600,000 Heat Pump Installations a Year: How Do We Get There?

The push for renewable energy in the UK is accelerating, and one of the clearest objectives is scaling heat pump installations to 600,000 units per year by 2025. With ambitious goals set by the government and growing awareness of the need to decarbonize heating systems, this target may seem unachievable to most, the journey to get there is complex and needs a whole industry approach. In this post, we'll break down the current landscape of heat pump installations, the policies driving growth, and the steps that can be taken to reach this goal.

So where did the 600,000 heat pump installations per year come from? In Nathan Gambling’s podcast from his BetaTalk series, he and James Clark from Elite Group Services chat to Daniel Newport currently from the Tony Blair Institute for Climate. Daniel is the former deputy director of the heat and buildings strategy team at BEIS.

During the podcast Daniel recalls “The government always felt, the lack of a firm target was holding back the political discussion about what are we trying to achieve”.

He discusses the need to try to understand what will be needed to hit the government's 2050 ambitions, what action would be needed in the home energy sector and how Net Zero brought clarity to the situation.

I recommend having a listen to the podcast, you can find it here: https://betatalk.buzzsprout.com/509671/episodes/11002012

Current Heat Pump Installations

According to MCS figures, the UK has installed over 250,000 total heat pumps in the UK, with 35,000 being installed in 2023 (under the MCS scheme). Despite this progress, current installation rates are far below the 600,000 per year target set by the UK government.

How does the UK fare against the rest of the EU?

Countries like Sweden and Norway, which have colder climates similar to the UK, have seen significant success with heat pumps. As pointed out by Nathan, the UK’s figures are often difficult to compare because Scandinavian countries for example include air-to-air heat pumps in their figures, while the UK tends to focus on air-to-water systems and air-to-air installations are not counted in heat pump installation figures. These differences in reporting make direct comparisons tricky, but Scandinavia’s much higher installation rates suggest that increased awareness and clearer reporting could be key in boosting adoption in the UK.

Government Support: Increasing the BUS Grant

In September 2023, the UK government announced an increase in the Boiler Upgrade Scheme (BUS) grant from £5,000 to £7,500 for households in England looking to install air-source heat pumps. This increase aims to reduce the upfront cost, one of the biggest barriers for homeowners considering heat pump technology.

In Scotland, households benefit from a similar £7,500 grant, alongside an additional interest-free loan of up to £7,500. The Scottish scheme has helped drive higher installation rates per capita compared to England, with greater financial incentives making a clear difference. However, even with these grants, uptake has been slower than anticipated, largely due to awareness issues, the spark gap, and existing cost gaps between traditional gas boilers and heat pumps.

So what can be done to help significantly increase the number of heat pump installations in the UK and take us forward to decarbonising home heating systems?

Tackling the "Spark Gap" and Peaker Plants

The spark gap is thought to be one of the main drivers of heat pump installations—the difference in the cost of electricity and gas—is a critical factor holding back installations in the UK. As electricity is still significantly more expensive than gas, many households hesitate to switch from gas boilers to electric heat pumps. To make heat pumps more financially viable, the Climate Change Committee has recommended the government reduce taxes on electricity and increase taxes on gas.

My feeling is that increasing energy bills at the moment is not the correct route to go down and actually targets the worst off in our society, even if the vast majority of people did want to switch to a heat pump, they simply do not have the financial means to do so.

Nathan Gambling commented that the UK's reliance on Peaker plants—power stations that kick in during peak electricity demand—drives up energy prices and can make electricity from renewable sources seem more expensive than it is. Shifting the grid towards a more balanced, renewable-based model will be essential to reducing energy costs and making heat pumps more competitive with traditional heating methods and therefore closing the spark gap.

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The gas-powered Peaker plants are significantly more expensive to run, between Sept 2021 and early January 2022 the average cost per MWh was £287 from these plants. The normal average from this period was around £69 from standard sources. The profits driven by these plants that are mainly used at peak consumption times as a backstop when other contributors to the grid can’t meet demand, surged in December 2022 to between £5,000 and £6,000 per MWh and the grid spent a record-breaking £27 million in one day. The foreign-owned companies that operate these plants have seen profits quadruple in a year, and controversially were not party to the windfall tax implemented by the Conservative government that other energy companies were.

