An installer view on challenges in the domestic heat pump market
At R A Brown we are passionate about renewable heating and heat pumps in particular, having been one of the early adopters of this technology, we therefore think it is important to highlight the current challenges and that the government takes decisive action to support the heat pump industry and carbon reduction.
Why is our domestic heat pump market going backwards?
We are celebrating 15 years of installing heat pumps mainly in the domestic off gas grid market. But we’re not breaking out the bubbly just yet. I have been unpicking why the retrofit heat pump market is going backwards. There’s been so much press coverage about heat pumps over the past year or two.
The Boiler Upgrade Scheme grant was launched last April replacing the Renewable Heat Incentive and it is significantly underperforming; only just over £38 million has been paid out with over £100 million left in the budget pot to end of March this year.
Consumer demand seems to have been hit by a lethal combination of moderate heating oil prices, uncertainty over rising electricity prices and a grant that at £5K, barely covers the recent price rises in heat pumps and all the components needed for a system.
I did a follow up call to a potential customer this week and what he said illustrated the issues clearly.
I asked him what he felt about the guide estimate for ground and air source heat pumps systems for his planned chalet renovation project. He said that once he’d picked himself off the floor shocked by the potential cost of the ground source system, that even with the deduction of the BUS, the complete system and all plumbing comes in at around £38K. He said that he’s thinking of installing an oil boiler and keeping the rest of the money in the bank. He explained that he doesn’t really ‘trust’ air source systems as he has friends who had an air source installed in their self build and the system is not keeping them warm. Therefore he is not attracted by the somewhat less expensive air source option we are offering. He also agreed with me that the current price of electricity is a big disincentive and that he has no trust that now electricity prices have risen they will reduce again.
It is depressing that almost everyone we speak to has a personal horror story of friends or acquaintances with air source heat pump systems that have been poorly designed in terms of heat pump size or heat emitter sizing and or poorly installed. How is the industry ever to move forward? We’ve been working hard building up the credibility of heat pump systems for 15 years and our systems often exceed our customers’ expectations, but to achieve these results we use top quality products, employ skilled people and train staff and of course all of this comes at a price.
I’m not sure why we have a fixation in the UK for heat pumps to be somehow ‘brought down to’ the cost of a gas boiler. Considering the system upgrades required in terms of new radiators and pipework improvements needed in addition to the units being more expensive in themselves, it is blatantly ridiculous. 537 000 heat pumps were installed in France in 2021 and they cost the same as they do in the UK, these supposed volume discounts simply do not exist. Heat pumps are a globally traded product, not somehow magically on bargain basement offer to the tiny UK market.
I am also concerned that this ‘cheap’ approach is causing a very sub optimal situation in the new build market. On rural housing estates air source heat pumps are being installed in a very ‘unsupported’ way. To keep costs down builders buy a package of the cheapest possible heat pump and cylinder. The popular manufacturers working in this market sell a heat pump system like a TV, with little or non existent technical support for installers and ultimately for the homeowner. Imagine moving into a house with and unfamiliar heating system and having no-one to be able to call for advice on settings, for maintenance or servicing because the manufacturer doesn’t price these services into their infrastructure because of extreme price sensitivity in the building trade. We are looking to extend our servicing department to cover as many of these cheaper brands to reduce the ‘bad press’ that will almost inevitably ensue from these unsupported end customers. It is worlds away from our follow up calls and system tweaking that we offer our installation customers.
I can’t draw any other conclusion than that something needs to shift in the external environment – the grant provision, introduction of affordable green home improvement finance, lower electricity prices compared to gas and oil, implementation of the planned ban on oil boilers in new builds from 2025. In the meantime the reality is that in off gas grid areas people are incentivised to replace an old oil boiler with another oil boiler. We will never move towards carbon zero targets with this state of affairs.