Octopus Energy CEO lays out roadmap for £1,000 heat pumps: ‘Much cheaper!’

What is the £5000 boiler heat pump payment?

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Heat pumps play a crucial role in the Government’s Energy Security Strategy to boost the UK’s energy independence and fulfil its climate targets.  But given that they can cost up to £10,000 at market price, many households cannot afford to replace their gas boilers. Prime Minister Boris Johnson rolled out the Boiler Upgrade Scheme, which offers up to £5,000 in subsidies to install a new heat pump.

But despite this support scheme, many households have still found heat pumps to be prohibitively expensive, with some even being quoted £16,000 for installing a replacing their gas boiler. 

Speaking to Express.co.uk, Mr Jackson said: “We have got to become appealing for day-to-day use for typical British homes.

“Heat pumps are getting there, and as we install more they’ll get cheaper.”

The UK’s push to install heat pumps through the Boiler Upgrade Scheme is set to be followed by a ban on the sale of new gas boilers from 2036, as part of the Government’s net-zero pledges.

Mr Jackson noted that in order for heat pumps in the UK to be widely rolled at the same cost as boilers, a few things need to happen.

He said: “First of all, the hardware needs to get cheaper, today a typical heat pump unit costs about £3,000. 

“We feel we can get that price down to not much more than £1,000.

“We will get the hardware [price] down by a factor of three, with volume, and these are going to be better heat pumps, and cheaper.”

He also noted that the installation process for a new heat pump, needs to get much smoother, as it currently takes “a couple of guys, three or four weeks” to install a heat pump.

He added: “We need to get to a point where we can install a heat pump with two or three guys, in two or three days.

“Our aim is to get to same-day installation over time.

“Last thing is that we need to get running costs down. 

“Now that gas costs so much more, a heat pump is actually cheaper to run typically than a gas boiler. 

“As the differentially between gas and electricity starts to open, we’ll see that heat pumps start to get cheaper and cheaper to run.” 

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Meanwhile, the Government is currently mulling over plans to sever the link between the prices of gas and electricity for consumers, a move which Mr Jackson believes will reduce costs even further. 

He said: “At the moment the electricity price in the market is quite high, even though so much of it comes from renewables because gas sets the price points.

“The Government has said that they’re going to find ways to decouple electricity prices from gas prices. 

“What that means is that over time heat pumps will get much cheaper to run than gas.” 

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