Study: Brits face extra £9bn energy bills due to Government’s go-slow on heat pumps

Pictured: A home fitted with an air-source heat pump. Image: OVO Energy

That is according to a new study from the Energy and Climate Intelligence Unit (ECIU).

The think-tank estimates that wholesale gas prices will remain at least twice as high as they were before the price crisis until 2030 at the earliest. As such, it has been advocating for a more robust programme of energy efficiency improvements across the UK’s housing stock and a more rapid rollout of heat pumps.

The Government is targeting 600,000 heat pump installations annually by 2028 but its own climate advisors have warned that it is well off track. Challenges include bringing heat pumps to price parity with gas boilers using subsidies and innovation funding, and ensuring that the UK has an appropriate supply chain and base of skilled installers.

In its new study, the ECIU compared a business-as-usual trajectory to one in which the Government meets its heat pump installation targets. The finding is that, between 2024 and 2035, the UK would need to import an additional 200 TWh of gas in the former scenario. This would add up to £9bn to consumer bills.

ECIU energy analyst Jess Ralston said: “Electric heat pump sales are booming in Europe and the US, who are dubbing them ‘freedom pumps’ in the light of Russia’s interference in the international gas market.

“The Government faces a choice; continue subsidising oil and gas, and leave households exposed to volatile gas prices, or direct investment through bold policy into renewables instead.”

A recent UK-wide heat pump trial was more than ten times oversubscribed, proving that homes are interested in these technologies. The trial, plus other research, found that the biggest remaining barrier to uptake is the upfront cost of a unit and its installation.

Future policy changes

The publication of the study comes at a key moment for decision-making around heat pumps in the UK.

This season, Ministers are set to consult on specifics of the Future Homes Standard, including its requirements on low-carbon heating. The Standard will apply to all homes built from 2023. There is a chance, the ECIU is warning, that homes could still be connected to the gas grid post-2025 due to the gas industry’s positioning of hydrogen as a solution.

Many think-tanks, the ECIU included, are advocating for low-carbon hydrogen to be used in heavy industry and transport rather than in blends for home heating. This is because home heating is easier to electrify. But gas networks and boiler manufacturers are reportedly pushing back against any regulation which rules out hydrogen.

Late last month, the Competition and Markets Authority (CMA) stated that the description of gas boilers as “hydrogen-ready” could potentially breach its greenwashing codes. This is because the Government has not yet made a decision on hydrogen blending, meaning that these boilers could, in theory, never use hydrogen. Customers may also assume that their boiler uses 100% hydrogen when, in reality, a blend of around 20% would be used in the first instance.

There is, reportedly, much rowing within the Conservative Party about hydrogen blending for heating at present. A ‘hydrogen levy’ on household bills has been proposed to fund low-carbon hydrogen production. Energy Security Secretary Grant Shapps is an advocate and has floated a 2025 launch date. Other senior Tories argue that customers already cannot cope with their high energy bills. We can expect a decision on the levy in the coming weeks.

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