Clean Heat Market Mechanism to incentivise heat pumps

[LnP]

 

The government has published its response to its consultation document on the Clean Heat Market Mechanism. The original consultation is here.

Targets for generating or acquiring heat pump credits for the first two years of the scheme will be 4% of a manufacturer’s relevant fossil fuel boiler sales for April 2024 to March 2025 and 6% of relevant sales for the following year. A tradable heat pump credit will be earned by a heat pump manufacturer upon the installation of a qualifying domestic-scale hydronic heat pump. Boiler manufacturers will have to pay £3,000 for every boiler they sell above the target.

 

This will have an impact on the up front purchase price decision whether to buy a heat pump or a boiler. But it might be more effective in incentivising people to choose heat pumps, if they were to break the current relationship between the price of gas and electricity, to reduce the relative running costs of heat pumps? Interested in thoughts ...

 

Edited December 1, 2023 by LnP

[Roger440]

37 minutes ago, LnP said:

 

The government has published its response to its consultation document on the Clean Heat Market Mechanism. The original consultation is here.

Targets for generating or acquiring heat pump credits for the first two years of the scheme will be 4% of a manufacturer’s relevant fossil fuel boiler sales for April 2024 to March 2025 and 6% of relevant sales for the following year. A tradable heat pump credit will be earned by a heat pump manufacturer upon the installation of a qualifying domestic-scale hydronic heat pump. Boiler manufacturers will have to pay £3,000 for every boiler they sell above the target.

 

This will have an impact on the up front purchase price decision whether to buy a heat pump or a boiler. But it might be more effective in incentivising people to choose heat pumps, if they were to break the current relationship between the price of gas and electricity, to reduce the relative running costs of heat pumps? Interested in thoughts ...

 

 

Worcester have already announced had they plan to spread that 3k accross everything they sell. I think smeone posted there press release on here. The jist was, there insufficent demand for heat pumps to make a credible business.

 

Sounds like a another bunch of reasons that will stop anything other than a full priced (overpriced) tax payer funded bodge job. Ie, no DIY. Because it cant be "verified" as a qualifying installation. Indeed, i suspect, and logically it must, lead to heat  pumps only being available to professionals who can produce the necessary paperwork to back it up.

 

Maybe im too cynical????

 

Looks like another oil boiler for me.........................................

 

Edited to add, they are not going to break the price link. Way to much money being made.

Edited December 1, 2023 by Roger440

[nod]

It’s all good 

But a long way off no gas boilers in new builds by 2025 that many on here where convinced would happen 

Totally unrealistic 

Wonder how many of the new pledges will actually happen I suspect the ones that bring in more tax revenue 

 

 

 

I

[ProDave]

I am not convinced these "credit" market things do anything more than create some non productive jobs to move some money and bits of paper around a system so some companies can claim to be smug and "met targets"

 

The fact we seem to be "solving" the problem with schemes like this gives me little hope that we will ever actually solve the real problem.

[Beelbeebub]

I've previously suggested putting the extra £2.5k towards a "price guarantee" subsidy.

 

Scheme would be open to anyone (even self installs) as long as they have a smart meter and a smart heat meter (provided by energy company) fitted.

 

The heat meter would work out the heat delivered and hence the cost of that heat if delivered via gas. It would then deduct the difference between that and the price of electricity from the customers bill. In effect guaranteeing that the customer never pays more than gas for (say) 5 years. The scheme would then taper off over the next 5.

 

Combined with the £5k subsidy off the install this would make an install about the same as a gas boiler replacement. Therenwouod he less need for the rad upgrades upfront as the subsidy would take care of any underperforming. It would give 5 years to bring the system up to parity with gas (and grants would be available for that eg radiator scrappage schemes).

