Heat pumps are about to get a lot more expensive – here’s how to save

If you’re thinking of buying a heat pump, you should probably do it soon. The Government paid record grants for heat pumps in August, but looks set to cut them substantially in the Budget on 28 October to help fund increases in defence spending. There are other ideas being floated to help households access heat pumps: boiler makers may have Government targets for sales of heat pumps increased, in the hope this will bring prices down; and low-interest loans for green tech are likely to be unveiled soon. Nothing, though, has been confirmed yet. Cutting heat pump grants would be a massive blow for would-be heat pump purchasers, given that the grants range from £7,500 to £9,000 and are currently available to most households. As such, they effectively bring down the cost of a heat pump to roughly the same level as a standard gas combi boiler – which average around £3,800 for a typical three-bedroom home. Once a heat pump is installed, a typical household could save between £110 and £350 a year compared to using a conventional gas boiler, according to Nesta, the research and innovation charity. With energy bills predicted to jump by 16 per cent to £1,999 a year for a typical dual-fuel household in January, these kinds of savings are more important than ever. Heat pumps typically take heat from the air outside the home (and less often the ground), bring it inside and warm it to the required temperature. But because most of the heat is transferred from the surroundings rather than generated from scratch, they are three to five times more efficient than gas central heating.And because they run on electricity, they are much better for the environment than gas-burning boilers – especially if it’s generated from low-carbon sources such as wind, solar and nuclear power, which now provide the majority of the UK’s electricity. This gives heat pumps the added benefit of improving your energy efficiency, or EPC, rating. That’s rapidly becoming very important, with strict new minimum requirements of an EPC C rating due to be implemented on rented properties in 2030, something many of them don’t currently achieve. To put the environmental performance of a heat pump into perspective, replacing an old G-rated boiler with a modern A-rated one would typically add three to 10 EPC points, according to the Home Energy Check website (with each of the seven EPC grades spanning an average of 14 points, but with more points per grade lower down the scale and fewer points higher up). By contrast, if you replace your G-rated boiler with a standard air-source heat pump, you can expect to jump from EPC band E or D to band C or even B – with the caveat that the property does need to be reasonably well insulated for that scale of benefit. But, however many plus points heat pumps have, any significant cut to the grants will inevitably put most people off buying one. At the moment, 85 per cent of British households use a natural gas boiler to heat their homes. This dependence on gas heating means the UK is more vulnerable to energy price shocks, such as those caused by the Ukraine and Iran wars, than any other country in Western Europe, according to the International Monetary Fund. Indeed, the European Network of Transmission System Operators for Gas (ENTSOG) warned this month that Britain could potentially run out of gas by the end of winter if a cold snap hits in the next few months. This could force Britain to use expensive liquefied natural gas from the US, delivered to the country in tankers, which would drive up the cost of bills for UK households even further. EU gas reserves are currently just 72 per cent filled going into the winter, far below the 88 per cent level seen as the minimum needed. But things are significantly worse in the UK, with storage levels at just 48 per cent, according to ENTSOG. Yet, reports indicate that the Government is planning to reduce its £2.7bn heat pump subsidy pot by hundreds of millions of pounds at the Budget. Exactly how big those cuts will be – and when they will come in – is anybody’s guess. Hopefully, the Government will see sense between now and Budget day, as experts warn that the heat pump industry would practically collapse without the subsidies. A widespread switch from gas boilers to electric heat pumps is by far the best way of curbing the UK’s gas dependency, and the five-year subsidy programme is only costing £540m a year; a drop in the ocean compared to the benefit. Mel Evans, head of climate at Greenpeace, reckons the oil and gas companies should pay for the subsidies through further taxes, given that they are making massive additional profits from the soaring fossil fuel prices. Shell alone made a profit of £7.4bn in just April, May and June of this year – more than twice the amount it made the same time last year – driven by soaring oil prices. I agree, but I’m not holding my breath. For the time being, if you’re minded to get a heat pump, move quickly.