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Heat pumps are critical to Net Zero  but urgently need support in the public interest

Laura Bishop, Ground Source Heat Pump Association. 19 July 2021

Delivering the UK’s heat pump installation target requires urgent policy action and a clear strategy.

The Ground Source Heat Pump Association welcomed the Prime Minister’s Ten Point Plan last November and its target for 600,000 UK heat pumps installations a year by 2028, but as the Climate Change Committee (CCC) has pointed out, it is not possible to deliver a low carbon future simply by just wishing it. We now need to see urgent policy action by the UK government and a clear strategy to help drive forward our low carbon heating future.

Heating our homes, businesses, and industry accounts for nearly half of all energy usage in the UK and more than a third of our carbon emissions, but progress towards net zero in the heat sector has been patchy at best.

The CCC requires 400,000 heat pumps a year by 2025

The CCC’s net zero pathways require that 400,000 heat pumps a year are installed by 2025, rising to over 900,000 a year by 2028, considerably more than the Ten Point Plan commitment. But last year, only 36,000 heat pumps were installed in the UK, marginally up on 2019. The CCC notes that “progress in upgrading the building stock with the necessary measures over the last decade has been very poor”.

Decarbonisation of heat will be essential to deliver the 2050 target, given that 70% of our heat is from burning natural gas. Ground source heat pumps have a major part to play as they do not employ combustion. They are a proven, efficient, and low carbon technology that can deliver heating to households and businesses at the lowest operating cost, while supporting tens of thousands of locally based jobs. A heat pump deployed today will also be progressively lower in carbon emissions over its lifecycle as the electricity grid is decarbonised further.

Spark gap

So what needs to be done? One of the main areas where we see policy not matching up with ambition is the spark gap on fuel prices in the UK. This is the price difference between gas and electricity and is one of the key reasons for heat pumps not being deployed in the numbers we need to see. Gas is cheap, well understood, and widespread. At around 3.5p/kWh for a unit of gas, the UK has amongst the lowest cost of gas in Europe. Conversely, we have around the highest unit cost of electricity in Europe at anywhere between 11-16p/kWh.

If we were to replace all gas boilers with heat pumps today, consumers’ bills would increase by around 17%. And that is without the increased capital cost of installing a heat pump over a gas (or oil/LPG) boiler. The costs of gas and electricity are affected by historic levies that load “environmental taxes” on to the electricity price, but not on to the gas price. That may have been OK when electricity was being generated by high carbon sources such as coal. However, we are seeing real fall in the carbon intensity of the grid, and it therefore makes sense to transfer the levies from electricity to gas. In this way, we would see the cost of gas and electricity rebalanced to make electric heating systems stand on their own two feet. We hope for a government consultation on this issue soon.

The industry cannot afford another unhelpful period of stop-start support

We also support strongly the CCC’s call for a multi-year funding regime for heat technologies, which should include a capital grant for the installation of ground source heat pumps, with a target of 200,000 installations a year by 2025. After the debacle of the green homes grant, it is vital that the UK government works with trade associations like the GSHPA in the design and roll-out of any new grant scheme. The industry cannot afford another unhelpful period of stop-start support. A properly funded grant scheme would also help to address the CCC’s call for the government to set out a “clear route for expanding heat pump and heat network supply chains,” and to do so, now.

The GSHPA is also pushing for the energy efficiency retrofit of existing homes to be made a national infrastructure priority, supported by HM Treasury. This needs to be on a street-by-street basis, with ground loops treated crucially as long-term infrastructure assets. This could transform uptake of ground source heat pumps, both at community and business level by helping to address current financial barriers through deployment at scale.

Heat and Building Strategy

The UK needs a credible new strategy and a much stronger policy framework for decarbonising heat, including urgent action in the 2020s. The government’s long-awaited Heat and Building Strategy was originally due by summer 2020. It is vital now that the Strategy due out this year sets out a clear, urgent, and properly funded pathway for ground source heat pumps, as part of a credible long-term low carbon heating strategy.

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