Is the UK Heat Pump Market likely to double by 2025?

In March this year the government declared that fossil fuel heating could be banned in all new homes built after 2025. This opens the door to significant opportunity for low carbon heating. Though companies are waiting for building regulations to be updated there is still solid potential for growth in the UK heat pump market.

Currently the heating system stock in the UK relies heavily on gas systems. 85% of all the heating systems operating are gas boilers and about 1.5m million gas boilers are being installed in the UK each year. In fact, the UK is the biggest boiler market in Europe. At the moment renewable heating represents just 2% of the heating systems in the UK and 1% of this is supplied by heat pumps, air source heat pumps being considerably more common than ground source.

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A review was recently carried out by Delta-ee to consider the opportunities and barriers for heat pumps in order to assess how the market is likely to develop over the next few years. Despite the concern around future support for heat pumps after the Renewable Heat Incentive ends in 2021 and the likely negative impact of Brexit on the heating market Delta-ee foresees the UK heat pump market doubling in size by 2025.

Interestingly, the use of heat pumps, both air source and ground source for hot water and household consumption is well-established in many other countries such as Central and Northern Europe, the United States and Canada. We need to ask ourselves why the UK has been lagging behind in growing this market and when & what can be done to develop this market in the future.

Delta-ee think that increasing uptake in the new build market will be the key to driving growth. With the support of large-scale shared ground loop projects and increased confidence in hybrid heat pumps they believe growth could be more than twice as high to 2025 with the right policies and regulations in place. In addition, if fossil fuel has been banned in new builds, they can see the market really taking off from 2025 onwards.

Many people know something about the benefits of heat pumps both in terms of their pocket and for the environment. Thanks to government measures and positive trends the penetration of heat pumps in the UK heating market is very likely to increase significantly during the following years.

The Renewable Heat Incentive (RHI) is a UK Government scheme created to encourage the uptake of renewable heat technologies amongst householders, communities and businesses through financial incentives. This incentive is the first of its type in the world and the UK Government expects the RHI to contribute towards the 2020 ambition of 12% of heating coming from renewable sources.

The domestic RHI began on 9th April 2014 and provides financial support to the owner of the renewable heating system for seven years. The scheme covers England, Wales and Scotland and is targeted at – but not limited to – off-gas households.

Like other renewable technology the performance of heat pumps is improving all the time which will make them in the future truly competitive in a market currently controlled by gas boilers. Though the initial installation costs of heat pumps will remain higher than those of gas boilers their running costs are set to decrease significantly making them a very attractive option for supplying hot water and heating.

In the UK heating market, utilities supply over 90% of customers. As previously mentioned most installations in the UK are gas boilers but this has begun to change. Some of the largest utilities are offering heat pump installation services and companies in this sector are beginning to feel more confident about joining the UK market.

Government regulations aimed at making new residential buildings ‘Zero Carbon Homes’ will also encourage the installation of heat pumps though it must be noted that there are many options for accomplishing the zero-carbon goal, not just heat pumps.

The Greater London Authority has already adopted the reduced emission factor and because their methodology does not include direct electric heating in carbon savings calculations, heat pumps are likely to be the best option from a carbon perspective and hopefully this will make a positive impact on the market this year.

Over the next few years, the ground source heat pump market will be advanced by large-scale shared ground loop developments in housing association retrofits. An example of this is the project in Enfield, where Kensa has been contracted to install its Shoebox heat pumps in 400 flats. There are many new initiatives such as this, Grant UK for example have designed a wet underfloor heating range to partner with heat pumps.

Experts in the field agree that at least until 2020 the installation of heat pumps will experience rapid growth mostly driven by RHI tariffs and utilities initiative of increasing the size of the heat pump industry in the UK. It is not only engaging UK companies in the industry but also foreign companies that will help to raise standards and produce a more dynamic heating market in the UK.

Find out more about heat pumps here.