A UK energy firm has struck a deal that it says will significantly reduce the cost of heat pumps. Octopus Energy has made a controlling investment in heat pump manufacturer Renewable Energy Devices (RED).
It said that, as a result, it was looking to make heat pumps that are “quiet, highly efficient” and come in a range of sizes to fit different UK homes.
The company said: “When bought with the government’s new Boiler Upgrade Scheme, they will cost about the same as a gas boiler.
“By scaling production, the partners are planning to bring costs down even further, with a view to eliminating the need for government support over time.”
The company also announced plans to incorporate its “smart grid” technology into its heat pumps.
It said: “This will enable the pumps to make the most of spare capacity on the electricity grid and distribution networks, and reduce the load at peak times - and lower running costs for customers.”
Speaking to Express.co.uk, Greg Jackson, founder of Octopus Energy, said: "Heat pumps are already the most energy-efficient way of heating a house and now we just need to make them cheaper. Octopus Energy's investment will help drive the price down, making them more affordable and giving people a choice of how to heat their homes."
In a press release, he added: “This agreement will involve major investments into heat pump manufacturing, creating valuable green jobs across the UK and helping increase our energy security by getting more homes off gas, and drive down costs for customers.
“This is the “Model T” moment for the heat pump industry. Thousands of heat pumps rolling out of RED’s Craigavon factory a month is just the beginning.
“Like the original Ford, we’re planning to scale production every year, cutting costs even further and making heat pumps affordable for everyone.”
In the UK’s recent Energy Security Strategy, the Government announced a roadmap to make the UK self-reliant on energy. Heat pumps play an important role in this plan, with Prime Minister Boris Johnson rolling out a major subsidy scheme to cut the costs of buying a new heat pump in households by half.
At market price, an average energy-efficient heat pump costs nearly £10,000. However, this Boiler Upgrade Scheme (BUS) will offer a limited number of homeowners in England and Wales up to £5,000 to help replace old gas boilers.
This leads up to the government’s net-zero pledges, with a ban on the sale of new gas boilers from 2036. The Government is currently targeting the installation of 600,000 heat pumps every year by 2028.
To accelerate this process and lower the costs of heat pumps, Chancellor Rishi Sunak recently announced that the government is scrapping the five per cent VAT on home energy efficiency technology including heat pumps over the next five years.
