Heat Pumps are vital to our Net Zero goal - but the time to act is now
Philippe Commaret, Managing Director for Customers
| EDF
EDF’s Managing Director, Philippe Commaret, explains that heat pumps can help decarbonise heat in the UK but we must learn lessons in order to succeed
Only around 30,000 heat pumps are installed each year in the UK, compared to about 1.5 million gas boilers and 85% of homes still rely on gas boilers for heating. This means over the next seven years, heat pump installs must increase by almost 20-fold in order to reach the Government’s target of 600,000 per year by 2028. Given the average life of a gas boiler is 15 years, we only have one or two opportunities to make the vital switch before 2050.
The challenge seems enormous. But we know that the appetite for green, low carbon technologies is there.
Over the five months that the Green Homes Grant (GHG) scheme was open, 125,000 people applied for a grant and we believe many more would have done so if the scheme had lasted longer. So how can we harness this demand and drive heat pump installations in a way that is fair and affordable for everyone?
Whilst the GHG didn’t fail through lack of demand, one of its key issues was that it didn’t prioritise the customer journey. Applicants had to follow a complicated, two-step process, with the emphasis on the customer to prove to administrators that they had the best value quote from the private market. This complexity inevitably caused confusion, deterred customers and companies from participating in the scheme, and delayed progress.
But this doesn’t mean that a well-designed grant scheme to help with the high up-front costs of heat pumps can’t work. Making the process more simple and easy-to-use will provide a much better customer journey and will harness the demand needed to reach targets.
And this early consumer confidence in heat pumps is critical because that will drive down costs. At the moment, installation costs are high because the technology is relatively new in the UK but more demand means better supply chains and lower costs. The CCC’s 6th Carbon Budget Report suggests mass market adoption will lead to air source heat pump costs falling by 20%-30% by 2030.
This growing supply chain is also great news for jobs; the Heat Pump Association, suggests that the number of heat pump installers will need to increase from around 2,000 today to 50,000 by 2030 to reach our targets and all in all, the heat decarbonisation programme could support a further 150k high-quality jobs in our economy by 2035.
As well as providing strong incentives to stimulate the heat pump market, the Government can look to neighbouring countries to learn further lessons.
France, for example, has achieved almost 3 million heat pump installs and 37% of its heat comes from electric sources, compared to just 8% in the UK. Our recent research paper with Public First - Options for Energy Bill Reform - showed how provision of incentives and a better balance between the costs of electricity and fossil fuels in France makes it more appealing for customers to switch.
This rebalancing of policy costs is something the Government must tackle if we are to move away from our heavy reliance on gas boilers. Currently, the additional environmental policy costs added to electricity bills mean gas is still a much cheaper heat option; at current levels, a home with an air source heat pump will pay £305 more a year in 2030 in energy bills than an equivalent home with a gas boiler.
In France, policy costs are more balanced and they also have a carbon tax which is placed on all CO2 emitting fuels, including gas. Crucially this means higher emitting fuels have higher costs. These changes have acted as a natural deterrent to fossil fuels and have helped drive take up of low-carbon electric heat technologies, like heat pumps.
France has also given clear messages to customers that a change will and must come. They committed to banning the installation of gas boilers in new build homes by mid-2021. The UK expects to do the same by 2025.
This has worked well in the Electric Vehicle market where generous grants and tax incentives mean more and more customers are switching to electric, giving the government the confidence to bring forward the ban of the sale of new petrol and diesel cars to 2030.
With heat so crucial to health, a big challenge will be ensuring any policy decisions don’t increase bills for vulnerable customers. Putting additional costs onto gas users could impact poorer households if they are not prioritised or given the right assistance. Our research with Public First showed it is possible to rebalance policy costs without having a big impact on bills, but additional support will be needed to make sure any impact is neutralised.
Whatever happens, it’s clear that heat pumps will play an important part in the UK’s future and the upcoming Heat and Buildings Strategy is a chance to provide a clear policy framework for the change.
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