Heat pumps offer £22.5bn economic boost

UK: Electrifying home heating, primarily through hydronic heat pumps, could increase total GVA from residential heating by 85% to £22.5bn by 2035, according to a new report.

With the UK government urgently seeking opportunities to boost economic growth, the new analysis by the Heat Pump Association UK (HPA UK) finds that the transition to low carbon residential heating represents a significant economic, employment and energy security opportunity.

The report – From Carbon to Competitiveness: The UK Opportunity Associated with Decarbonising Residential Heating – models the impact of accelerating the deployment of decarbonised heating in line with the ambition set out in the government’s Carbon Budget and Growth Delivery Plan for 2025-2035. It finds that electrifying home heating, primarily through hydronic heat pumps, could increase total gross value added (GVA) from residential heating from £12.2bn today to £22.5bn by 2035.

Heat pump manufacturing, installation, worth £1bn to the UK economy in 2025, would have the opportunity to rise to £15bn by 2035, the report claims. In addition, heat pump related employment could grow by over 110,000 full-time equivalent jobs by 2035.

Gas demand could also fall by 63TWh between 2025 and 2035, the report states, saving enough energy to run the London Underground for 75 years.

There are also public health benefits: a projected 6% reduction in overall UK air pollution by 2035 as fossil fuel boiler numbers decline, and carbon abatement from the rollout of heat pumps could reach 17MtCO₂e annually by 2035.

“Today’s findings show that decarbonising residential heating should not be viewed as a cost burden, but a major economic opportunity,” commented HPA UK’s chief executive Charlotte Lee. “Heat pumps can drive billions of pounds in growth, support tens of thousands of skilled jobs across the country and strengthen the UK’s energy security by reducing reliance on imported gas. With the right long term policy clarity, the UK can build a world-leading heat pump industry, grow our domestic manufacturing, and deliver cleaner, healthier homes for millions of residents.”

Chris Galpin, an energy advisor at climate think tank E3G, said “Modernising Britain’s homes will make them warmer, more comfortable, and cheaper to heat. But it also has the potential to add billions to the UK economy. The UK should stop overtaxing electricity to unlock billions more in additional investment towards these bill-saving home upgrades.”

Garry Felgate, chief executive of the MCS Foundation, added: “MCS data shows that a record number of certified heat pumps are being installed across the UK. The analysis released today adds an additional layer to an already positive story – the boom in renewables is boosting well-paid jobs, driving the green economy, and providing efficient, affordable, fossil-free heating for households. To further enhance this trend, it is critical the Government reduce disproportionately high electricity prices. Doing so would maximise the economic opportunities and ensure households see the full benefits of savings on their energy bills.”