Ministers overestimated public enthusiasm for heat pumps
PUBLIC enthusiasm for heat pumps has been overestimated by ministers, putting the Government’s net zero goals at risk, the spending watchdog has warned.
The National Audit Office (NAO) found that 27 gas boilers were installed for every one heat pump in 2022, as taxpayer-funded subsidies failed to spur demand among homeowners.
In a report published today, it said the rollout of heat pumps has been “slower than planned” despite them being a “key component” in meeting climate targets. It comes just days after Claire Coutinho, the Energy Secretary, scrapped the so-called “boiler tax”, which would have fined boiler makers if they failed to meet sales targets for heat pumps. The policy, which has been delayed until after the election, was meant to promote heat pumps but was seen as politically toxic as it would have pushed up the price of gas boilers.
Just 55,000 domestic heat pumps were installed in 2022, the NAO found, which is a small fraction of the longer term aim for 600,000 a year by 2030.
By contrast, about 1.5million new gas-fired boilers were installed, mostly to replace worn-out models, even though homeowners could have chosen heat pumps instead.
The Government’s Boiler Upgrade Scheme, which offers homeowners a grant to help them pay for the cost of a heat pump, has also underperformed, the NAO said. Just 18,900 heat pumps were installed between May 2022 and December 2023 under the scheme, less than half of the 50,000 installations that had been expected.
The NAO warned that ministers were “relying on optimistic assumptions about consumer demand and manufacturer supply of heat pumps increasing substantially” to hit the 600,000 target. Gareth Davies, the head of the NAO, warned the Government had done far too little to make people aware of alternatives to boilers.
He said: “The Department for Energy Security and Net Zero must ensure its mix of incentives, engagement and regulations addresses the barriers to progress in its programme of work.”
He also warned that the costs of heat pumps far outstripped those of boilers, with the NAO finding that a typical heat pump installation cost £13,300 – far above the typical £2,000-3,000 cost of a new boiler. Ms Coutinho last year increased the grants available for homeowners upgrading to heat pumps from £5,000 to £7,500 under the Boiler Upgrade Scheme. However, for many homeowners this still leaves a shortfall.
The NAO’S report said that the Government’s assumptions about consumer demand were “optimistic”.
It also said that to meet the net zero target, installations would need to carry on rising at pace to reach 1.6 million a year by 2035. “Decarbonising home heating represents one of the biggest challenges to the government achieving net zero, requiring almost all
households to engage in the transition,” the report said.
Meg Hillier MP, the chairman of the Committee of Public Accounts, which oversees the NAO, said: “[The Department for Energy Security and Net Zero] need to be realistic about levels of consumer demand, raise public awareness of heat pumps and work with industry to make heat pumps more affordable.”
Around 18 per cent of UK emissions come from home heating and there are 24 million homes with gas-fired boilers that must switch to low carbon heating systems. Mike Foster, the Energy and Utilities Alliance’s chief executive, said: “We question whether the strategy on heating is fit for purpose. The NAO is right to say there is no long-term plan. Few people in the industry believe it is remotely likely to achieve the target of 600,000 heat pump installations a year by 2028.”
A Department for Energy Security and Net Zero spokesman said: “By helping rather than forcing families to install heat pumps, with a 50 per cent bigger heat pump grant, we have boosted applications by nearly 40 per cent.”