Recommendation 10

DESNZ recognised that the cost of running heat pumps was also a key barrier to heat pump adoption. It explained that, as they are based on electricity, heat pumps are more expensive to run than fossil fuel boilers because of the cost of electricity is higher than gas.17 This view was supported by written evidence to our inquiry from some energy suppliers including Good Energy and Octopus Energy; a consumer campaign group, Fuel Poverty Action; and Energy UK.18 In their written evidence, the Heat Pump Association and the MCS Foundation told us that the UK’s price ratio between electricity and gas prices of 4:1 was one of the highest in Europe.19 Both EDF Energy and the MCS Foundation explained that this disparity was partly due to the government levying a large proportion of its environmental policy costs on electricity bills, such as schemes to support renewable energy development and energy efficiency. The MCS Foundation added that, for a standard direct debit customer, 16% of their electricity bill will be made up of these levies, compared to only 5% of their gas bill.20 DESNZ explained that although electricity was about four times per unit more expensive than gas, this was offset by the fact that heat pumps were three times as efficient as gas boilers, which “helps a lot”.21