Most policy commentators agree that it makes little sense to install heat pumps in inefficient buildings. Yet that’s exactly what the government’s new Heat and Buildings Strategy proposes.
The plan is to take a heat pump first approach, phasing out the installation of high carbon fossil fuels in homes and businesses off the gas grid from the mid-2020s. The government is also targeting new build, which is sensible, but existing homes with gas boilers won’t be targeted until much later – 2035.
The government argues that it’s appropriate to target off-gas grid buildings because they use more polluting fuel – which is true. However, it also makes other more questionable claims to justify its plan. One is that data suggests 80% of these homes can fit a low temperature heat pump system without any modification other than resizing the heat emitters. Another is that the cost of heat pumps will fall be between 25% and 50% by 2025, so these households won’t face significant additional cost.
Neither of these claims stand up to scrutiny.
Few would disagree that you can install a heat pump in virtually any building. The question is whether it’s practical or cost effective to do so.
The government’s 80% claim derives from an academic study, but it ignores other BEIS data that shows that 65% of oil heated homes are in poorest performing EPC bands E, F or G – homes that are unlikely to be heat pump ready without costly energy efficiency improvements. A recent survey by OFTEC of 229 rural heating businesses supports this latter view. They reported that less than 20% of the homes they serve are currently suited to a heat pump without energy efficiency improvements.
And those improvements are likely to be costly. Government research found that the average cost of upgrading a home from Band E to C is £12,300; from Bands F and G, it increases to £18,900. This doesn’t include the cost of the heat pump itself, which will add on average another £11,000. These costs are unlikely to be affordable for most households.
The claim that the price of heat pumps will fall is also not compelling. The average reported cost of a heat pump installation rose 37% between 2011 and 2019. With inflation now at over 5% and rising, the idea that prices will fall by 50% in three years seems extraordinarily optimistic.
It’s true that some energy players, notably Octopus Energy, plan to offer heat pumps at much lower cost. However, they will do this by targeting easy wins – suburban homes in the south east of England. Hard to treat rural homes are not part of their initial plans because the opportunity to save costs is clearly not there. These homes are simply the wrong place to start and it’s difficult to understand why the government’s policy strategists didn’t come to the same, surely obvious, conclusion. Even if prices do magically fall by 50%, a typical air source heat pump will still cost at least twice as much as an oil or LPG boiler in 2026 when the new policies come in.
What does this mean for off gas grid homes and businesses, many of whom are blissfully unaware of these plans? Imagine a scenario in early 2026 where your oil boiler fails and can’t be fixed. Instead of a simple like-for-like replacement, you’ll likely face a myriad of difficulties. Is the building suitable for a heat pump? Is your pipework the right size? What needs to be changed and how much will it cost? Will you even be able to find an installer you trust to do the work? If you don’t have substantial savings, will a loan or re-mortgage be possible? Even if you can afford the cost, are you prepared for a lengthy delay and significant disruption while you wait for your heating to be restored?
This is not scaremongering. The government has proposed a test of ‘reasonable practicality’ when a boiler is replaced, but they haven’t defined how this will work. Given the ‘heat pump first’ approach, it’s a fair assumption that most homes will be required to fit a heat pump under the new regulations, with all the challenges and cost that this will entail.
This begs an obvious question: is the government’s plan discriminatory? Any policy that treats a minority of society differently to the majority must be fair. Indeed, the government states in the Heat and Buildings Strategy that a fair transition is critical to success. But as the guinea pigs for the government’s heat pump roll out, rural households potentially face the highest costs, most disruption, and the greatest uncertainty over outcomes. Until 2035, an equivalent gas-heated household can just fit another gas boiler and relax. Few would agree that this is fair.
Is there another way? While heat pumps are an excellent technology, they are not an ideal solution for many off-grid homes – something the government should now concede. A policy reboot is urgently needed, targeting heat pumps where they can be installed quickly and easily.
For the off-grid sector, alongside funding for sensible energy efficiency improvements, the adoption of a more technology inclusive approach would make sense, with support for options like renewable liquid fuels such as HVO alongside heat pumps. This would offer much-needed choice, allowing the right heating solution for each home to be selected. It would help protect many households from excessive capital costs and encourage more competition, benefitting consumers. Importantly, it would also help to accelerate the transition to cleaner fuels. Conversion to HVO is straightforward, does not require an appliance change and offers an 88% carbon reduction compared to traditional heating oil. For many homes it would be the perfect option.
You can find out more about HVO on the Future Ready Fuel website. Please consider supporting our campaign. It’s vital we get this option accepted by government to protect rural households and enable a fair transition to low carbon heating for all.
Malcolm Farrow is head of Public Affairs at OFTEC.