[nod]

I should t complain £7500 towards a H P is a real bonus 

 

I a friend who owns a company with over a 100 plumbers and heating engineers working for him 

When I asked him if he was gearing up to boilers being fazed out Like others he said Nah it will never happen 

[Beelbeebub]

47 minutes ago, nod said:

I should t complain £7500 towards a H P is a real bonus 

 

I a friend who owns a company with over a 100 plumbers and heating engineers working for him 

When I asked him if he was gearing up to boilers being fazed out Like others he said Nah it will never happen 

Yeah, but the restrictions to get the £7.5k mean the consumer often still pays more than just swapping to a new boiler.

 

New DHW tank, some new pipework, new rads etc. quickly eats up the subsidy.

 

And there is still the fear that the running costs will be higher anyway.

 

This would remove that and allow the install to be more minimal. After a season of running, guaranteed to be no more.esoensice than gas, a better assessment of what needs doing *in light of actual experience* can be done. Some upgrades carried out (say new rads), then try again and so on.

 

You'd still get a 5k subsidy on the install (at least). But you'd also get the security of no higher bills for 5 years.  The money for the subsidy would be collected from the gas bills (which would reduce the difference and also the amount of subsidy required!)

Edited December 2, 2023 by Beelbeebub

[nod]

55 minutes ago, Beelbeebub said:

Yeah, but the restrictions to get the £7.5k mean the consumer often still pays more than just swapping to a new boiler.

 

New DHW tank, some new pipework, new rads etc. quickly eats up the subsidy.

 

And there is still the fear that the running costs will be higher anyway.

 

This would remove that and allow the install to be more minimal. After a season of running, guaranteed to be no more.esoensice than gas, a better assessment of what needs doing *in light of actual experience* can be done. Some upgrades carried out (say new rads), then try again and so on.

 

You'd still get a 5k subsidy on the install (at least). But you'd also get the security of no higher bills for 5 years.  The money for the subsidy would be collected from the gas bills (which would reduce the difference and also the amount of subsidy required!)

I couldn’t fit a boiler for what I’ve to pay towards a HP

 

The HP company said they rarely swap a boiler for a HP As most people expect there bills to be reduce 

Which is unlikely 

[Roger440]

3 hours ago, Beelbeebub said:

Yeah, but the restrictions to get the £7.5k mean the consumer often still pays more than just swapping to a new boiler.

 

New DHW tank, some new pipework, new rads etc. quickly eats up the subsidy.

 

And there is still the fear that the running costs will be higher anyway.

 

This would remove that and allow the install to be more minimal. After a season of running, guaranteed to be no more.esoensice than gas, a better assessment of what needs doing *in light of actual experience* can be done. Some upgrades carried out (say new rads), then try again and so on.

 

You'd still get a 5k subsidy on the install (at least). But you'd also get the security of no higher bills for 5 years.  The money for the subsidy would be collected from the gas bills (which would reduce the difference and also the amount of subsidy required!)

 

All that will happen is the installers will do a worse job. Because if it costs a fortune to run, who cares? No comeback. All paid for by someone else (us) Harvest the subsidy and run for the hills.

 

I dont think your idea is grounded in reality.

 

The wheels will come off heat pump installation as soon as the first blackouts occur. Surely, only a matter of time? 

 

 

 

[magnayn]

The government is so terribly good at solving things with targets. Ask them how their smart-meter rollout targets are doing..

 

As you say - simply address the price ratio between gas and electricity and the market will solve it itself.

 

Like all these tinkerings, I expect massive unintended consequences.

[Beelbeebub]

12 hours ago, nod said:

I couldn’t fit a boiler for what I’ve to pay towards a HP

 

The HP company said they rarely swap a boiler for a HP As most people expect there bills to be reduce 

Which is unlikely 

This makes my point.

 

You've be guaranteed that the install wouldn't cost more for at least 5 years (or whatever the period is).

 

5k will pay the majority of the purchase price of a HP unit. 7.5k would pay for some of the extras as well.

 

A boiler swap typically costs 2k, so that could cover a number of rad swaps, a bit of pipework etc.

