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Ministers are considering funding energy bill discounts for UK heat pump owners as they try to get more households to install the devices to help cut carbon emissions.
Plans are being debated for a scheme under which households with heat pumps would not have to pay “green levies” on the electricity they use to run them, according to government and industry sources.
Replacing gas-fired boilers with heat pumps is considered key to Britain’s climate goals but households only installed about 60,000 last year, well below the annual target of 600,000 by 2028 put in place under the former Conservative government.
Heat pumps run on electricity, which in Britain is increasingly supplied by renewable sources, and are highly efficient.
But barriers include the upfront costs, as well as the cost of electricity, which for households in Britain is four times more expensive than gas, partly due to charges added to electricity bills to support wind and solar farms.
The idea of a “Clean Heat” discount on bills would mitigate any cuts to heat pump subsidies in next week’s government spending review if — as expected — chancellor Rachel Reeves retreats from a Labour manifesto pledge to spend an extra £6.6bn on the Warm Homes energy efficiency programme.
But the proposal has run into opposition among industry figures who fear it may not last long enough to give households confidence to invest in greener technology. Instead they favour removing levies from household electricity bills completely.
Bringing down electricity prices was “the single most important mechanism” in boosting the take-up of heat pumps, said Adam Berman, policy director at trade group Energy UK.
“Rebalancing these costs is crucial to driving the decarbonisation of homes. But there is widespread concern in industry about a clean heat tariff solution which raises fundamental questions of fairness and longevity.”
Ben Westerman, director of policy and advocacy at campaign group Electrify Britain, said: “This risks only benefiting households who can already afford heat pumps. These benefits should be accessible to everyone.”
The vast majority of Britain’s homes run on gas-fired boilers — which are responsible for more than 15 per cent of the UK’s greenhouse gas emissions. That needs to change if the country is to meet its targets of cutting overall emissions by 81 per cent by 2035 and to net zero by 2050.
Campaigners have for a long time urged the government to move the green levies off electricity bills and on to either gas bills or general taxation, but ministers are wary. The proposed Clean Heat discount is an attempt to make heat pumps cheaper to run without removing levies from electricity entirely.
Industry and government projections estimate the proposal could cost high tens to low hundred of millions per year, meaning it would need to be approved as part of next week’s government spending review.
Details are still being debated, however, with one industry source saying moving the levies on to gas bills has also been discussed.
The Department for Energy Security and Net Zero said no decisions had been made.
“This is speculation. We are exploring a range of options for rebalancing gas and electricity prices — with securing better outcomes for consumers at the heart of our approach, and will set out further details in due course,” it said.
