UK Government Announces Subsidy to Incentivise Heat Pump Installation

By Lily Zhou
Lily Zhou
Lily Zhou
Lily Zhou is a freelance writer mostly covering UK news for The Epoch Times.
October 19, 2021 Updated: October 19, 2021

UK taxpayers will foot half of the bills for replacing gas boilers with heat pumps in households as the government announced new subsidies on Monday.

From April 2022, those who wish to install low carbon heating systems such as heat pumps will have their installation costs slashed by £5,000 ($6,913) through a £450 million ($622 million) 3-year Boiler Upgrade Scheme.

It’s part of a £3.9 billion ($5.4 billion) package, also announced on Monday, to decarbonise heat and buildings.

The government said the grant would make the price of installing heat pumps similar to that of gas boiler installations.

Currently, heat pumps—which run on electricity and work like a fridge in reverse to extract energy from the air or ground—cost £10,000 ($13,800) to install on average, with prices varying from £6,000 ($8,300) to £18,000 ($25,000), depending on the type of pump and the size of the home.

Prime Minister Boris Johnson said in a statement that the subsidy will “help homeowners make the switch sooner, without costing them extra, so that going green is the better choice when their boiler needs an upgrade.”

The government said “no-one will be forced to remove their existing fossil fuel boilers. It also confirmed its target to phase out new installations of fossil fuel boilers from 2035.

It’s not clear at the moment whether it will be cheaper to run heat pumps than gas boilers because the efficient running of most domestic heat pumps requires good insulation and because green levies are higher on electricity than on gas.

The government said it will launch a consultation on shifting levies away from electricity to gas before making a decision in 2022.

It will also invest £60 million ($83 million) into technological innovation in order to make the heat pumps smaller, easier to install, and cheaper to run over the coming years.

According to the government, industry leaders expect the cost of heat pumps will be reduced by between a quarter and a half by 2025, and match the cost of buying and running fossil fuel boilers by 2030.

Other fundings include investments in other trials and the development of new heating systems such as hydrogen-ready boilers.

Business and Energy Secretary Kwasi Kwarteng said the pivot to low-carbon heating systems would “protect consumers in long term” as “recent volatile global gas prices have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels.”

The government also said the plan will support up to 240,000 jobs across the UK by 2035.

It will take time to train enough engineers to install and maintain new heating systems.

Greg Jackson, CEO and founder of Octopus Energy, said the company has begun training engineers “at the rate of 1,000 per year.”

Jan Rosenow, Europe director at the Regulatory Assistance Project—which aims to accelerate the shift from fossil fuel energy, suggested the announcement would boost the UK’s green credentials ahead of the the 2021 United Nations Climate Change Conference—otherwise known as the COP26—in Glasgow, Scotland.

“The UK would be the first country in the world banning the installation of new fossil heating systems which will set an example to others. This is an important signal in the run-up to Cop26 in Glasgow,” Rosenow said, adding that it’s “essential” to subsidise heat pump installations as they are more expensive.

PA contributed to this report.

Lily Zhou
Lily Zhou is a freelance writer mostly covering UK news for The Epoch Times.