[Beelbeebub]

10 hours ago, Roger440 said:

 

All that will happen is the installers will do a worse job. Because if it costs a fortune to run, who cares? No comeback. All paid for by someone else (us) Harvest the subsidy and run for the hills.

 

I dont think your idea is grounded in reality.

 

The wheels will come off heat pump installation as soon as the first blackouts occur. Surely, only a matter of time? 

 

 

 

Poor installation is the major problem with HPs.

 

The thing is with this system is you'll also have a reall good record of performance tied to the installer.  Should help root out the real cowboys.  In addition, rather than just a single "one hit" install like now, which is super dependent on the single installer, you would have a phased install over several seasons (possibly using dofferent installers) as the system is progressively upgraded (rads etc) to break even.

 

And as for the very common "heatpumps don't work in a power cut argument".... How well does you combi boiler work in a power cut?

[JohnMo]

16 hours ago, nod said:

I couldn’t fit a boiler for what I’ve to pay towards a HP

 

The HP company said they rarely swap a boiler for a HP As most people expect there bills to be reduce 

Which is unlikely 

We have had -7 degs for the last 12 hours and it's not going above -5 degs 

until around midnight. We had a CoP just under 3 overnight. Heating has been off since 08.20 as house was up to temp. All the heating and DHW was heated at 15.16p per kWh. So gas would have to be under 5p per kWh to be cheaper but it costs 7p.

 

So no reason a heat pump cannot be cheaper than gas. Plus I was running the heat pump yesterday afternoon for free - as we were generating over 3kW for a few hours

 

3 hours ago, Beelbeebub said:

And as for the very common "heatpumps don't work in a power cut argument".... How well does you combi boiler work in a power cut?

All heating is off unless you have a battery or generator, doesn't matter if it's gas or electric (unless it's a charged up storage heater)

[Mattg4321]

To be fair a gas boiler would run for hours, or probably days, on battery using an Inverter with island mode. A HP would deplete a domestic battery fairly rapidly. 
 

I’m all for cutting pollution and would fit a HP in place of my gas boiler, but would rather have a backup supply of heat for if (when?) the grid fails. Will be keeping my gas fire and would consider a log burner if not. I don’t like sitting in the cold, especially when it’s due to the £@&&wits in charge and their half baked, short term plans and targets. 

Edited December 3, 2023 by Mattg4321

[JohnMo]

3 minutes ago, Mattg4321 said:

be fair a gas boiler would run for hours on battery using an Inverter with island mode. 

We've got a generator - got it prior to the heat pump, but it runs the heat pump with no issues.

[Mattg4321]

8 minutes ago, JohnMo said:

We've got a generator - got it prior to the heat pump, but it runs the heat pump with no issues.

Running a heat pump with a fossil fuel generator sort of defeats the object though!! Ok for very sporadic use I guess!

[JohnMo]

21 minutes ago, Mattg4321 said:

Will be keeping my gas fire and would consider a log burner if not.

No worse than the above options.

[Mattg4321]

1 minute ago, JohnMo said:

No worse than the above options.

Agreed in terms of pollution, but the above are more convenient in that you don’t need a supply of petrol/diesel that is liable to go off if not used in fairly short order.

 

A problem a few of my customers have had after I’ve wired in a generator hook up and change over switch for them. 

[Iceverge]

13 hours ago, magnayn said:

The government is so terribly good at solving things with targets. Ask them how their smart-meter rollout targets are doing..

 

As you say - simply address the price ratio between gas and electricity and the market will solve it itself.

 

Like all these tinkerings, I expect massive unintended consequences.

 

Completely agree.

 

Targets are the "wish it and it'll come true" equivalent for politicians. 

 

 

 

 

Plain A2A heat pumps were excluded. 

 

They are the cheapest form of heat pump and can readily deliver a COP of 4 or 5 for £1500 installed or £37B for the UK. 

 

You could just bolt one into the hallway or living room or every house and let them accommodate the "base load" of house heating with exiting gas to top the heating. 

