More than £15 million has been awarded by the government for ‘innovation projects’ to make low carbon heating like heat pumps cheaper and easier to install, to speed up the UK’s move away from fossil fuels.
The funding is part of the government’s £60 million Heat Pump Ready programme which aims to accelerate the development of ‘innovative solutions’ that can reduce the barriers to deploying low carbon technology in homes and businesses across the UK. Funding for the programme comes from the Department’s £1bn Net-Zero Innovation portfolio (NZIP) that was launched late last year by then-Chancellor Rishi Sunak alongside the Heat and Building Strategy.
24 innovative heat pump projects across England and Scotland have been selected by the UK government to share £15m of new funding.
The Department for Business, Energy, and Industrial Strategy (BEIS) has confirmed that it has selected the winning projects for the latest round of its Heat Pump Ready funding programme. BEIS hopes that the £60m of funding will help to create more than 300 jobs in the heat pump manufacturing and installation sectors and related industries.
The innovation funding is designed to complement the government’s £450 million Boiler Upgrade Scheme, which provides grants of up to £5,000 to homeowners who install air source heat pumps and up to £6,000 to homeowners who install ground source heat pumps towards the cost of a heat pump.
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Many green groups had hoped for a longer running scheme given that there are 29 million domestic properties in the UK, and that the UK Government is targeting 600,000 heat pump installations nationally each year by 2028. More and more homeowners are considering switching to heat pumps in the face of soaring energy bills. One study from the Energy and Climate Intelligence Unit (ECIU) has found that one-third of UK homes are now looking at installing a heat pump. However, citizens’ groups have repeatedly warned that those able to choose a heat pump, even with Government support, are likely to be high earners.
Innovation support is just one part of the government’s strategy to help bring low-carbon heating technology to the mass-market and supports the target of installing 600,000 heat pumps a year by 2028.
The renewable energy industry has estimated that the UK heat pump market grew by nearly 50% in 2021. Along with the Boiler Upgrade scheme, Heat Pump Ready is part of a wider package of policies the government is introducing to scale up deployment and support industry to reduce the costs of heat pumps.
The current zero rate of VAT for installing clean heating measures makes it an even more affordable option for people looking to replace a gas or oil boiler in their property.
Already a proven technology, heat pumps are much more efficient than traditional fossil fuel boilers and provide a reliable, low carbon heating solution for households.
Projects supported by this latest round of funding under the programme are contributing to efforts to bring down heat pump costs, make them more efficient and minimise disruption in homes and other buildings during installation. Working with industry, the UK government is aiming for heat pumps to cost the same as gas boilers to buy and run by 2030 at the latest with big reductions by 25-50% by 2025.
The hope is that the projects will collectively be able to attract £6.5m of additional private investment due to the government’s financial support.
Projects being supported by stream 2 funding include one in Harrogate in North Yorkshire that is using data from smart meters to help optimise the running of a heat pump in a household energy system, a scheme in Truro in Cornwall that is looking to develop efficient and ecological refrigerants that are used in heat pumps and a project in Thame in Oxfordshire looking at ways to reduce the costs of installing and running a heat pump.
The £15 million stream 2 funding supports 37 small and medium enterprises across the 24 projects in England and Scotland.
The successful applicants include a collaboration between EDF, Daikin Air conditioning and the University of Sheffield to create and expand a digital platform which provides customers with advice on selecting, installing and caring for heat pumps; Energiesprong, which is aiming to develop a retrofit package including heat pumps; Green Energy Options, which is using AI to assist heat pump deployment, and Home Infrastructure Technology, which is developing a green loan to help homeowners fund heat pumps and other carbon-cutting measures.
Business and Energy Minister Lord Callanan said:
“In light of rising global gas and oil prices, getting low-carbon heating technology into homes is a priority for this government as it will help households ditch the costly fossil fuels that are driving up bills.
“Heat pumps are a proven, reliable technology that uses cheaper renewable energy produced in the UK. We are already bringing costs down through the Boiler Upgrade Scheme and slashing VAT to zero, but by finding innovative ways to make them even cheaper and easier to install, we will help more homes see the benefits even quicker.”
