Funding Cost Reduction could Threaten Heat Pump Upgrades

Government has not yet confirmed funding for the boiler upgrade scheme and broader ‘warm homes plan’ beyond next year

The rollout of heat pumps will slow down and could cost the Government more if funding is cut at the spending review next week, industry experts have warned.

Grants of £7,500 are currently available for households that want to replace a gas boiler with a heat pump, which is considered more environmentally friendly because it runs on electricity.

But funding for the boiler upgrade scheme expires next year, with future budgets dependent on the Treasury committing more money at the spending review on 11 June.

The Government has promised to unveil a Warm Homes Plan in the coming months, with details about how to promote the uptake of heat pumps and other forms of green household energy, as well as helping people insulate their homes better to save on power.

Labour pledged a total budget of £13.2bn, half of which was due to be new funding, but that is now in doubt.

Large and small firms involved in the manufacturing and installation of heat pumps urged the Department for Energy Security and Net Zero (DESNZ), led by Energy Secretary Ed Miliband, to keep its promises.

Ministers have said that in due course, a large majority of houses should be equipped with heat pumps and have also committed to decarbonising the electricity grid by 2030, in a bid to slash the amount of CO2 emissions caused by home heating in the UK.

Pamela Brown of Aira, a Swedish company dubbed the “Spotify of heat pumps” because it runs a subscription model, said the state support was “absolutely critical” to encouraging uptake and praised the UK’s policies as the best of any market the firm works in.

She told The i Paper:

“Is it important for our business to have plans like the Warm Homes Plan? I believe it is. Number one, a boiler upgrade scheme is a strong motivator for people to make the switch. The financial incentive really helps.”

Emma Bohan, who runs a small installation firm in Derbyshire called IMS Heat Pumps, said:

“The current support provided by the boiler upgrade scheme has been one of the most successful schemes the Government have launched in support of delivering heat pumps, having funded 49,000 since its launch.

“To even consider that that might be part of a swingeing cut that they need to make under their funding commitments would have a massive impact on me and other installers.”

She added: “The consumers on the ground need to understand that the Government believes this. Otherwise, you create space for the climate change deniers and the fossil fuel industry to maintain that grip, which weakens our energy security and stops the growth happening in what is clearly a really exciting and innovative sector.”

Another industry source said:

“The Government seems to be taking some inevitably short-term decisions to try and scrimp a few pennies.”

Richard Warren of Truro-based company Kensa said that investment decisions were “all about certainty” and warned: “You need to get to a scale to push costs down significantly, and if you reduce investment you are not necessarily going to get that scale and you will not save money in the long term.”

Under pressure from Labour MPs and anti-poverty campaigners, ministers are preparing to bring back the winter fuel payment for more pensioners.

By Hugo Gye inews Political Editor

Source: inews