Heat pump installations are far below target, says NAO

The UK’s rollout of heat pump installations is running behind schedule, the National Audit Office (NAO) has said.

In a report published on Monday (18 March), the NAO said that the number of heat pump installations up until December 2023 was less than half of what was planned. The NAO said the government had also delayed a key policy aimed at increasing heat pump installations.

Home heating generates 18 per cent of UK greenhouse gas emissions, and air source, ground and water heat pumps have been identified as the government’s favoured technologies to decarbonise housing.

The government has set a target of installing 600,000 heat pumps every year by 2028 – an elevenfold increase on the 55,000 heat pumps sold in 2022. By 2035, it wants 1.6 million heat pumps to be installed annually.

But the spending watchdog said the government’s assumptions are overly optimistic.

Its flagship Boiler Upgrade Scheme only managed to deliver 18,900 heat pumps between May 2022 and December 2023. The Department for Energy Security and Net Zero (DESNZ) had expected 50,000 installations during this period.

The NAO also criticised the department for having no long-term plan to raise awareness of the need to decarbonise home heating, and for planning to not make a decision on the role of hydrogen in decarbonising home heating until 2026.

It also noted that the target of 600,000 annual heat pump installations relies on 400,000 of those being due to the Clean Heat Market Mechanism (CHMM) and Boiler Upgrade Scheme.

The CHMM, dubbed the “boiler tax” by its opponents, will see boiler manufacturers fined unless heat pumps account for 3.8 per cent of their boiler sales in the first year of the scheme, and 5.6 per cent in the second year.

The policy was set to be introduced in April, but the government delayed its implementation by a year on Thursday (14 March), after the NAO’s report had been signed off.

NAO comptroller and auditor general Gareth Davies said: “Government needs to engage every household to achieve its objective to decarbonise home heating as part of the transition to net zero.

“DESNZ’s progress in making households aware and encouraging them to switch to low-carbon alternatives has been slower than expected.”

He added: “DESNZ must draw on its experience to date to ensure its mix of incentives, engagement and regulations addresses the barriers to progress in its current programme of work.”

Commenting on the NAO report, Nick Winser, commissioner at the National Infrastructure Commission, said: “The NAO highlights that government’s current plans appear insufficient to meet its ambition of installing 600,000 heat pumps a year by 2028 or helping the eight million homes [that] need to switch from fossil fuel boilers to electrified heating by 2035 to meet climate targets.

“Recent decisions to delay or reverse policy have only made hitting these targets harder. The NAO’s call for government to develop a more robust, holistic, longer-term plan is absolutely right and echoes our recommendations in the second National Infrastructure Assessment.”

On Thursday, the government also relaxed the rules around qualifying for government grants for heat pumps, removing a requirement to install cavity wall or loft insulation.

A DESNZ spokesperson said: “By helping rather than forcing families to install heat pumps, with a 50 per cent bigger heat pump grant, we have boosted applications by nearly 40 per cent [over an unspecified timeframe].

“Almost half of homes in England now have an Energy Performance Certificate of C or above, up from just 14 per cent in 2010. We are investing billions in home upgrades including insulating around 700,000 properties.”

He added that the government is also running a media campaign on TV, radio and in newspapers about heat pumps, insulation and solar panels, in an effort to raise awareness.

Last year the UK government proposed that all new housing built from 2025 onwards should include heat pumps.

Meanwhile, the Scottish Government was warned by its Regulatory Review Group last month that its proposed 2045 deadline to remove all gas boilers may be unrealistic, due to a lack of capacity in the market.

The latest NAO report also notes that the skills and capacity of suppliers could be a limiting factor in transitioning to low-carbon heating. 

DESNZ is providing £5m in funding to support 10,000 heat-pump and heat-network training opportunities from 2023-24 to 2024-25.

The department believes there are enough places to help produce the required number of installers in 2025, but that training schemes will need to expand greatly in the following years.

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