U.K. Green Homes Grant Reversal Halves Heat Pump Outlook

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

  • 16% of 3 billion-pound budget expected to be allocated
  • BNEF expects 54,000 fewer heat pump sales in 2021-23

The U.K. government will not deliver the full budget initially promised to its 3 billion-pound ($4.2 billion) green stimulus program – the Green Homes Grant. This damages the outlook for heat pump uptake. BNEF expects just 16% of the original budget to be allocated in total.

The closure of the scheme to new applicants in March 2021, a full year ahead of expectations, has flat-lined expectations for growth in heat pump installations. BNEF’s forecast for heat pump adoption in the U.K. fell by nearly half, to around 33,000 heat pump sales a year from 2021-23, compared to our original estimate of almost 60,000 per year over the same period.

The reversal also has implications for the nascent U.K. heat pump industry. The U.K. Heat Pump Association reported that its members “placed orders with their supply chains to deliver a total of 67,000 units in 2021”, in anticipation of a doubling of the market under the Green Homes Grant. Manufacturers could be left with excess products or forced to cancel contracts as a result of the changes.

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