The 2021 Heat and Buildings Strategy has failed to deliver the promised reductions in heat pump costs, according to trade body the Energy and Utilities Alliance (EUA).
The failure poses questions around the whole approach to decarbonising UK homes, the EUA says, since heat pumps are the preferred appliance to be fitted to meet net zero under the previous government and under Ed Miliband.
When published in October 2021, the Heat and Buildings Strategy promised heat pump costs would fall by at least 25-50% by 2025, achieving price parity with a boiler by 2030. Four years on, data obtained from the government’s preferred heat pump installation accreditation body, MCS, suggests costs have increased, rather than fallen.
In October 2021, the average heat pump installation cost £12,155.24. By October 2025 that figure was £13,699.46, a cash increase, but adjusted for inflation in real terms it equates to a fall of just 8%. During this time, the size of heat pumps installed has fallen, but the cost per kWh of heat has risen from £1,253.46 in 2021 to £1,630.87 by 2025 (according to MCS). Adjusting for inflation, it shows that in real terms the cost per kWh has increased by 6%.
Mike Foster, CEO of EUA said: “However you look at it, the Heat and Buildings Strategy has failed to deliver the promised price cuts. The whole policy of heat decarbonisation now needs to be looked at again. The promised land of cheap heat pumps and lower bills have both failed to materialise. We need a new plan.
“The whole of UK energy policy has been geared towards heat pumps being affordable and providing millions of homes with cheap, clean heat. It hasn’t happened, so this government needs to put right what the previous one got wrong.
“Industry warned that the price reductions promised in 2021 would not happen, but we were ignored. It is time that ministers listened to those that work at the coalface. Realistic plans are needed to give consumers and taxpayers a proper estimate of costs they and the country will face.
“As for the idea that by 2030, a heat pump will cost the same as a boiler, well...the only way that can happen is if ministers artificially increase the cost of the boiler tax to eye-watering sums, causing real hardship and making themselves unelectable.”