About Nesta

Nesta is an innovation foundation. For us, innovation means turning bold ideas into reality and changing lives for the better. We use our expertise, skills and funding in areas where there are big challenges facing society.

The problem

We know that the high upfront costs as well as a lack of confidence in the technology are two big barriers to heat pump uptake. Group buying has had good success in the UK domestic solar market. For example, the Solar Together scheme has installed 79,500 solar panels in the UK since 2018. Collective switching, when consumers get together to negotiate a group deal with their energy suppliers, has facilitated switching among an older demographic with Ofgem finding that 24% of the switches made through their collective switch trial were by customers over 75 years old. We wanted to explore whether group buying could work for heat pumps in the UK.

We had two main assumptions. Firstly, that the equipment and labour costs of installations could be reduced by economies of scale. Secondly, that installers would feel that the reduced marketing costs for increasing orders in one area would outweigh the downside of offering a discount.

We also identified the potential for peer support as a secondary benefit. Providing some kind of forum for participants to share experiences, ask questions and help each other with troubleshooting might increase their confidence.

What we did

We knew we needed to talk to both heat pump installers and potential customers. Our first task was to map out what participating in this group buying platform might look like. Here’s what we came up with:

To simplify the question of how participants would find the platform, we chose a model where a local authority proactively contacted local residents as part of its plan to tackle climate change.

Mapping the customer journey was pretty straightforward but in doing so we identified the dependencies of the service and gaps to be filled. You’ll see there’s a prominent X in a couple of these stages. This X might well be another organisation, such as a local independent advice service. We didn’t need to answer this definitively.

We also mapped how an auction process might work, with installers competing to offer the best price to a certain customer group. A key consideration was whether it was fair or acceptable for everyone to pay the same price, meaning customers with cheaper or simpler installations subsidising more complex ones in other people’s homes.

Next, we spoke to installers and wholesalers to find out whether a scheme like this was attractive, if economies of scale were possible and what the potential discount might be. We also spoke to an existing group buying platform provider about the attractiveness of the UK heat pump market.

Finally, we held a small focus group with potential customers to understand whether group buying would increase their motivation to get a heat pump.

What we found

Ultimately we concluded that group buying as a model has real potential, but that it’s not something Nesta should pursue ourselves. Why not?

Firstly, we weren’t persuaded that it's our role to compete with existing companies thatoffer group buying. Secondly, we don’t think the heat pump market in 2022 is ready.

On the supply side, installers, wholesalers and existing group buy providers were generally positive about participating and didn’t identify any deal-breaking barriers. With most installers already having busy order books, however, there was a question over whether a sudden spike in demand could be met.

They were confident economies of scale would be possible, suggesting discounts of around 5% from bulk buying heat pumps and related kit such as radiators, piping, etc..

What we learned about labour costs is more interesting. The factors that contribute to the complexity and cost of installations vary significantly from house to house. We were told installers often respond to this uncertainty by quoting a flat rate which is high enough to cover the most complex jobs. This means that packaging similar properties in a local area together could give more certainty of the actual costs. These costs won’t necessarily be lower, but it could reduce the need to over-quote.

We also heard that a lot of current demand for heat pumps comes from highly engaged customers – people who shop around, know exactly what heat pump they want and only that one will do. This might be a more expensive unit than they really need and means installers have to pay for multiple rounds of manufacturer-specific training.

Therefore, a group buying scheme which offered a more standardised package – say, only one heat pump from one manufacturer – could cut costs for customers who were happy with a less bespoke package.

On the demand side, our focus group started from a fairly low baseline of interest. They were positive about group buying, but their expectations of the level of savings were quite unrealistic – suggesting discounts ranging from 25% to 75%.

However, they did spontaneously mention peer support as a potential benefit, to help with choice overload, confidence in a quality installation and coordination. However, this didn’t ultimately outweigh the main barrier of high upfront cost.


We believe group buying has real potential to drive the UK heat pump market and that it is most likely to appeal to less engaged customers who are happy to accept an off-the-shelf package. We think including a peer support element would add value.

However, the wider market needs to shift to the point where costs are already coming down and the number of competent installers is there to meet the demand, before launching such a platform is likely to succeed.