Briefing: the cost of air source heat pumps

Key findings:

  • Air source heat pumps are alternatives to gas boilers and are part of HM Government’s net zero strategy. These could cost each household up to £18,000, with costs also including underfloor heating, air distribution systems or improved insulation.

  • HM Government plans to provide £5,000 grants to some households from April 2022, through the three-year £450 million boiler upgrade scheme. The purpose is to subsidise homeowners to install low-carbon heating systems – such as heat pumps – by mitigating the cost of installation, bringing the cost closer to that of installing a new gas boiler.

  • If the grant were offered to the 23 million residential households that do not have an air source heat pump or equivalent, the cost would be £115 billion.

  • HM Government has announced £4 billion of new funding for decarbonising heat and buildings from 2022 to 2025. 2 This includes the boiler upgrade scheme.

  • The four taxes with explicit environmental objectives raised £2.7 billion in revenue in 2020-21. When combined with other taxes which have a partial environmental objective, the total green tax revenue came to £33.7 billion in 2020-21. This is due to rise to at least £52.6 billion in 2025-26.



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