At a grid CO2 of about 200gCO2/kWh and a gas boiler CO2 of about 300g/kWh with a COP of 4 you could would have heat in your house with an A2A HP at 50g/CO2. 

Even if you shifted half of your energy use to the A2A you would take your CO2/kWh from 300g/Kwh to 175g/kWh of CO2. 

 

 

A 42% reduction in household CO2 emissions for less than the cost of Hinkley point C.  

 

 

Yeah, lets exclude that. 🤪

 

 

 

 

 

 

 

 

 

 

[magnayn]

16 minutes ago, Iceverge said:

 

 

Plain A2A heat pumps were excluded. 

 

They are the cheapest form of heat pump and can readily deliver a COP of 4 or 5 for £1500 installed or £37B for the UK. 

 

 

I know. Completely maddening. We should be gunning for A2A in the places where it's obviously the simplest option - such as many flats.

 

But. IMO, we have an industry shilling for complexity. Experts such as, umm, ahem, geat heek, continue to make bizarre claims like "oh the SCOP on A2A is not as good and it's hard to calculate". It seems completely self-evident that a system exchanging heat into water, then exchanging that again into air is going to be more lossy than one that skips out the middle man.

 

I look at these 'highly efficient heat pump hot water tanks" that cost £1,600 for the tank alone, and my ears prick up when they debug bad installations and just side-mention "oh, of course these things need annual maintenance" and can't help but conclude that for many, an electric shower is like £100 from screwfix, and they could replace it every single year and /still/ end up ahead, and not have to find space they may not have to put a giant tank.

 

We seem completely trapped. On one end we've the zealots, making wild claims about the universal suitability of heat pumps in retrofit because you'll "definitely save money" (who variously ignore installation costs, or maintenance costs, or the gas/electric price ratio, or the fact that low temperature systems tend to run 24/7 and end up emitting about 7% more heat, or that A2W installs seem to be supremely sensitive to very narrow design parameters). We've the grant-harvesters and training industry, who _like_ it complicated so they can sell their services and won't recommend anything that doesn't line their pockets. And at the other end we have the "heat pumps don't work" crazies with their "don't work in cold climates" nonsense -- of course unfortunately they don't have to go too far to find horror stories. I think many are just angry about net zero, and it's all just a proxy fight for them.

 

Here on planet earth, the majority simply want warm homes and hot water at the lowest cost over the medium term, and frankly everything else comes a distant second. They are not interested in having to tweak weather compensation curves to avoid crazy bills, or constantly tinkering with their system, or endless costs in maintenance. They also don't really want ugly, possibly noisy fan units and large water tanks - but will likely put up with them if it achieves Job #1.

 

There's a complete dearth of honest brokers. The government could, say, pay for home surveys that gathered up all the information to act as an entry-point into system design for the various options - A2W, A2A, (which could include "not worth it _yet_"). You could then have a tender process where suppliers could bid for the work. You could even use a scheme to underwrite the running costs -- effectively guarantee to the householder that they will come out no worse off. Or, really, just make gas pricier.

 

Taxing boilers in this way just strikes me will lead to bad outcomes -- like: old, non-condensing units being patched up because it being too expensive to swap; boiler imports (boiler gangs across the NI/ROI border anyone?); a healthy "buy all the components of a boiler as parts" and who knows what inventive circumventions will materialise. But I doubt it will move the retrofit market one iota.

[sharpener]

6 hours ago, Beelbeebub said:

And as for the very common "heatpumps don't work in a power cut argument".... How well does you combi boiler work in a power cut?

 

3 hours ago, JohnMo said:

All heating is off unless you have a battery or generator, doesn't matter if it's gas or electric (unless it's a charged up storage heater)

 

Planning to keep our AGA and WBS for exactly this reason. Existing 10kWh of Pylontech will keep the oil boiler running for a bit but would last no time once 12kW Arotherm Plus is installed (hopefully spring 2024), so it will go on the grid side of the inverter metering.

 

[Beelbeebub]

1 hour ago, Iceverge said:

 

Completely agree.

