British public still find heat pumps too expensive and complicated, Lords warn
A Lords Committee is criticising the UK Government for poorly designing a grant scheme giving homeowners £5,000 towards heat pumps, arguing that the technology is still “impossible” to access for low-income homes.
A key facet of the Government’s Heat and Buildings Strategy, launched in late 2021, is the Boiler Upgrade Scheme (BUS). The scheme was allocated a £450m pot, to be spent on £5,000-per-home grant packages to replace gas boilers with heat pumps.
It was given a three-year duration and a target to assist 90,000 homes. But, more than one-third of the way into the BUS, less than 10,000 homes have claimed vouchers and less than 8,000 of these homes had spent the vouchers.
The Lords Environment and Climate Change Committee has published a new report following an inquiry into the scheme’s effectiveness. The Committee has concluded that, if current take-up rates continue, only half of the allocated budget from the scheme will be used.
As of 31 January, vouchers worth a total of some £50,000 had been issued, but around one-fifth had not yet been redeemed. This is out of a total budget of £150m per year for the scheme.
These low take-up rates would jeapordise the UK Government’s target of 600,000 heat pump installations per year from 2028. The Lords Committee has partly attributed low take-up to poor awareness of the grant scheme itself, plus poor awareness and widespread confusion and concern about the practicalities of using a heat pump.
The Government has responded by promising a better public messaging campaign to raise awareness of the scheme, but the Committee also wants a dedicated advisory initiative on retrofitting and heat pump installation, providing tailored information.
The Committee also wants the Government to think strategically about redesigning the scheme for the future. It has recommended that any unspent funds from the first-year budget are rolled into the second year, and a review conducted to explore options for extending the scheme.
An extension of the scheme could entail a re-design to help lower-income housing access greater financial help. Heat pumps typically cost around £13,000, so even with a grant, people can expect to pay several thousands of pounds.
The Committee stated: “Upfront costs are too high for many households, even with the help of the grant, making it impossible for low-income households to benefit from the scheme.”
The Government has committed to bringing all clean technologies, including heat pumps, to price parity with their predecessors by 2030. Some firms have promised cheaper heat pumps before that point, including Centrica and Octopus Energy.
Responding to the report, the Heat Pump Federation’s director of growth and external affairs Bean Beanland said many inclusions “chime precisely with what heat pump installers and consumers are telling the Federation”.
“In particular, homeowners and landlords need better information on heat pump technologies that are available now, and this needs to be underpinned by an Energy Performance Certificate framework that appropriately recognises the benefits of heat pump systems,” Beanland said.
Other bodies have disagreed, arguing that any unspent funding should be spent elsewhere – such as improving home energy efficiency or researching the future of hydrogen in home heating.
The Energy and Utilities Alliance has been advocating the scrappage of the BUS in its entirety recent months, arguing that “giving a £5,000 taxpayer handout to the well-off is immoral and simply cannot be justified when millions are living in fuel poverty and we all face a 20% increase in our bills from April.”
The Alliance’s chief executive Mark Foster has called the Lords’ report “out-of-touch” and particularly rebuked its suggestions about easing insulation requirements as a way of increasing the take up of heat pumps.
As an alternative to heat pump grants now, the Alliance wants to see a mandate for hydrogen-ready boilers going forward, which it describes as a “no-regrets” option with lower upfront costs for consumers.
Also advocating hydrogen is the Energy Networks Association. Its chief executive Lawrence Slade said: “The BUS scheme is failing to deliver for customers because, as the Committee correctly points out, public awareness is low and promotion of the scheme has been inadequate. To decarbonise heating, customers need choice.
“It is an accepted fact that multiple solutions will be required. The use of heat pumps and the adoption of hydrogen are going to be needed if the UK is to meet its net zero target. Debates about one technology over another are simply not helpful for customers and add confusion.
“Experience from the last two decades shows us that much more effort is needed overall to engage customers in energy efficiency and how to reduce demands on the energy system.”
Many ENA members are advocates of blue hydrogen development and of the use of hydrogen in home heating, so this does not come as a surprise. Some green groups have questioned whether this approach is really aligned with climate science and is an economic choice, or merely a way for gas companies to avoid shifting business models too drastically in the low-carbon transition.
The Lords Committee’s report cites previous research from MPs on the Science and Technology Committee, who concluded late last year that hydrogen would be better used in sectors that are harder to electrify than home heating, such as industrial sectors. The Heat and Buildings Strategy deferred a decision on Government mandates and targets for hydrogen in home heating until 2026. The Government stated that it first wanted to complete large-scale trials of blends and pure hydrogen in local communities.
The new report states that this delay, and contiunued talk about hydrogen from the Government, is confusing or misleading the public. The Lords argue that “hydrogen is not a serious option for home heating for the short to medium-term”.
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