Report

Supply change

This report from UK think tank the Social Market Foundation explores the economic and environmental benefits of making the UK’s heat pump supply chain more robust.

The UK’s heat pump supply chain is still in its infancy and remains much weaker than in mainland Europe or Asia.

This SMF report explores the economic and environmental benefits of making the UK’s heat pump supply chain more robust and provides recommendations for how to achieve this. Heat pumps have a vital role to play in decarbonising home heat, which accounts for 14% of the UK’s greenhouse gas emissions. Government targets mean demand for heat pumps is set to grow, presenting domestic manufacturers with a market opportunity, and domestic production could contribute £5.5 billion to the UK economy by 2035, spur job creation and innovation, and reduce the risk of supply chain shocks.

Taking advantage of this opportunity requires a conscious development of the heat pump installer workforce to address a growing skills shortage and better integrate manufacturers and installers. It also requires new consumer offers, such as the ‘heat as a service’ model or property linked finance, to lower the upfront cost of heat pump installation and make the benefits of heat pumps more accessible to consumers.

The report’s recommendations for the government include: naming heat pumps in the Future Homes Standard to provide manufacturers with certainty; working with industry and training providers to design a strategy for scaling up the heat pump installation workforce; and restructuring energy pricing and promote innovative financial products to make heat pumps more affordable.