Fining manufacturers for missing heat pump targets 'will cause price hikes'

Heat pump on grass lawn as part of home eco heating systems
The UK government is introducing fines for companies that fail to increase heat pump production which manufacturers warn will have negative consequences for the country (Image credit: Getty Images)

Manufacturers of boilers have slammed plans for fines for companies that fail to scale up heat pump production.

From next year the UK Government plans to penalise firms that do not meet quotas for heat pump production and installation. Heat pumps are a major part of Whitehall’s plans for net zero.

The UK is lagging behind other European nations in ground and air source heat pump installations, despite schemes to incentivise homeowners to install them.

Why do boiler manufacturers face fines?

In March the Department for Energy & Net Zero launched a consultation on a plan to fine large manufacturers that do not sell enough heat pumps under a new percentage-based sales quota.

Under the scheme, producers will be required to sell heat pumps equivalent to 4 per cent of their gas or oil boiler sales above minimum sales volume baselines and face £5,000 fines for every gas or oil boiler that causes them to fall below that threshold.

The government has allocated £450 million towards its Boiler Upgrade Scheme with the aim of installing 600,000 heat pumps in British homes per year by 2028. 

Fines may cause job losses and price hikes

Manufacturers have criticised the plans, claiming they will result in job losses, price rises for homeowners, and are unrealistic in the face of low demand.

Henrik Hansen, managing director for Vaillant UK & Ireland, which recently invested £4m in a heat pump production line at its Derbyshire factory, told the Financial Times: “Altogether in the UK we employ around 1,000 people. If we start having penalties imposed on us, we will revisit our investment plans.

“We think there is a risk this could not only hold investment but also potentially lead to job losses in Derbyshire.” 

An 'impasse between the industry and Whitehall'

Mike Foster, chief executive of the lobby group Energy and Utilities Alliance, says there is an “impasse between the industry and Whitehall,” claiming: “Whitehall is divorced from how the industry works.”

But the government and environmental groups defended the plans, claiming it will help the UK slash its emissions and insulate it from energy market volatility, as demonstrated by the Russian invasion of Ukraine.

Colm Britchfield, a policy adviser with E3G, an environmental think-tank which manages the Electrify Heat campaign, says the fines will encourage manufacturers to scale up production.

He said: “The fines are at the level they are as you need the costs of compliance to be lower than the cost of non-compliance.”

A spokesperson from the Department of Energy Security and Net Zero said: “We are consulting on proposals to give the industry greater incentive to invest in ways to make heat pumps a more attractive and simpler choice for more UK households.”

The government has introduced heat pump grants in a bid to drive take-up in UK households.

Sam Webb

Sam is based in Coventry and has been a news reporter for nearly 20 years. His work has featured in the Mirror, The Sun, MailOnline, the Independent, and news outlets throughout the world.  As a copywriter, he has written for clients as diverse as Saint-Gobain, Michelin, Halfords Autocentre, Great British Heating, and Irwin Industrial Tools. During the pandemic, he converted a van into a mini-camper and is currently planning to convert his shed into an office and Star Wars shrine.