Domestic heat pump installs have trebled since 2022

Monthly demand for Heat Pumps has trebled since 2022 - and is set to soar in 2025.

Our analysis shows Air Source Heat Pump (ASHP) installations have seen a 3x increase in monthly installs since 2022. After a significant peak and drop when the Renewable Heat Incentive (RHI) scheme closed in 2022, demand has recovered strongly and continued to grow.

The Boiler Upgrade Scheme (BUS) launched in 2022 has incentivised ASHPs by providing funding to replace gas boilers with renewable heating. However, BUS redemptions account for only ~40% of total installs - most installations are not funded by this scheme.

There is strong demand coming from New Builds, which is set to increase significantly in 2025 with the implementation of the Future Homes Standard. This new standard will drive further adoption of low-carbon heating solutions like heat pumps in residential construction.

Heat pumps drive cheaper bills, but costs per kWh are higher

Our visual demonstrates the cost pathway of switching from a gas boiler to an air source heat pump.

Air Source Heat Pumps (ASHP) could lower energy bills

• Customer savings are in part due to avoiding the gas standing charge; but critically depend on the difference between the efficiency of the existing gas boiler and the heat pump’s Coefficient of Performance (COP).
• A customer replacing a gas boiler with an ASHP pays more per kWh - but uses much less energy.

Example for a typical customer

• A customer replacing an average boiler (85%) with an ASHP with COP of 3 would pay around the same each year on energy. However, as shown on the chart, higher COP values (e.g. 3.2) would result in lower annual energy bills.

Cost challenges and incentives

• For most customers, these savings are outweighed by the capital costs of installing an ASHP because gas is not fully cost reflective – even after factoring in the cost of a new boiler if required.
• Options to rebalance gas/electricity costs have been debated with no movement: including policy cost removal from electricity, moving to general taxation, or including a cost of carbon in household gas usage. However, it’s acknowledged that each of these will create winners and losers; the latter option especially risks worsening fuel poverty for the most vulnerable households.

Get our full ASHP report

Our full ASHP insights report explores key developments shaping the future of heat pumps in the UK, including:

• The UK Government’s projection for 30 million homes to adopt air-source heat pumps by 2050
• A declining electricity-to-gas price ratio (~3.9), strengthening the case for electrification
• Supplier tariffs designed to reduce the running costs of ASHPs

To request the full report, contact Matt Turner-Tait.