Behavioural Insights Team and Nesta conduct trial that suggests around a quarter of households could be interested in installing heat pumps even at current high prices

There is potentially huge pent up demand for heat pumps from a substantial market of clean tech ‘early adopters’, according to the results of an experiment carried out by the UK’s Behavioural Insights Team (BIT) that suggested around one in three homeowners are willing to pay extra for a heat pump compared to a conventional boiler.

BITor the ‘Nudge Unit’ as its is less formally knownis operated by the charity Nesta and both united to recently to conduct an experiment to try and gauge how price sensitive UK homeowners are when it comes to installing heat pumps in their property.

In a blog post explaining the experiment, BIT said it surveyed 1,801 UK homeowners who currently use gas boilers as part of an online experiment in December 2021. They were asked to choose between a replacement gas boiler for £2,000 and a heat pump, which was priced randomly between £2,000 and £12,000, inclusive of unit cost, installation, and subsidies.

Researchers found that an early adopter group, representing approximately 25 per cent of homeowners, said they were willing to pay the full current cost of heat pumps of between £10,000 and £12,000, which the authors noted was a “reassuringly high proportion”.

BIT said that was this level of interest to translate into heat pump sales in the coming years, it would result in hundreds of thousands of households adopting heat pumps each year, compared to the 35,000 a year installed at present.

However, the research also identified a bigger group of roughly one in three homeowners, willing to switch to a heat pump if costs could be brought down to around £4,000 to £8,000, which BIT said would be crucial to achieving government targets. 

The government is aiming for 600,000 installations per year from 2028, with around 200,000 of those going into new homes after gas boilers are phased out from new builds from 2025. BIT suggests that, with a few simple assumptions, this means as many as 35 to 40 percent of annual boiler replacements in owner-occupied homes would need to opt for a heat pump. The BIT team said its results suggest meeting the target would require a target cost no higher than between £4,000 and £6,000, which is around half the current market cost of installing a heat pump.

The study also suggested a rump of householders still have little interest in installing heat pumps. A majority of respondents said they would not opt for a heat pump even if they cost the same as a boiler, with people citing concerns over disruption when installing the technology and effectiveness.

“There’s a mix of good and bad news in our analysis,” BIT said. “It looks like there is a substantial group of homeowners who would consider buying a heat pump at today’s prices. There is another group who would be open to a heat pump if the cost falls. But there is also a large group of homeowners who are so far unpersuaded by heat pumps, and who might need more than just cost reductions to make the switch away from gas.”

The latest findings, follows fresh analysis from the Energy and Climate Intelligence Unit (ECIU) showing how a national heat pump and home insulation roll out would cut demand for Russian gas much more quickly than development of new gas fields in the North Sea while limiting energy consumers’ vulnerability to volatile international gas market prices.

Analysis by the think tank suggests the deployment of insulation and electric heat pumps in 6.5 million homes by 2027 could reduce UK gas demand by four per cent, which is roughly equivalent to UK imports of Russian gas.

In contrast, new North Sea oil fields would not shield consumers from volatile international gas prices and would have little short-term impact on the provenance of UK’s gas supplies, given the projects in question would not come online until 2028 at the earliest, it said.

“The net zero path leads us to common sense home insulation and clean, renewable, homegrown energy that enables us to cut dependence on other countries like Russia for gas and oil,” said Dr Simon Cran-McGreehin, head of analysis at the ECIU. “It’s a permanent solution and the UK needs to embrace it with greater urgency if we want to be truly energy secure.” 

Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.

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