The number of heat pump installations by December 2023 was less than half DESNZ’s projections and uncertainty regarding the role of hydrogen in home heating is hampering investment and effective planning, a new National Audit Office (NAO) report has found.
Government sees heat pumps as the main technology to decarbonise the UK’s 28 million homes over the next decade and it wants to see up to 1.6 million heat pumps being installed annually by 2035. But the independent public spending watchdog says the government’s assumptions about levels of consumer demand and manufacturer supply are optimistic. The government’s flagship Boiler Upgrade Scheme installed just 18,900 heat pumps between May 2022 and December 2023 compared with DESNZ’s plans for 50,000 installations by this point.
Plans to rebalancing gas and electricity prices, for example by moving some levies and charges from electricity to gas bills have been delayed and installation costs also fell more slowly than DESNZ hoped.
Meanwhile NAO recommends government considers providing more certainty on the role of hydrogen in home heating before 2026. The department has so far indicated that it will have a limited role, but it will not formally take a decision in 2026. Stakeholders told the NAO ongoing uncertainty could slow progress by limiting the ability of local authorities and industry to plan and invest.
Parts of the gas network may need to be decommissioned if natural gas is no longer in use and hydrogen is confined to certain areas of the country. DESNZ is working to develop its understanding of the consequences for gas networks of decarbonising home heating and how decommissioning could be funded.
The public spending watchdog is recommending government develops an overarching long-term consumer engagement plan for decarbonising home heating. And it also recommends that DESNZ accelerates its work to rebalance the cost of energy to improve heat pump uptake.
“Government needs to engage every household to achieve its objective to decarbonise home heating as part of the transition to net zero. DESNZ’s progress in making households aware and encouraging them to switch to low-carbon alternatives has been slower than expected.”
“DESNZ must draw on its experience to date to ensure its mix of incentives, engagement and regulations addresses the barriers to progress in its current programme of work.”
Gareth Davies, the head of the NAO.
The NAO’s report, Decarbonising Home Heating, assesses the progress the Department for Energy Security and Net Zero (DESNZ) has made in decarbonising home heating since it published its Heat and Buildings Strategy in 2021.
The government has committed to rebalance energy prices over the course of the 2020s. Electricity remains more expensive per unit than gas, making heat pumps potentially more expensive to run than a gas boiler. The government’s plans include shifting energy levies and obligations from electricity to gas bills, but its plans around this have been delayed by nearly two years.
Despite these uncertainties, NAO says “it has become increasingly clear since the 2021 Heat and Buildings Strategy that the government’s approach will centre on heat pumps as the main technology”.
Mark Wild, CEO, SGN, said:
“It’s right for the NAO to underline the unanswered questions on the future of our energy system for households, including why there has been such a slow uptake of heat pumps in the UK. Clearly the high installation costs mean that even with the government grant, heat pumps remain out of reach for many households.
“The move to net zero must not push anyone into fuel poverty – we need to bring people on this journey with us by giving them a choice in how they power and heat their homes, whether it’s through electricity, including hybrid heat pumps, or low-carbon alternatives like hydrogen or biomethane. Achieving net zero is going to take every tool in the box.
“A decision on decarbonising home heating must not be rushed until the all the evidence has been gathered. We continue to work closely with the government on this ahead of a decision in 2026.”

Jess Ralston, Energy Analyst, Energy and Climate Intelligence Unit, said:
“The NAO detail a sorry saga of the Government’s efforts, or rather lack of them, in moving households to clean heating. Some of these spring from a failure to act, for example by not promoting the Boiler Upgrade Scheme to homeowners or rebalancing levies from electricity to gas bills. Others come from dithering and U-turns by no.10, such as the move to delay the Clean Heat Market Mechanism which only benefits the big boiler manufacturers and keeps the UK reliant on gas for longer.

“These all have consequences; heat pump uptake is slow, uncertainty is hampering investment, and our energy independence as a country is weaker as we’ll have to import more gas as the North Sea continues its decline. Citizen’s Advice say scrapping the Clean Heat Market Mechanism would ‘hurt’ households by leaving them vulnerable to volatile international gas prices.
“Industry, consumer groups and now government advisors are all urging the Government to learn from its mistakes, develop a clear long-term policy to correct them, and stand up to lobbying from the incumbent gas industry if there is to be any hope of turning this progress around.”

Download the full report here