Fewer than 100,000 households will benefit from the UK government’s heat pump subsidy

Gas goals.
Gas goals.
Image: Reuters/Jeremy Selwyn/Pool
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The UK government will offer subsidies worth £5,000 ($6,892) to help households in England and Wales replace old gas boilers with low carbon heat pumps, starting in April.

The subsidies are part of a £3.9 billion ($5.4 billion) plan announced by the Boris Johnson-led government today to help decarbonize households and public sector buildings in order to cut UK climate emissions to “net zero” by 2050.  The government will deploy £450 million ($622 million) to replace the less environmentally-sound boilers over the next three years—amounting to 90,000 heat pumps.

There is also a £60 million innovation fund to make clean heat systems smaller, easier to install, and cheaper to run.

Cutting UK buildings’ carbon emissions

The UK currently has over 26 million boilers, most of which run on gas. Heating buildings accounts for 21% of the country’s carbon emissions—the largest contributor.

“Our new grants 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,” Johnson said.

However, critics feel the grants will not have a substantial impact on the government’s climate ambitions, especially given that only 90,000 households will benefit from the subsidies in the next three years based on the funding allocation set out in the UK government’s plan.

Research by British renewable energy group Octopus Energy’s Centre for Net Zero (CNZ) that up to 560,000 British households would switch to heat pumps during this timeframe if the subsidy allocation was increased. “If ministers are serious about getting the numbers of heat pumps into people’s homes that will keep us on track to achieving net zero, they must consider increasing the available funding rather than cutting off demand,” Lucy Yu, CEO of Centre for Net Zero, said.

Ed Miliband, the main opposition Labour Party’s shadow business secretary, said that £450 million is a “meager, unambitious, and wholly inadequate response.” Labour has proposed its own £6 billion pound-a-year insulation and low-carbon heating plan for the next decade.

The government had previously stated a goal of installing 600,000 heat pumps per year by 2028 in homes and commercial buildings like hospitals and schools. This is premised on the growth of companies that manufacture, supply and install heat pumps—an industry that has said is desperate for development support from the government.

In order to reach its ambitious commitment to reduce emissions, the authorities should loosen their pursestrings to allow for an additional £9.75 billion of investment over the next three years, Pedro Guertler of independent climate think tank E3G told the BBC.

“It’s challenging, but necessary, achievable and a great investment for people, jobs, skills, and manufacturing,” he said.

Throwing money at the problem alone is also not enough; a lot hinges on the execution. For instance, the £1.5 billion Green Homes Grant scheme which launched last July offered vouchers for the installation of low carbon technology including heat pumps.  An administrative nightmare, the program was scrapped a year on after only spending 10% of its budget.

Gas boilers vs heat pumps

Green initiatives and proposals by governments are taking center stage in the run up to the COP26 climate summit starting in Glasgow on Oct. 31. The UK government has already confirmed that new buildings will not be allowed to install gas boilers from 2025, and they will be banned entirely from the mid-2030s.

This change won’t come easy because it’s not a one-for-one swap. Heat pumps—which operate kind of like fridges in reverse, extracting warmth from the air, the ground, or water—currently cost up to three times as much as traditional gas boilers. Plus, many houses will require an upgrade to their insulation in preparation.

The case for heat pumps, however, is convincing. A heat pump takes low level heat from a natural source and uses a small amount of electricity to generate a much larger volume of heat. They are around 350% efficient when comparing the amount of electricity put in and heat returned. By contrast, even the most efficient boiler is just 90% efficient.

Their long-term operating costs also end up being lower. Replacing an old gas boiler with an air source heat pump in a four-bedroom detached home would save £395-£425 per year on heating bills, the Energy Saving Trust estimates.

In addition to the main low-carbon reasons, these new-age renewable heating systems aren’t as flammable and don’t require as much maintenance as gas boilers.

Solving the electricity problem

The UK can’t just switch out boilers—it also needs to ensure that its electric grid is able to handle the new demand generated by heat pumps. And household heating is only one item on the green agenda. The authorities also want to replace the bulk of UK’s fossil fuel vehicles with battery-powered alternatives, which will also increase the load on the national grid.

The government has said it plans to reduce the cost of electricity over the next decade by shifting levies away from power bills to gas, with more details to come next year.

Over time, households, too, will be able to use smart controls to make their electricity use stable, efficient, and cost-effective.