Retraining Gas Engineers

The UK is home to approximately 130,000 gas engineers, the industry could look to retrain this skilled workforce to install and maintain heat pumps, particularly as the use of traditional gas boilers decreases through legislation and the transition to renewable heat sources over the coming years.

Manufacturers and trade bodies have a significant role to play in this transition, providing both financial and technical support. Retraining programs could be subsidised by manufacturers or incentivized through government grants, while collaboration between these entities and educational institutions could accelerate the pace of skill-building in the industry.

There is a massive talent pool of engineers already in this country, and a focus on sharing the burden to help the already skilled workforce transition to ensure the UK can strive to hit its Net Zero ambitions could be key. Should we fail to do this, not only will we be in a tricky position in relation to having no workforce to install and maintain these systems. The current gas engineers will be redundant.

There are a number of suggested actions the government, along with colleges and with the support of industry trade bodies as well as manufacturers could undertake.

To meet the UK’s net-zero goals, retraining the country’s 130,000 gas engineers in renewable technologies is critical. While efforts are underway, more can be done by both the government and colleges to accelerate this transition.

1. Increase Financial Support

More generous grants or interest-free loans for retraining would reduce cost barriers for engineers, particularly those who are self-employed. Offering subsidies that cover a larger percentage of course fees or providing stipends during training could attract more participants.

2. Strengthen Industry Partnerships

Colleges should expand partnerships with renewable energy companies to provide hands-on training and align courses with market demands. Industry-backed apprenticeships and real-world experience will help ensure engineers gain practical skills relevant to current technologies.

3. Flexible Learning Options

Offering online, evening, or weekend courses can help working engineers retrain without disrupting their jobs. Modular courses focused on specific renewable technologies, like heat pumps, would allow for more tailored learning experiences.

4. Increase Awareness

Government-backed awareness campaigns can inform gas engineers of the opportunities and support available for retraining. Highlighting the growing demand for renewable installations and available financial incentives could encourage more to make the switch.

5. Ongoing Professional Development

To keep engineers up-to-date with rapidly evolving renewable technologies, government and colleges should offer continuing education programs, ensuring they maintain high standards and remain competitive in the field.

6. Localised Training Centers

The government could expand regional training hubs to make renewable energy education more accessible nationwide, particularly for engineers in rural areas who may lack access to specialised training.

7. Fast-Track Certification

Creating a fast-track certification program that recognizes existing skills and provides targeted training in renewable technologies would streamline the transition, allowing experienced gas engineers to retrain quickly.

While there are a number of schemes underway to help engineers retrain, there is still a lot that needs to be done. By increasing financial support, creating flexible learning opportunities, and strengthening partnerships, the government and colleges can significantly boost retraining efforts and help meet the UK's renewable energy targets.

These mechanisms should also be used to focus on bringing more apprentices into the sector, providing employers with greater financial support, and ensuring the training in place is fit for purpose and takes account of the new technologies and software that is advancing at a rapid pace.

The Role of Large Energy Companies

Large energy companies are beginning to embrace the heat pump revolution, recognizing that the future of heating lies in renewable technology. Energy giants like British Gas have already started rolling out heat pump installation services, but more can be done. As market leaders, they can drive consumer awareness, offer financing options, and leverage economies of scale to bring down the costs of heat pump installations for the average household that would not normally have the means to pay.

One of the key players helping drive the adoption of heat pumps and other renewable technologies in the UK is Octopus Energy. Through their Trusted Partner Scheme, Octopus is building a network of highly qualified and reliable installers who meet the highest standards for renewable energy installation, including heat pumps. By vetting installers and ensuring they meet rigorous criteria, Octopus provides consumers with peace of mind, knowing that their installation is handled by trusted professionals. This scheme also helps bridge the gap between consumers and installers by offering competitive financing options and simplifying the customer journey from inquiry to installation.

Whilst controversial to some within the industry and seen as driving down pricing as it is seen as a loss leader, there is an argument to say that the installations Octopus are undertaking at lower cost directly would never have gone to the open market in any case. For those inquiries Octopus can’t or doesn’t want to take forward, their trusted partners can quote for the work at their own rates.

