Amongst the flurry of announcements and publications on Energy Security Day, heat pump deployment and the electrification of heat have emerged a big winner.
Amongst the flurry of announcements and publications on Energy Security Day, heat pump deployment and the electrification of heat have emerged a big winner. Government has sent a strong signal that they are backing the electrification of heat as the key route for heat decarbonisation. Policy aims to enhance the electricity grid, boost renewable electricity generation and attract investment and finance will all promote a ‘heat-pump friendly’ environment. Several Electrify Heat recommendations have also been directly addressed, including extending the Boiler Upgrade Scheme, moving forward with the market-based mechanism to boost heat pump manufacturing, and moving forward with steps to reduce the running costs of clean electricity.
“The Government is firmly committed to making the UK one of the largest markets in the world for heat pumps.”
Net Zero Growth Plan
“Heat pumps are an important part of the future of heating as they are significantly more efficient than traditional boilers, use cleaner energy, and should reduce bills relative to fossil fuel heating.”
Powering Up Britain
“Heat pumps will reduce the demand for gas, alongside more energy efficiency measures in our housing stock.”
Energy Security Plan
“We are putting in place a combination of regulatory and public spending measures to make heat pumps as cheap to buy and run as fossil fuel boilers, to achieve at least 600,000 heat pump installations a year by 2028.”
Net Zero Growth Plan
Support for Heat Pumps
1. Boiler Upgrade Scheme extension
The Government has announced a three-year extension of the flagship Boiler Upgrade Scheme, which offers consumer grants when replacing a fossil fuel boiler with a heat pump. The scheme, which will now run until 2028, will also benefit from an enhanced marketing campaign to increase consumer awareness and take-up.
2. Market-Based Mechanism for Clean Heat
Government has confirmed its intention to implement a Clean Heat Market-Mechanism in 2024 through the Energy Bill, a market-based incentive for manufacturers to increase installation of low-carbon heating systems relative to the sale of fossil fuel boilers. A new consultation is now live (until June 2023).
3. Phase-out of Gas Boilers
The Government has an ambition to phase out all new and replacement natural gas boilers by 2035 at the latest and will further consider the Net Zero Review’s recommendation in relation to this (from 2033).
4. Smart heat pumps
In the government response on a Smart and Secure Electricity System, the “significant value” that heat pumps can provide to a more flexible energy system was highlighted. It was also noted that any ‘smart mandate’ would be deliverable by industry and would not create a barrier to the Government’s ambition to deploy 600,000 heat pumps a year by 2028.
5. Heat Pump Investment Accelerator, Heat Training Grant for heat pumps, Heat Pump Ready Programme
Government reconfirmed and showed commitment to recent schemes and initiatives aimed at promoting investment and skills in the heat pump industry.
- The £30 million Heat Pump Investment Accelerator competition, designed to leverage £270million private investment to boost manufacturing and supply of heat pumps in the UK.
- Launch of the Heat Training Grant, a £5 million Heat Training Grant aimed at supporting 10,000 low carbon heating installers over the next two years.
- In the Net Zero Research and Innovation Framework: Delivery Plan 2022 – 2025, government restated the significance of the £60 million Heat Pump Ready programme, which aims to accelerate the commercialisation of innovative clean energy technologies and processes through the 2020s and 2030.
A Heat Pump Ready Environment
6. Cutting Electricity Prices Relative to Gas Prices
Perhaps the biggest win of the day was the announcement to rebalance gas and electricity costs in household bills with the aim of making electricity bills cheaper and speeding up electrification for households and businesses. Government aims to outline a clear approach by the end of 2023 and should make significant progress affecting relative prices by the end of 2024.
7. Grid Capacity Expansion and More Renewables
Plans to expand the capacity of the grid are welcome as we continue to see an acceleration of heat electrification. Government intends to speed up the planning process through a new set of revised Energy National Policy Statements. An investigation by the Electricity Networks Commissioner will examine what else can be done to speed up network infrastructure, with recommendations delivered to Ministers by June.
Contracts for Difference (CfD) rounds will be held annually rather than every two years, and Government will introduce measures to speed up getting new renewables projects feeding into the UK’s electricity grid.
8. Green Skills Funding
Programmes to support green skills, including apprenticeships, T levels and Skills Bootcamps will be funded. This will focus on areas of employer demand for skills including retrofit construction, heat pump installation and green heating technologies. This will form part of the £3.8 billion DfE is investing in skills by 2024-25.
9. A Word on the Future Homes Standard
The Net Zero Research & Innovation Framework Delivery Plan highlighted the government’s intention that, from 2025, under the Future Homes Standard all new-build homes will have low carbon heating and high levels of efficiency. This is another implication that Electrify Heat’s policy recommendation of no new gas-grid connection under the Standard is being considered seriously and may be adopted.
Financing Heat Electrification
10. Mobilising Private investment:
The Green Finance Strategy 2023 announced that a net zero investment roadmap for heat pumps will be published “shortly”, sign posting opportunities that will mobilise private investment.
11. Boosting exports and regulation:
UK Export Finance has also been given an extra £10 billion to boost exports, including from the UK’s world leading clean growth sectors. The government will also publish Patrick Vallance’s Pro-Innovation Regulation of Technologies Review to support growth and innovation in green industries, and its response, which accepts all nine recommendations including on grid capacity, heat pumps and electric vehicle charging infrastructure.
Energy Security Day’s announcements have been welcome and send clear and positive market and consumer signals that the Government is committed to accelerating heat pump deployment and that electrification will be the primary method of decarbonising heat in the UK.
However, three key acknowledgments remain, the scale of the challenge is greater than we are legislating for, the pace of change and action is still insufficient to overcome this challenge, and the priority for ensuring our energy security must focus even more on the electrification of heat and widespread deployment of heat pumps.
Electrify Heat would welcome further detail and ambition from Government on its commitment to an electrified approach to heat decarbonisation. We will continue to engage on the full range of policies need to get on track.