Heat pumps are currently the best low-carbon option for heating the majority of homes. They are highly efficient, use electricity which is increasingly generated from renewable sources and can be adapted to heat almost all homes effectively.

However, heat pumps are currently expensive, which makes them unaffordable for many households. This is a major barrier to their widespread adoption. Although the cost varies depending on the type of home, our analysis shows that the two most important areas to focus on when it comes to cost reduction are installation and running costs.

Our research shows that it would take only relatively modest changes to make heat pumps competitive on price. We modelled the impact of three changes and found that it would be possible to bring the whole life cost of a heat pump much closer to that of a gas boiler.

This is where the market matters. Manufacturers and heating engineers need to focus on increasing the efficiency of heat pumps in homes which should be backed up by government action on the cost of electricity and gas to make heat pumps more affordable to run. The UK will need a lot of new, highly skilled installers to reach government’s targets and reduce costs. By removing VAT on home retrofits, the cost and complexity of installing heat pumps and other energy efficiency measures would be reduced, creating a clear pathway to achieving the UK’s emission reduction goals.

Our work outlines the key challenges, contexts, methods of research, actual costs and recommendations for reducing the price of heat pumps in the UK.