Hannah Audino, Buildings Decarbonisation Lead at the Energy Transitions Commission
Heat pumps are the core of decarbonising the UK’s building stock. Their superior efficiency means they require 3-4 times less energy than gas boilers and electric resistive heating and can deliver clean heat and comfort to households, with the potential to lower energy bills.
Deployment has remained stubbornly low and far behind European peers – but is the tide starting to turn? In March, a record 4,000 applications were submitted for the government’s grant for £7,500, which can meet 60-95% of the cost of buying and installing a heat pump. This reflects a loosening of requirements for cavity wall and loft insulation, and a relaxation of planning policy to allow installation within one meter of a neighboring property. These are welcome developments; deep insulation is not essential for heat pumps to provide equivalent heat and comfort as a gas boiler – the Energy Transitions Commission’s report, Achieving Zero-Carbon Buildings, busts this myth.
But we are far from where we need to be. Buildings account for 40% of the UK’s carbon emissions. To meet the government’s target of reducing emissions by at least 68% by 2030 (compared to 1990 levels), it is targeting 600,000 installs a year by 2028 – that’s a 10-fold increase from today.
This is achievable – but with less than three years to go, policy needs to act fast. There are five key priorities.
Firstly, the government must provide investment certainty. The Future Homes Standard – regulations on “zero-carbon ready” new buildings – was due to come into effect in 2025 but is still yet to be announced. The government should announce an immediate ban on gas boilers in new homes, and a ban on their sale in existing buildings from 2035. This is critical to scaling the heat pump market, lower upfront costs and build local supply chains and skills.
Secondly, it is imperative that gas and electricity prices are rebalanced to actively incentivise heat electrification. In the UK, a kWh of electricity costs four times more than a kWh of gas, virtually eroding the efficiency benefit of heat pumps on energy bills. In comparison, in Norway and Finland, gas and electricity cost virtually the same; as a result, there are 50-60 heat pumps installed per 1,000 households a year, compared to less than 5 in the UK.
A two-pronged approach is needed. The government must remove levies which are currently disproportionately applied to electricity; revenues from carbon pricing can compensate. Alternatively, they can be passed – gradually – onto gas, with revenues used to finance heat pumps for lower-income households. This must be underpinned by a well-designed power market that ensures electricity prices better reflect the proportion of low-cost renewables installed on the UK’s grid.
Thirdly, the government must continue to fund its heat pump and energy efficiency grants beyond 2026. Over the medium-term, subsidies should target lower-income households. For other households, the government should offer low-cost finance at zero-interest rates. Banks also have a role to play through mortgage top-ups at favourable rates; there is increasing evidence that heat pumps and energy efficiency improvements augment a property’s value.
Fourth, a coordinated and locally led approach is needed, involving local government, energy and network companies, and businesses. Street-by-street decarbonisation strategies can coordinate upgrades to local distribution networks, invest in local skills, and serve as a one-stop-shop to streamline installation. Crucially, they should identify where networked ground-source heat pumps can be deployed; these are 4-5 times more efficient than gas boilers, serve entire blocks of flats or streets, and are financed by the private sector (repaid through a standing charge) and so reduce the upfront cost for households.
Finally, one of the biggest challenges is incentivising landlords to install heat pumps instead of resistive heating; heat pumps cost 4-5 times more to install, but cost households 3-4 times less to run. This is imperative both for electricity grids and supporting lower-income households in the transition. The government should implement its proposals to ensure rental properties have a minimum Energy Performance Certificate rating of C by 2030, and provide low-cost finance that is repaid directly through rental income.
It is entirely feasible to fully disconnect the UK’s buildings from the gas grid by 2045, at the latest, while lowering energy bills and improving living standards. But achieving zero-carbon buildings will not be easy – millions of individual households must be incentivized to make changes to their home that, in many cases, have a sizeable upfront cost. This requires strong national ambition, a clear role for the private sector, and unwavering policy.
This article appeared in the June 2025 issue of Energy Manager magazine. Subscribe here.