Skip to main content

Heat Pumps Tariff: UK's First Ever Tariff for Heat Pumps to Launch This Autumn

Heat pumps
(Image credit: Getty Images)

Good Energy will launch the UK’s first-ever tariff for heat pumps this autumn, the green energy supplier has announced.

The new tariff will be made available for customer applications around the same time as the launch of the Green Homes Grant - a government scheme commencing in September which will provide homeowners with vouchers up to £5,000 to improve their energy efficiency. These improvements include the installation of heat pumps

Good Energy says the Green Homes Grant was influential in creating the new tariff as it makes it more economically viable for homeowners to install low-carbon renewable technologies.

How Will the Heat Pumps Tariff Work?

The tariff will offer cheaper unit rates for homeowners with heat pumps, as well as offering reductions in rates during specific times of the day. Good Energy says that this will help homeowners benefit at times when renewable output is high, or when there is lower demand on the electricity grid. 

“This tariff will be designed to make it as easy and affordable as possible for people to get rid of dirty gas heating their home and start using clean electricity from renewables,” said Juliet Davenport, founder and CEO of Good Energy.

What Are Heat Pumps?

Essentially, heat pumps provide renewable energy for heating and, in some cases, hot water. There are two main types: air source heat pumps and ground source heat pumps, which function differently. 

The combination of this new tariff and the Green Homes Grant will help to make both installation and running of the heat pump less expensive.

Heat pump technology is also eligible for subsidies under the Renewable Heat Incentive (RHI), a government scheme which provides financial support to homeowners who install renewable heating systems, for seven years.

However, it is currently unclear whether heat pumps installed as part of the Green Homes Grant will be eligible for the RHI. 

How Much Will A Heat Pump Cost?

A caveat of installing heat pumps under the new tariff and the Green Home Grant scheme is that a smaller single fan air source heat pump system will cost around £11,000-£16,000, including installation. A larger system will cost £14,000-£20,000. 

A ground source heat pump is pricier, and will cost £16,000-£25,000. 

While the poorest households will be afforded grants of up to £10,000, the vouchers will be capped at £5,000 for most homeowners. Buying a heat pump is therefore a big investment and will likely require homeowners to invest some of their own money, but you’ll notice the difference immediately in the energy savings you make.