of challenges and the improbability of reaching government targets, industry remains optimistic about the eventual replacement of gas boilers with heat pumps.
“It is a great thing that gas boilers aren’t very dependable products, as one to two million break every year in the UK,” says Särefjord. “This gives us the chance each year to transform 10% of our heating systems from dirty to clean. What needs to happen is the removal of all barriers to educate, so that every single customer who is lucky enough that their boiler breaks can make the intelligent choice without any red tape or taxation.”
Industry is also united in calling for government consultations to address the disparities between electricity and gas that are holding the heat pump market back.
In July, prominent heat pump manufacturer Mitsubishi Electric urged the UK government to prioritise reducing electricity costs and enable a phased approach to drive low-carbon heating.
“Industry also needs to see policies coming into play. In terms of a return on investment, manufacturers and other stakeholders need the certainty that the government is on the right track and there is a clarity of pipeline for jobs and growth,” Smalley says.
According to Nesta’s survey of heat pump engineers, 87% of respondents said that they want to increase the number of installations they perform. This would strengthen the heat pump supply chain and further reassure manufacturers, who can in turn develop innovations to ease the way for consumers.
Lowes suggests that innovation in the reducing the space required for heat pumps could boost consumer adoption in cities like London. He also highlights the potential of combining energy from solar power and heat pumps in reducing energy bills, but “no one has put them together yet, probably because the heat pump market is too small”.
As such innovations emerge and the public’s awareness of heat pumps spreads, gas boilers can be phased out of the UK’s energy landscape.
Särefjord sees the future of the heat pump market as a matter of evolution that all industries undergo. “We should always remember that when we introduced gas, we came from coal. The introduction of gas was a good thing 70 years ago. It is just that very few technologies live for 70 years. It is not strange that we have something better now.”
