Failing heat pump rollout puts net zero goals at risk, ministers warned
Jonathan Leake
5 min read
heat pump installation
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 times more gas boilers were installed in homes in 2022 as taxpayer-funded subsidies failed to spur demand.
In a report published on Monday it said the rollout of heat pumps has been “slower than planned” despite the fact they are 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 encourage adoption but was seen as politically toxic as it would have pushed up the price of gas boilers.
By contrast about 1.5m new gas-fired boilers were installed, mostly to replace worn-out models, even though homeowners could have chosen heat pumps instead.
The Government’s flagship 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 ministers were “relying on optimistic assumptions about consumer demand and manufacturer supply of heat pumps increasing substantially” to hit the 600,000 target.
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.
“Despite these uncertainties, it has become increasingly clear that the Government’s approach will centre on heat pumps as the main technology.
“But DESNZ’s progress with encouraging households to install heat pumps has been slower than planned because costs remain high and public awareness remains low.”
He said: “The Department for Energy Security and Net Zero (Desnz) must ensure its mix of incentives, engagement and regulations addresses the barriers to progress in its current programme of work.”
He also warned that the costs of heat pumps still far outstripped those of boilers with the NAO finding that a typical heat pump installation cost £13,300 - far above the typical £2-3,000 cost of a new boiler.
The NAO’s report said: “The Government’s assumptions about levels of consumer demand are optimistic.
“The Government’s flagship Boiler Upgrade Scheme has also underperformed, installing just 18,900 heat pumps between May 2022 and December 2023.”
Meg Hillier MP, chairman of the Committee of Public Accounts, which oversees the NAO, said: “DESNZ 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 for households.”
Around 18pc of UK emissions come from home heating and there are 24m homes with gas-fired boilers that must switch to low carbon heating systems.
The Energy and Utilities Alliance (EUA), which represents the manufacturers and installers of boilers, heat pumps and other heating systems, said ministers’ assumptions regarding consumer demand for heat pumps were “wildly optimistic”.
Mike Foster, the EUA’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, when the figure was around 60,000 in 2023. That rate of growth is simply unrealistic.”
He added: “Heat pump costs are not coming down, nor were they ever going to. They are sold globally by the millions; any production economies of scale have already been achieved in the global market. It is naïve to hope that UK sales will trigger a mass reduction of heat pump costs.”
The NAO also criticised the Government for “making little progress on its commitments to rebalance energy prices” - a reference to the way several levies are added specifically to electricity bills but not gas bills, making electricity more expensive.
It said: “Electricity remains more expensive per unit than gas, making heat pumps potentially more expensive to run than gas boilers. DESNZ recognises that rebalancing energy prices, for example by shifting energy levies and obligations away from electricity to gas, is important for increasing the attraction of heat pumps. DESNZ… told us that this work is delayed to 2024.”
The report was backed by Nick Winser, the Electricity Networks Commissioner and a member of the UK’s National Infrastructure Commission, who recently published a report on the national grid.
Mr Winser said: “The NAO highlights that the Government’s current plans appear insufficient to meet its ambition of installing 600,000 heat pumps a year by 2028 or helping the 8m homes who need to switch from fossil fuel boilers to electrified heating by 2035 to meet climate targets.
“Recent [government] decisions to delay or reverse policy have only made hitting these targets harder.”
Juliet Phillips, UK energy programme lead at E3G, an NGO campaigning to cut climate emissions, said: “The clean heat strategies have been delayed and derailed by members of the very same party which originally introduced this landmark government strategy back in 2021.
“The UK desperately needs political leaders who will stand up to vested interests and put the UK on track for energy independence and lower bills.”
A DESNZ spokesman said: “By helping rather than forcing families to install heat pumps, with a 50pc bigger heat pump grant, we have boosted applications by nearly 40pc.”
