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Gas boiler fittings outnumbered new heat pump installations by more than 15 to one last year, and only one in eight new homes were equipped with the low-carbon alternative despite the government’s clean energy targets.
Poorer households are also being shut out of the heat pump market as the grants available are inadequate and should be increased, according to a report by the Resolution Foundation thinktank.
The UK has the slowest introduction of heat pumps in Europe: fewer than 100,000 were fitted last year, compared with 1.5m gas boilers. Most of the boilers were replacements for existing units, but new houses are still being built with gas as standard – only 13% of new homes came with heat pumps last year.
If the government is to meet its net zero targets, switching people to heat pumps will be essential: about 450,000 households will need to install them each year by 2030. But the grant available through the boiler upgrade scheme – £7,500 in England and Wales – still leaves homeowners paying about £5,400 on average.
This cuts off poorer households: only 19% of heat pumps in use today are in the poorest third of areas, while about 45% are installed in the richest third of neighbourhoods.
Heat pumps are also more expensive to run than gas boilers, because of the distortions of the UK’s privatised electricity market. Electricity prices are made artificially higher than gas prices in the UK, by a combination of the way energy prices are set and the fact that green levies, to pay for renewable energy incentives, are put on electricity rather than gas bills.
That distortion means that despite being much more efficient than gas boilers, heat pumps are more expensive to run than they should be. At current energy prices, households would on average suffer a £32 bill increase by making the switch, the report found.
Shifting the levies to gas would make switching much more attractive, as it would save most households more than £300 a year.
Jonathan Marshall, a principal economist at the Resolution Foundation, said: “The mass adoption of heat pumps in our homes is vital if Britain is to hit its net zero targets. But the rollout is miles off track, with heat pumps particularly out of reach for many poorer families.”
He called for the current subsidy system to be reformed to offer targeted support for low-income households. Top-up grants of about £3,000 to households with gross income below £30,000 and non-pension assets below £500,000 would cost about £370m a year by 2030, according to the report.
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New regulations called the future homes standard have not yet been published. If they were to enforce heat pump installations in new-build homes, instead of gas boilers, that would also help to expand the market for heat pumps and bring down prices for all.
A spokesperson for the Department for Energy Security and Net Zero said: “Our warm homes plan will transform homes across the country by making them cheaper and cleaner to run, rolling out upgrades to up to 300,000 homes this year. We will not force anyone to rip out a working boiler and are helping more people get a heat pump through our £7,500 grant for households, having almost doubled the scheme’s funding this year.
“We have committed an initial £3.4bn over the next three years, including £1.8bn to support fuel poverty schemes. We will set out full details of our ambitious plan following the spending review.”
