REPORT - CREATING A HEAT PUMP MASS MARKET IN THE UK

21 4 C R E A T I N G A H E A T P U M P MA S S M A R K E T I N T H E U K SUMMARY Heat pumps will be the primary technology for decarbonising the way we heat our homes, but currently the UK lags behind European and American peers – frequently finishing ‘bottom of the league table’ for the number of heat pumps installed.1 This report considers a range of viable routes to market for heat pumps and set. [...] Nesta found that countries where the cost of electricity is high in relation to gas tend to install fewer heat pumps.4 The UK can reduce the price of electricity by building renewables at pace and developing more flexible options for electricity consumption and demand. [...] The average cost in revenue foregone, over three years between 2024/25 and 2026/27, would be a maximum of £390m a year for all electric heating, or £90m a year for heat pumps and £300m for direct electric heating.7 This two-tier system is successfully deployed in Denmark, where households installing a heat pump will receive a discount on the amount of electricity used for heating. [...] This approach can reduce the running costs of the heat pump, and reduce the cost of the electricity system for everyone. [...] 2 1 C R E A T I N G A H E A T P U M P MA S S M A R K E T I N T H E U K Summary Recommendations CHAPTER 1 Reducing the cost of electrIcity Near-term options to ensure the affordability of heat pump running costs CHAPTER 2 Business models and consumer options Costs of heat pumps Upfront purchase and subsidy Leasing and service models Flexibility CHAPTER 3 Mobilising public and private finance Unlock.