‘Heat pumps will never be as cheap as gas boilers’

A leading manufacturer of domestic heating devices has rejected claims by Octopus Energy’s chief executive that the price of heat pumps will fall to the level of gas boilers.

Giving evidence to a Business, Energy & Industrial Strategy (BEIS) committee inquiry into heat decarbonisation this morning (16 March), Greg Jackson reiterated his argument that harmonisation of tax and policy costs on electricity and gas will spur consumer demand for heat pumps.

He pointed to the electric vehicle market as a parallel, saying the development of a mass market for heat pumps will drive down the cost of the devices.

However, Steve Keeton, director of external affairs at the Vaillant Group UK Ltd, contested Jackson’s claim.

He said that while increased uptake heat pumps will undoubtedly lead to some economies of scale, many of the components in the devices are commonly used in air conditioning, meaning that their cost is unlikely to drop dramatically.

Keeton added that the greater size of heat pumps, which are typically three times the weight of a gas boiler, also means the materials involved in their manufacture are more expensive.

“They (costs) will come down but not right down to parity.”

The German owned company manufactures a range of heating devices including both heat pumps and gas boilers.

Responding, Jackson said: “We heard the same from the traditional car industry ten years ago: the reality is that as soon as you start backing a new technology at scale, the costs come down significantly and the fundamentals of every component changes.”

He added there are potentially “enormous” cost savings available from the “fortune” society pays to maintain the gas network.

Keeton also dismissed the government’s argument that householders’ reluctance to admit tradesmen to their properties is to blame for the slow take-up of the Green Homes Grant voucher scheme.

He said the engineers installing his company’s devices, had “not had a lot of negative feedback” about going into peoples’ homes during recent months.

“It’s not been a massive contribution to why the GHG has not kicked on,” Keeton said, adding that the key reason for the troubled scheme’s faltering progress was mainly how it has been administered.

He was backed up by Michael Lewis, chief executive of Eon UK, who said the company had maintained high smart meter installation rates over the past year.

The success of the local authority delivered GHG scheme, compared to the vouchers, pointed to the need for a body to co-ordinate the roll out of energy efficiency and low carbon heating devices until the market can stand on its own feet, he said: “The lesson from the GHG is that a co-ordinated national delivery body can deliver this much more effectively than a voucher schemes because individual consumers need help and guidance from outside experts.”

George Day, head of markets, policy and regulation at the Energy Systems Catapult, told the committee that the mooted independent system operator could help to cut through the rivalries between gas and electricity suppliers to identify the right heating technology for local areas.

Such an independent body could help ensure that a network of local energy plans, which he said must be rolled out within the next five years, developed into a “coherent” national strategy.