UK Planning & Noise Regulations Impact on Heat Pump Installations

Permitted Development Rights have been expanded in recent years to allow many homeowners to install heat pumps without requiring planning permission. However, there are still restrictions in place, especially regarding the placement of external units for air-source heat pumps. These units must meet certain size and placement requirements, particularly in conservation areas and listed buildings, where stricter regulations often apply.

Another major hurdle is the issue of noise regulations. Heat pumps, particularly air-source heat pumps, emit noise when in operation, which can be a concern in densely populated areas. UK regulations stipulate that noise levels must not exceed 42 decibels at the property boundary. This means that in urban settings or properties with close neighbours, the placement of the external unit becomes critical, and it can sometimes necessitate additional soundproofing measures, adding to the cost and complexity of installations or scuppering them all together.

These planning and noise regulations can slow the uptake of heat pumps, particularly in urban or highly regulated areas, where meeting the requirements may involve additional costs or delays. To overcome these challenges, further planning reforms may be necessary to make the installation process more flexible, particularly in cities where adoption could have the greatest impact on reducing carbon emissions. Additionally, manufacturers are continually working on quieter heat pump models, which could alleviate noise concerns and lead to greater acceptance in noise-sensitive areas.

It’s fair to say that the overall view of the industry from an installer's point of view is that some of the legislation is unnecessarily cumbersome and lacks a common sense approach.

The Role of Umbrella Schemes and MCS Certification

Companies such as VitoEnergy play an instrumental part in simplifying the process for prospective heat pump engineers looking to transition to the renewable energy sector through their umbrella scheme. This scheme offers a comprehensive, turnkey solution supporting the engineer to renewable energy installations, including heat pumps. This includes training, full back-office support and material handling. Ultimately giving engineers the confidence to take the leap to renewables, a huge positive for driving engineer numbers in the sector

If you are interested in finding out more, please check out their website: https://www.vitoenergy.co.uk/installers-heat-pump-vitoverified/

From a consumer perspective, their umbrella scheme ensures that all installations are handled by trusted and certified professionals, removing the hassle of coordinating with multiple contractors. By streamlining the customer experience, VitoEnergy reduces the friction often associated with renewable energy adoption, ensuring that installations are completed to high standards while meeting all regulatory requirements. Boosting confidence for consumers, in what is likely a new technology for them is critical to ensuring the wider uptake in the UK.

The MCS Certification Scheme for heat pumps specifically is essential for accessing government incentives like the Boiler Upgrade Scheme (BUS), which offers grants to reduce installation costs. Only MCS-certified installations are eligible for these subsidies, making the scheme integral to achieving the UK's target of 600,000 heat pump installations per year. By ensuring that installers are properly trained and adhere to strict guidelines, MCS raises the quality of installations, reduces the risk of faulty systems, and promotes the long-term success of renewable energy technologies.

In addition to certifying installers, MCS is heavily involved in developing industry standards and providing ongoing training and support. This is particularly important as the UK transitions from gas-based heating systems to heat pumps and other renewable technologies. Through collaboration with industry bodies, manufacturers, and the government, MCS helps to create a robust framework that supports growth in the renewable energy sector.

Payaca’s Role

The Payaca team is passionate about helping renewable energy businesses deliver as many installations as possible in our drive to Net Zero.

Renewable energy businesses can be far more complex to operate:

·         Managing large-scale projects

·         Ensuring compliance

·         Delivering a high level of customer service, as well as

·         Managing an admin and a field team.

·         Day-to-day business management

·         Business growth

For renewable energy businesses focused on growth, Payaca can:

·         Streamline processes

·         Significantly reduce administrative time

·         Manage compliance and internal processes

·         Increase lead conversion

·         Increase productivity

·         Ensure customer service levels

·         Provide you with the tools and the support to put your business in the best possible position for sustainable growth.

Payaca works closely with some of the largest organisations in the industry, we have a deep understanding of the challenges businesses face. By creating a central system that handles heat loss surveys, quoting, invoicing, in-field surveys, and completion forms as well as appointment and field team scheduling, we can ensure your business is in the best position for sustainable growth.

Give us a call and tell us about your business and we can show you how Payaca can quickly streamline your business.

Massive thanks go to Nathan Gambling for his contribution and insight into helping shape this article. Credit to the MCS for the data and the heat pump association for the graphic.

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