The cost of making your home climate change proof

In a blog entry in December I talked about the push the British government is undertaking as far as the promotion of heat pumps is concerned. A recently published report by the National Audit Office (NAO) shows that the assumptions on consumer demand for heat pumps are ‘optimistic’: Between May 2022 and December 2023 only 18’900 pumps were apparently installed, less than half than the forecast 50’000 units.

As the NAO rightly points out in its report, cost remains a factor: The government subsidy of £7’500 (increased in September from previously £5’000) don’t cover the cost of pumps which, while being more efficient, also cost four times more than a gas boiler. So are consumers like myself, which a couple of years ago upgraded their gas boiler as was then the recommendation by the industry and government alike, supposed to find ourselves out of pocket yet again, this time for a heat pump?

I wholeheartedly agree that old boilers should now be replaced by heat pumps rather than a new boiler, and the home energy sector accounts for around 18% of the country’s overall greenhouse gas emissions and was in 2021, according to the UK Environmental Accounts: 2023 published by the Office for National Statistics, the highest contributing sector.

Air source heat pumps cost between £2,400 – £14,050 to install, depending on the size of your property, while the annual running costs range from £685 to £1,550. By installing an air source heat pump to replace a gas boiler, you can expect to save up to £340 on your annual energy bills. And since most residential dwellings in Britain have a gas boiler installed, the average break-even point for replacing a gas boiler with an air-to-air heat pump is about 17 years.

17 years!! Not exactly a great rate of return. I know, this is as much about climate change and saving the planet, which I am very much in favour of, but demanding such a sacrifice from the population when household budgets are already stretched like never before in modern times is pushing it.

Heat pumps fall under the government’s Boiler Upgrade Scheme and thus only homes which have an eligible Energy Performance Certificate (EPC) issued in the last 10 years, with no outstanding recommendations for loft or cavity wall insulation will qualify for the grant. And, of course, such improvements don’t come cheap either. But the fact is, that if you’ve got another £15,000 worth of other alterations to bring the house up to a standard that it works, there aren’t many people, particularly in a rural setting, who are going to be able to afford this kind of investment. So, at least as things stand now, I think it’s doubtful that Britain will meet a goal of 600,000 heat pump installations per year from 2028.

Moreover, this can lead to a backlash: Last year Germany’s ruling coalition tried to ban gas boilers, only to change course when voters objected to the costs. Hence not a good idea for a country such as the U.K., which is heading to the polls later this year.

With much of the U.K.’s housing stock in desperate need of better insulation before upgrading to a heat pump makes sense, the government should maybe subsidise double glazing and cavity wall insulation as well. Owners will need inducements to spend big sums retrofitting their homes to pollute less, which benefits everyone.

At the moment only roughly 1% of British homes have a heat pump installed, so there is quite a long way to go….