Heat pump manufacturers look to have persuaded D-ESNZ to abandon what looked to become heavy cash penalties if they fail from this spring to meet a stiff government target for selling and installing the devices as replacements for household boilers.
Press reports over the weekend indicated that ministers were on the cusp of dropping the so-called ‘boiler tax’.
It looms in the form of Whitehall’s imminent requirement that home heating installers match or substitute 4% of conventional gas boilers sold with sales of low carbon air- or ground-sourced pumps. If they fall short, the rules require them after April to pay £3,000 for every installation they miss under that threshold.
National take-up of the low-carbon heat systems continues to undershoot massively the government’s two year old target to have the low carbon devices installed in 600,000 homes every year by 2028. In 2022, fewer than 10,000 of the pumps were plumbed in to British homes.
Anticipating the £3,000 penalty taking effect this spring, manufacturers and specialist installers had reportedly simply increased their prices for adding pumps to homes.
The Guardian reported last year that lobbyists for the gas boiler industry were trying to delay the new measures. Now Claire Coutinho, who became energy secretary in September, is reportedly minded to scrap the target and fines after concluding that it was bad for consumers.
“Boiler manufacturers have saddled families with indefensible price hikes – this is not right,” a government source told the Sunday Times. “We’re looking again at the policy, and expect manufacturers to do the right thing and remove their price hikes immediately.”
In September the UK’s biggest pump supplier Worcester Bosch went public on its intended rise of £300 per installation. Output capacity and homeowner demand were both running too cool to meet the government’s targets, making fines inevitable, it said.
According to the Guardian this morning, energy secretary Clare Coutinho believes ditching the policy may be the only way to get manufacturers to drop their prices again and that the government can still hit its target of 600,000 heat pumps through other schemes and incentives.
A Department for Energy Security and Net Zero spokesperson tells the paper that the government remains committed to its ambition of installing 600,000 heat pumps a year by 2028.
“We want to do this in a way that does not burden consumers, and we’ve increased our heat pump grants by 50% to £7,500 – making it one of the most generous schemes in Europe“, the spokesperson was quoted as saying.
“This pragmatic approach is working, with a nearly 50% increase in people applying in December 2023 compared to the same month in 2022.”