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Switching from gas boilers to heat pumps: the importance of government subsidies and industry confidence

Independent Research

Heat pump modelling

Homes account for 21% of total greenhouse gas (GHG) emissions and 35% of total energy consumption in the UK in 2020. Natural gas is the most common heating fuel in domestic buildings, covering 80% of domestic heat demand in the UK. Yet the deployment of heat pumps presents a major opportunity to decarbonise the way we heat our homes. One of the major reasons for its slow uptake is the high up-front costs of heat pump systems relative to gas boilers.

In this analysis we looked at 30m properties across Great Britain to estimate the distribution of costs to retrofit an air source heat pump – rather than focusing on the cost for an ‘average’ household that currently dominates discussions.

We found that a £4,000 subsidy, as proposed under the Clean Heat Grant consulted on by government, could lead to the uptake of around 230,000 heat pumps per year. Following the Government’s Heat & Buildings Strategy announcement in October 2021, we updated our modelling to reflect the subsidy confirmed in the £450m Boiler Upgrade Scheme. 

Our research showed that actual cumulative demand for heat pump installations over the three year duration of the grant could be closer to 560,000 households – over six times the number that would be covered by the £450m scheme.