The move to incentivise homeowners through the Heat and Buildings Strategy is expected to reduce the UK’s dependency on fossil fuels and exposure to global price spikes, whilst supporting up to 240,000 jobs by 2035.
Under government plans, buying and running costs of heat pumps will be the same as gas boilers by 2030. This supports a new target for all new heating systems installed in UK homes by 2035 to be either using low-carbon technologies or supporting new technologies like hydrogen-ready boilers.
“Recent volatile global gas prices have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade to protect consumers in long term,” business and energy secretary Kwasi Kwarteng said in a statement. “As the technology improves and costs plummet over the next decade, we expect low carbon heating systems will become the obvious, affordable choice for consumers. Through our new grant scheme, we will ensure people are able to choose a more efficient alternative in the meantime.”
The homeowner grants are being made available through a new £450m, three-year Boiler Upgrade Scheme, which is part of £3.9bn of new funding being invested through the Social Housing Decarbonisation Fund, the Home Upgrade Grant scheme, the Boiler Upgrade Scheme and the Heat Networks Transformation Programme and Public Sector Decarbonisation Scheme.
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To help grow the electric heat pump market, a new £60m Heat Pump Ready innovation programme is being announced also, which is part of the £1bn Net Zero Innovation Portfolio. According to BEIS, the scheme will provide funding to drive technological innovation which will make the systems smaller, easier to install and cheaper to run over the coming years. Ministers want also to reduce the price of electricity over the next decade by shifting levies away from electricity to gas. A call for evidence is expected to be published with decisions made in 2022.
“With the right policy framework in place, we’re confident the cost of a heat pump can be reduced by up to half over the coming years,” said E.ON UK chief executive Michael Lewis. “We welcome proposals in the Heat and Buildings Strategy which are designed to tackle this issue head-on, making the green option the default option. Once we have mass demand, commercial innovation in installation and economies of scale will take over to reduce costs and give customers greater confidence in what is already a tried and trusted technology for many around the world.”
Commenting on the announcement, Mike Foster, CEO of the Energy and Utilities Alliance said: “The grant hardly sets the world alight and is insufficient to the scale of the challenge we face in terms of reaching Net Zero.”
“It subsidises 30,000 heat pumps being installed each year and is well short of the support needed to get to 600,000 heat pumps installed each year by 2028. My suspicion is that the chancellor is putting the brakes on the prime minister’s flight of green fantasy.”
“I suspect hydrogen-ready boiler installations will be far greater than that number by 2028, suggesting that consumers have made their choice. But that choice, between heat pumps or hydrogen-ready boilers, is one they should have.
“The £5000 grant only pays half the cost of a heat pump, so those in fuel poverty will see no warmth from the government’s generosity."
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