The UK Government has today (14 March) confirmed that its Clean Heat Market Mechanism (CHMM), which was due to come into effect next month, will be delayed until April 2025 at the earliest. This is because a Statutory Instrument will not be laid to bring in Mechanism targets this year.
Under the CHMM, heating manufacturers will be required to ensure that heat pumps account for an ever-increasing proportion of their sales, starting at 4% in the first year. Non-compliance will bear a fine of £3,000 per unit.
Reports were rife in recent weeks that the Government was being urged to scrap the CHMM altogether by some manufacturers and MPs. Some manufacturers had reportedly hiked their product prices in a bid to shore up cash to pay CHMM fines.
A formal statement on the course of travel with the CHMM came from the Department for Energy Security and Net-Zero (DESNZ) today, less than a week after Energy Efficiency Minister Lord Callanan confirmed in a more subdued way that the policy would not be axed.
DESNZ has additionally tweaked its Boiler Upgrade Scheme, which provides homes switching from a fossil fuel boiler to a heat pump with up to £7,500 of grant funding.
The Scheme’s requirement for homes to have cavity wall insulation and/or loft insulation to qualify for funding has been aced, following a consultation.
DESNZ said in a statement that “properties should still be appropriately insulated so families can heat their homes for less and save money on their bills, removing the mandatory requirement will mean households can spread changes out at a pace that works for them, so families aren’t hit with one large bill”.
DESNZ Secretary Claire Coutinho said the changes are “all part of our wider plan to ensure we cut our emissions and make homes more energy efficient without burdening families with high costs”.
The UK Government’s climate advisors have warned that the changes could make the UK’s transition to net-zero heat more risky and expensive in the 2030s and beyond.
Mixed reaction
Responding to today’s CHMM news, several green economy leaders and researchers have expressed disappointment.
Heatio co-founder Thomas Farquhar called the decision “cowardly”. He said: “This was a proposal to increase competition and drive down prices for clean heat technologies such as heat pumps, making the move to clean energy more affordable and accessible for consumers….There is a haze of misinformation about the efficiency and practicality of heat pumps and the decision to delay the CHMM adds to it.”
MCS Foundation’s director of external affairs David Cowdrey said:“The Government needs to immediately set out plans for how it intends to fill the huge gap in heat pump plans that they have just created. We need clear and consistent policy more than anything, and without that the UK’s target of installing 600,000 heat pumps a year by 2028 is in serious jeopardy.”
There had been reports that the Government would scrap the 2028 target but, for now at least, this does not seem to be the case. For context, annual heat pump installation figures in the 2020s have been around 50,000.