 

Targets are the "wish it and it'll come true" equivalent for politicians. 

 

 

 

 

Plain A2A heat pumps were excluded. 

 

They are the cheapest form of heat pump and can readily deliver a COP of 4 or 5 for £1500 installed or £37B for the UK. 

 

You could just bolt one into the hallway or living room or every house and let them accommodate the "base load" of house heating with exiting gas to top the heating. 

At a grid CO2 of about 200gCO2/kWh and a gas boiler CO2 of about 300g/kWh with a COP of 4 you could would have heat in your house with an A2A HP at 50g/CO2. 

Even if you shifted half of your energy use to the A2A you would take your CO2/kWh from 300g/Kwh to 175g/kWh of CO2. 

 

 

A 42% reduction in household CO2 emissions for less than the cost of Hinkley point C.  

 

 

Yeah, lets exclude that. 🤪

 

 

 

 

 

 

 

 

 

 

Yeah, government targes and subsidy schemes do distort markets.

 

Whilst I agree that A2A units are being unfairly marginalised given their potential, I can see the reasoning as to why they were excluded - at least when the system was set up (basically it would have been used to install summer cooling and make co2 emissions worse).

 

Of course now, the situation is different - summer cooling might be useful for brief periods, and newer technologies like low GWP refidgerant mean installing lots of A2A units.mught not be such a bad thing now.

[Beelbeebub]

5 minutes ago, magnayn said:

It seems completely self-evident that a system exchanging heat into water, then exchanging that again into air is going to be more lossy than one that skips out the middle man.

I would say it's not quite that simple.

 

The efficiency is governed by the temperature lift.  

 

Th heat output a given emitter is (crudely) the effective area x the temperature.

 

A2A units use fan coils. If the refidgerant temp to get a given heat output is higher fornthr fancoil than it would be for the refidgerant in a plate heat exchanger feeding a UFH system, then the fan coil will be less efficient.

 

Though the complexity will be less.  But then you have to deal with high pressure refidgerant lines through the house which may be more problematic Vs low-pressure water.

 

All that said, a2a is an avenue we should be using more, especially for flats (though it does mean lots of boxes on buildings)

[Beelbeebub]

8 minutes ago, sharpener said:

 

 

Planning to keep our AGA and WBS for exactly this reason. Existing 10kWh of Pylontech will keep the oil boiler running for a bit but would last no time once 12kW Arotherm Plus is installed (hopefully spring 2024), so it will go on the grid side of the inverter metering.

 

True, but then you are comparing a heat pump against a boiler and a home battery system worth several £k

 

It's only really possible to make that argument as a negative is you already have a battery and a boiler and are thinking of switching to a HP.

 

If you don't already have a battery (which is the majority), then you will be no worse off with a HP Vs a boiler.

 

Even with a battery a 10kw unit will power a 7kw HP for several hours flat out. Sure if you get a 24 hour or longer power cut you're in trouble, but how common are they?

[Beelbeebub]

34 minutes ago, magnayn said:

You could even use a scheme to underwrite the running costs -- effectively guarantee to the householder that they will come out no worse off. Or, really, just make gas pricier.

Yup.

 

The reason we are doing all of this is to reduce co2 (as a nation).

 

All but the most cackhanded installations will do this. Even a rambling old farm house with no insulation and tiny radiators will emit less co2 using a HP than a gas boiler (or more likely the old oil boiler)

 

So the only stumbling block is the current disparity between gas and electric unit prices.  Part of that disparity is technical. Generating electricity from gas uses about 2.5 times as many kWh of gas per kWh of electricity so the base difference if all our electricity came.from gas wouod be 2.5x (plus capitao costs).

 

But we don't generate all our electricity from gas and our differential is more like 3.9x

 

Which is down to government policies.

 

Them government could change the energy market policies tomorrow and drop the price differential to 2.5 or even lower. At which point tge cast majority of HP installs would be cheaper than gas.