Octopus Energy and Halifax announced a pilot scheme under which Halifax mortgage customers would be offered air source heat pumps for as little as £2,000 fully installed, the Energy and Climate Intelligence Unit (ECIU) has reported1. The ECIU analysis, published on 15 November 2022, describes the arrangement as a recent announcement and gives no start date, end date or number of homes covered by the pilot; those details have not been reported1.
The £2,000 figure sits alongside the government's Boiler Upgrade Scheme, which offers a £5,000 grant for air source and £6,000 for ground source heat pumps, was launched in late May 2022 and will run until April 20251. The scheme aims to install 90,000 heat pumps over three years1. In September and October 2022, monthly installations of heat pumps registered by the Microgeneration Certification Scheme (MCS) were around 2,500, and the number of installers taking part in the Boiler Upgrade Scheme almost doubled from around 450 to 900 since its launch1.
The ECIU sets the pilot against much faster deployment elsewhere in Europe. Heat pumps have already replaced about 20% of the boilers in Europe, and Estonia sold 1,583 heat pumps per 100,000 people in 2021 and Poland 259 per 100,000, against the UK's 631. Total installed numbers are also far higher in most of Europe: the UK has just 280,000 heat pumps installed, France 3.1 million and Norway 1.3 million1. Had the UK already installed heat pumps at Estonia's rate per 100,000 people, domestic gas use would be 107TWh, or 34%, lower than in 2021, and gas imports in 2021 could have been cut by a fifth (19%)1.
"Octopus Energy and Halifax recently announced a new pilot scheme that would see Halifax mortgage customers offered air source heat pumps for as little as £2,000 fully installed"
The ECIU also reports that global growth in the heat pump market in 2021 was the highest on record at 13%, with sales growing by 15% in the US and 35% in the EU1. In Estonia, heat as a service, where consumers rent heat pumps for 10 to 15 years and so avoid upfront and maintenance costs, drew demand from 20% of consumers against predictions of 5%, four times higher than expected1. Polling for the ECIU earlier in the year found that one third of the British public would be more likely to get an electric heat pump to help insulate the UK from Russia interfering in the gas market1.
Why it matters for households
For a Halifax mortgage customer, the pilot as described puts the upfront cost of an air source heat pump at £2,000 fully installed, against the £5,000 Boiler Upgrade Scheme grant available for air source units and the £6,000 for ground source1. The cost of a heat pump is the main barrier the ECIU identifies in the UK's low installation rate, and the pilot is one of the business models it cites as an alternative to paying the full price upfront1. A home that runs on a heat pump rather than a gas boiler draws less gas, and the ECIU's central claim is that national deployment at Estonian rates would have cut UK gas imports by a fifth1. That is a national figure, not a household one, and the ECIU gives no per-home running cost comparison for the pilot.
What happens next
The Boiler Upgrade Scheme runs until April 20251. No end date, expansion or application process for the Octopus Energy and Halifax pilot has been reported1.