Heat pump grant is 'scheme for wealthy' says Andy Mayer
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British Gas has sparked a price war for heat pumps with major providers like Octopus Energy, E.ON and EDF to slash installation costs as the UK scrambles to replace gas boilers with the low-carbon alternatives. The UK’s main household energy supplier has said it will price match any offer by rival competitors for accredited installations. The firm has set a starting price of £2,999 per install for an air source heat pump. This is just £1 less than the £3,000 starting price for a standard installation offered by rival company Octopus Energy.
This price is far below standard installation costs, which are on average £10,000. It is even lower than the typical cost would be with the Government’s £5,000 grants offered as part of the Boiler Upgrade Scheme.
It is all in place help Westminster hit its target of rolling out 600,000 heat pumps a year by 2028 as part of its drive to Net Zero emissions by 2050.
The boiler alternatives work by drawing heat from the outside air and run on electricity. While some electricity is still generated by gas, National Grid has been smashing records as an increasing proportion is now coming from clean sources like wind and solar power. Last week, for instance, a record 21GW of the UK’s electricity was generated from the UK’s onshore and offshore wind farms.
Now, a price war could help to drive the cost of heat pumps down, a factor that many claimed had been scuppering the pace of the UK’s rollout.
Andrew Middleton, managing director of British Gas’s new net zero business division, said: “Heat pumps are an essential part of the UK’s journey towards a decarbonised future.
“We recognise that many households are being cautious with their spending in the current climate and want to do all we can to make this technology more affordable – so that those customers who can make the move to low carbon heating feel compelled to do so now.”
Installing a heat pump could also improve a home’s energy efficiency and help drive down bills in the long run.
However, it is important to note that ground source heat pumps “provide more renewable heating, capable of drawing more heat for less effort and require little-to-no electricity to run”.
Myles Robinson, an energy expert from Boiler Central, said: “The value of heat pumps does not come in financial form, but, rather, in terms of predictability and eco-friendliness.
“As you may be able to tell from their name, these pumps source their energy to heat a home from either the ground or the air. Compared to air source ones, ground source heat pumps provide more renewable heating, capable of drawing more heat for less effort and require little-to-no electricity to run.
“They are also far less dependent on the weather, compared to air source heat pumps which struggle to draw warmth from cooler air temperatures, just when you need the heating the most.”
But the expert raised the alarm over the potentially eye-watering costs installations can sometimes reach. She said: “Unfortunately, not every home is suitable for heat pump installation.
“If you live in a flat above ground level, for example, you obviously have nowhere to dig a hole for the ground source heat pump, nor is it worth bothering to get planning permission for an air source heat pump that will last you less than a boiler.
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“Furthermore, the costs of installing a ground source heat pump can rise to an eye-watering £35,000. Air source heat pumps are much cheaper to install, averaging to around £7,000, but they are entirely dependent on the outside weather, meaning you still need to use your boiler on the colder days.”
However, the pricing competition could help to swerve this problem and help kickstart a rapid rollout. Octopus Energy, the country’s third biggest household supplier, said it was “delighted” at British Gas’ move to trigger a pricing competition.
Rebecca Dibb-Simkin, global product director at Octopus Energy, said: “We often disagree with the incumbents but on this occasion, we’re delighted – unleashing market forces is what’s needed to quickly bring down prices and roll out heat pumps across the country. We’re more than happy to enter a price war over green heating with British Gas – bring it on!”
Also set to be dragged into the war is E.ON Energy. Its website says that heat pump installations can cost anywhere between £10,000 – £20,000. EDF, which is owned by the French state, also sells heat pumps in the UK and says that installations can cost anywhere from £7,000 – £12,000 depending on your home.
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