The Boiler Upgrade Scheme (BUS) is “seriously failing” to deliver on its objectives, according to a new report from the House of Lords environment and climate change committee, which brands the government’s heat pump installation targets as “very unlikely to be met”.
The damning verdict follows an inquiry into the scheme last year and the findings are reported in a letter from Baroness Parminter to the Rt Hon Lord Callahan.
Read the letter here.
The £450m BUS scheme, which provides £5000 grants to UK households to upgrade gas boilers to heat pumps, has only used a third of its £150m annual budget so far. Ofgem figures show that the scheme has issued £49.7m in vouchers, equating to 7,641 installations.
Analysis contained in the letter says that if the current take-up rate continues, only half of the allocated budget will be used to help households switch to low-carbon heating systems, and a healthy market of installers and manufacturers will not be in place in time to implement low-carbon heating policy measures smoothly.
Therefore, the government’s 2028 target of 600,000 installations per year is very unlikely to be met.
The report identifies a number of conditions that have lead to the scheme’s poor performance and makes recommendations to course-correct.
Problems identified included low public awareness of both the BUS scheme and the technology it funds, an undeveloped workforce, inaccessibility to low-income households, and inadequacies of the Energy Performance Certificate (EPC) rating system.
A shortage of trained installers with the relevant heat pump skills was named as a major barrier to take-up of BUS, and low carbon heat more widely. As of 2019 there were an estimated 2000 heat pump installers, compared to 130,000 Gas Safe registered engineers. Government figures in the Heat and Buildings Strategy estimate that at least 12,400 heat pump installers will be needed by 2025 and 50,200 by 2030, to reach ambitious installation targets.
High upfront costs are putting heat pumps beyond the means of many households, even with the help of the grant. This, said the committee, made it impossible for low income households to benefit from the scheme.
High running costs are also putting people off in making the switch to heat pumps. Market reform, said the report, could go some way in narrowing the price gap between gas and electricity and ensuring the cost of running a heat pump is affordable.
The committee urged the government to lower the noise around public messaging on hydrogen, stating that it is not a viable option for home heating in the short to medium term, and misleading information from the government is negatively impacting the adoption of low carbon heating technologies like heat pumps.
It also calls for changes to the Energy Performance Certificates (EPC) methodology so that certificates properly reward households for making the switch to low-carbon heating. Currently, flawed EPC recommendations put up a barrier to BUS eligibility. The committee therefore says the use of EPC ratings and the associated insulation requirements as an eligibility criterion for the BUS should be removed, alongside ensuring households can access reliable advice on how running costs differ according to the levels of insulation.
Baroness Parminter, Chair of the Environment and Climate Change Committee, said: “The transition to low-carbon heat is fundamental in the path to net zero, given that 17% of the UK’s greenhouse gas emissions come from our homes. The government must quickly address the barriers we have identified to a successful take-up of the Boiler Upgrade Scheme in order to help grow the take up of low-carbon heating systems. It is vital they do so if we are going to meet our Net Zero ambitions.”
Speaking for the Energy and Utilities Alliance (EUA), CEO Mike Foster says: “This report confirms just how far removed this committee is from the average member of the public. While we agree the Boiler Upgrade Scheme is failing, we want to see it scrapped, rather than see the recommendation of the committee to double-down on the flawed policy be supported.”
“Exposing just how out of touch the committee are, they suggest removing government protections around insulation requirements as a way of increasing the take up of heat pumps, when this will only push up bills and create a backlash against this technology. Because the money is tied up in the scheme, it can’t be used to fund sensible measures like insulation that permanently reduce bills and carbon emissions. Insulation can also be targeted at the least well-off, making it a fairer policy too!”
Commenting on the committee’s findings for ground source heat pumps, Dr Matthew Trewhella, CEO of The Kensa Group comments:
“As the leading ground source heat pump/networked heat pump provider in the UK, we are calling on the government to reconsider the subsidies that are currently offered by the Boiler Upgrade Scheme which is currently failing to incentivise ground source heat pumps fairly.
“We propose that grant levels should be related to carbon savings as ground source heat pumps are the most energy efficient heating and cooling technology. They should also be reflective of the impact on the grid and the longevity of the infrastructure – both of which are more beneficial with ground source technology.”
Henk van den Berg from heat pump manufacturer Daikin UK adds: “It’s disappointing there hasn’t been more uptake in the Boiler Upgrade Scheme, but the government must do better at properly communicating the benefits of heat pumps versus fossil fuel systems.
“Clearer training support for installers – particularly sole operators – will be key to meeting this target, too. Daikin currently trains 3000 engineers to fit low carbon heat pumps every year, but we have the capacity to double this number. The government needs to support our industry in shouting about the opportunities that jobs in the green economy offer.”
