Mike Foster, CEO of Energy and Utilities Alliance (EUA), has called for the Boiler Upgrade Scheme (BUS) to be revamped to encourage participation from smaller heat installer companies.
The scheme, which contributes £7,500 towards the cost of installing a heat pump, has funded 34,438 installations up to September 2024, at a cost to the taxpayer of £218m.
According to a Freedom of Information request obtained by EUA from Ofgem, 33% of the installations have been undertaken by just ten companies. Overall, a total of 1,401 companies have benefitted from the scheme.
From 2025 to 2028, the BUS is expected to spend £1.5bn towards 200,000 heat pumps, which, if current trends continue, suggest these ten companies will receive £500m of taxpayers’ cash.
Mike said: “We have been promised that heat pump installation costs will fall, but that has failed to materialise so far. Unit costs won’t fall, but the government does expect the cost of installing heat pumps to do so, partly by more and more installers getting used to fitting them. But if the subsidy scheme designed to drive this behaviour is being hoovered up by big business – Octopus Energy being the biggest beneficiary – then small installer firms will get squeezed out.
“In the longer term, without a huge increase in installers fitting heat pumps, any chance of getting to 600,000 heat pumps installed in 2028 will fail. We all know industry needs tens of thousands more trained heat pump installers and using the BUS to encourage this would be sensible. Simply fuelling an addiction to a taxpayer subsidy is not the way forward.
“High quality installations need to be the priority at this early stage, not just high volumes. Spreading the subsidy further will ensure the future supply of installers is there to meet the planned uptake of demand. Officials in Whitehall need to look at what more can be done to improve the outlook for smaller firms and ensure the best value for money is obtained for the taxpayer.”