Octopus Energy says households could theoretically have a heat pump installed for around £2,000 under a new scheme it is launching with Lloyd Banking Group.
The energy supplier wants to make air source heat pumps (ASHPs) and ground source heat pumps (GSHPs) more affordable for homeowners in the UK. The low-carbon heating systems can be prohibitively expensive for some households, even with government funding, with ASHPs costing up to £17,000 and GSHPs up to £19,000 and higher, according to EDF Energy.
Under this new pilot scheme, homeowners who have mortgages with Halifax (a subsidiary of Lloyds Banking Group) will be able to save on the installation costs of heat pumps provided they apply for the Boiler Upgrade Scheme (BUS). This government-funded scheme launched in April and offers £5,000 towards air source heat pumps and £6,000 towards ground source heat pumps.
Lloyd Banking Group will then provide an additional £1,000 discount on top of the BUS funding, meaning the amount left to pay for households could be as little as £2,000 (based on Octopus Energy's cheapest install).
How will this initiative work?
The partnership is designed to encourage heat pump up-take. Halifax mortgage customers who install a heat pump and apply for the Boiler Upgrade Scheme (BUS) will be able to apply for a £1,000 ‘cashback’ discount with the bank. This will be available to any of Halifax’s mortgage customers as part of a ‘Green Living Reward’ initiative.
Octopus Energy will provide and install the heat pumps, and says its estimated installation price could be as little as £2,000 — this is based on its typical cheapest install price of £3,000 (once a BUS grant of £5,000 has been deducted) and the £1,000 cashback the homeowner receives.
Heat pumps provide three to four times the energy efficiency of natural gas boilers, Octopus says, and this price may be less than the cost of a new gas boiler.
The government has committed to installing 600,000 heat pumps in UK homes per year by 2028, and Octopus says that an estimated 40% of homes could be suitable for heat pumps in the UK.
Rebecca Dibb-Simkin, chief product officer with Octopus Energy, said of the partnership: “The pilot with Lloyds Banking Group comes at a crucial time for consumers facing a dual climate and cost of living crisis. It no longer needs to be a question of prioritising one over the other: heat pumps are greener than gas boilers, and thanks to Octopus, the government and Lloyds Banking Group they can be cheaper too.”
This is one of a number of initivitates energy providers such as Octopus Energy are launching — the Octopus Energy free electric blankets are now also available to 10,000 of its customers, for instance.
