Another U-Turn - Clean Heat Market Mechanism

Thomas Farquhar, Heatio Co-founder & Chief Commercial Officer responds to the delay of The Clean Heat Market Mechanism: The government’s Clean Heat Market Mechanism (CHMM) was a proposal to increase competition and drive down prices for clean heat technologies such as heat pumps.

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From late last year, the government said to all boiler manufacturers that heat pumps should account for at least 4% of sales made in 2024. Failure to do so would result in a £3,000 fine per unit. With more than 1.7 million fossil fuel boilers being fitted each year, it would have made an immediate positive impact.

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Yet, in reality, all that happened is that the industry took a lazy approach and, rather than taking action, called it a “boiler tax”; immediately passing higher prices onto the consumer.  At the same time, the boiler and fossil fuel industry fuelled a campaign of misinformation around heat pumps, saying they weren’t fit for purpose, inefficient, noisy and expensive – all untrue.

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This negative prejudgment has been further amplified by UK media outlets with headlines like ‘Why heat pumps will never work in Britain’ and leading industry figures having public debates on whether your home “is suitable for a heat pump”. There’s a lot of disinformation. Heat pumps have been around for years, we all have a heat pump in our car and use it when we turn the air conditioner on. Nobody questions how the food in their fridge stays cold, and that’s a heat pump. But when we approach using heat pumps for heating a home, they assume it wouldn’t work. A heat pump is nothing more than a very efficient electric boiler, but people’s view is that they don’t heat homes as effectively.

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Low carbon heat pumps are 300-400% more efficient than gas boilers. Yet, in the UK we are addicted to cheap gas and so are still fitting 1.7 million boilers every year, and only 45,000 heat pumps. That heat pump figure needs to go up to 600,000 installations a year in the next five years.

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Compare this to countries with -20 °C winters like Norway where they’ve already installed heat pumps into 66% of homes. We’ve always had an abundant supply of cheap gas in the UK, we’re very resistant to change compared to other countries, and therefore we’ve got quite a steep curve to go. Europe has already made the switch and so isn’t as affected by the price hikes. Instead, our European neighbours are selling gas to us while wondering what the hell we’re doing in the UK, complaining of high gas prices while families can’t afford to heat their homes. In October 2023 the number of UK households in fuel poverty rose to 6.3 million.

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The clean heat market mechanism would fast-forward progress in the right direction, but instead, we are kicking the can down the road. It is the opposite of a groundswell; people in the low-carbon industry are making the changes, despite the best efforts of fossil fuel lobbyists, yet the consumer at the bottom are still scratching their heads as they are completely confused about what to do and install in their homes.

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That is why at Heatio we are on a mission to support the consumer by removing the barriers to installing efficient heat pumps, solar panels and batteries through a simple, accurate app showing consumers what is happening in their homes and what to install, supported with innovative green finance solutions to remove the financial barriers - so that everyone can afford to heat their homes and reduce their energy bills.

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