UK government publishes intended ‘route to market’ for heat pumps

What is the market-based mechanism for low carbon heat?

The market-based mechanism for low carbon heat is the UK government’s approach to establishing a widespread route to market for the installation of heat pumps.

Heat pumps are devices that transfer thermal energy between spaces, usually between an enclosed space and the outdoors. While there is no silver bullet to low carbon heating, they represent one of the many clean solutions to heating our homes and commercial buildings. Run primarily on electricity, in future years, heat pumps will cost less to heat a consumer’s home, as the price of electricity becomes more competitive with gas.

What has been proposed in the new mechanism?

The response to the consultation has revealed that gas boiler manufactures will be obligated to sell a certain number of heat pumps into the market, as a proportion of their gas boiler sales. The mechanism will serve as the ‘catalysing policy’ to grow the market for heat pumps, with government’s view that the market will operate freely as the mechanism grows.

Currently, the government wants to have 600,000 heat pumps installed every year by 2028, as signalled in the Heat and Buildings Strategy. Progressing this policy is key to the wider heat decarbonisation programme, and to the CBI’s overarching energy efficiency push – given that heat pumps can only work efficiently alongside a robust energy programme.

But there are multiple barriers that can stop the government’s target - from lack of consumer demand and high upfront capital costs, to supply chain and coordination issues. There has been some industry pushback on the scheme’s ability to operate in the free market, considering these barriers.

The CBI’s decarbonisation team is working on ensuring the barriers for low carbon heating are minimised through its own green skills campaigns and pushing government to progress on facilitative measures such as c