Summary: How is your next loft conversion or home renovation effected by the Clean Heat Market Mechanism (CHMM) announcement
The Clean Heat Market Mechanism (CHMM) is a UK government policy aimed at increasing the installation of heat pumps to improve home energy efficiency and reduce carbon emissions. The CHMM may lead to higher costs for gas boilers as manufacturers could pass on fines for not meeting heat pump sales targets. For loft conversions or home renovations, this means considering low-carbon heating options, especially if installing a new boiler soon. Factors to consider include space availability for certain systems and financial incentives for low-carbon technologies. Professional advice is recommended when exploring heating options. Scroll down to read more...
What is the Clean Heat Market Mechanism (CHMM)?
The Clean Heat Market Mechanism (CHMM) is a government policy that aims to improve energy efficiency in the home to meet carbon emission targets. The focus of the policy is to increase the installation of ground and air source heat pumps as an alternative to gas and oil heating systems.
Why is the Clean Heat Market Mechanism being introduced?
The Clean Heat Market Mechanism (CHMM) is being introduced as around half of the UK’s natural gas usage comes from heating homes and commercial buildings. Policymakers are looking to reduce this usage due to its contribution to carbon emissions and impact on climate change to meet global targets.
Reducing the use of fossil fuels such as gas and oil to heat the home is seen as an important step to help reach the government's Net Zero 2050 commitment. In order to meet this, the government has set a target of 600,000 heat pumps to be installed each year by 2028. However, in 2022 there were only 72,000 heat pumps installed in the UK, and despite grant funding of up to £7,500 now being provided, there were only 28,000 installations in the first 9 months of 2023. The level of demand for heat pumps vs their targets is adding to the pressure on the government to reach the number of installations they need in the next 5 years.
The introduction of the Clean Heat Market Mechanism means that the government is asking manufacturers of heating appliances to meet government targets for the number of heat pumps the manufacturers sell, relative to the number of gas or oil boilers they also sell, with fines if manufacturers fall short of these heat pump targets.
The government’s focus on ground and air source heat pumps is now supported by grants of up to £7,500 via the Boiler Upgrade Scheme (BUS) since October 2023. However, while the CHMM counts the installation of hybrid heat pumps towards its targets, the BUS grants available don’t yet cover hybrid heat pump systems in England & Wales; financial support is only available for hybrid heat pumps in Scotland.
How does the Clean Heat Market Mechanism work?
The Clean Heat Market Mechanism (CHMM) is due to start in April 2024. Manufacturers such as Worcester Bosch will earn ‘credits’ for heat pump installations and have a minimum number of ‘credits’ that they need to achieve or face fines. Each manufacturer’s target will vary as it will be relative to the number of gas and oil boilers they sell, and if the target is not met, then the manufacturer will be fined £3,000 per missing credit by the government.
What does the Clean Heat Market Mechanism mean for UK households?
Market-leading manufacturer Worcester Bosch has already shared that the impact of the CHMM fines could mean up to a £300 increase on gas boilers that would be passed on to consumers, with CEO Carl Arntzen quoted in the Sunday Times likening the policy to a ‘boiler tax’.
This increase could then take the average cost of a gas boiler installation up to around £2,800 - which in some cases would be the same cost as a heat pump installation covered by the Boiler Upgrade Scheme grant.
"In some cases, for the top end of our models, we’re having to look at around a £300 price increase." - Carl Arntzen, CEO of Worcester Bosch
Arntzen added that demand in the UK heat pump market is not yet at a sufficient scale to meet the government's proposed targets, meaning it's inevitable that manufacturers will face fines when the policy is implemented.
Should I get a new boiler or a heat pump?
There is a lot of noise in the press and from the government about the most cost-efficient and energy-efficient way to upgrade your heating system. Ultimately, it’s about getting the best product for your home at the best price.
Should I get a new heat pump?
Ground or air source pumps are definitely more pocket-friendly than they used to be, due to the government funding (BUS). However, they are not suitable for every home in the UK. They work differently from a traditional gas/oil boiler system in heating the home with lower operating temperatures and are at their most energy and cost-efficient in well-insulated or ‘new build’ type homes that have large radiators, solar panels, or underfloor heating. Most of the older homes in the UK are not as well-suited to the wider heating system it requires, and drafts and poor/old insulation might result in an inefficient heating output.
What is a hybrid heat pump?
Another great option for those who are looking at heat pumps but live in less insulated, older homes that might not get the most efficient output should look at a hybrid heat pump. This heating system uses a highly efficient combination of a hybrid heat pump and a boiler to power the heating system that connects into the home's existing gas pipes. Daikin’s hybrid heat pump intuitively switches between heat pump only, heat pump and gas combined, or gas only depending on which is the most cost-effective at the time, to keep efficiency high and costs low.
Should I get a new boiler?
When it comes to a new boiler, for those homes that aren’t well-insulated or a non-new build, upgrading your old boiler to a new boiler could be the most cost-effective option, and by upgrading your old boiler, it could still help to save over £550 a year on energy bills through improved efficiency.
What does this mean to my home renovation or loft conversion?
If you are converting your loft and need a new boiler or heating system as part of the project, it is important to consider the potential impacts of the Clean Heat Market Mechanism (CHMM) for clean heat in loft conversion. The CHMM is a government initiative that aims to phase out the sale of new gas boilers and replace them with low-carbon alternatives, providing clean heat for loft conversion. This means that if you are planning to install a new boiler as part of your loft conversion project, you may need to consider a low-carbon option.
The specific impact of the CHMM on your loft conversion project will depend on the timing of your project and the type of heating system you choose. If you are planning to install a new boiler in the next few years, it is likely that you will need to choose a low-carbon option for clean heat in loft conversion. However, if you are not planning to install a new boiler until later in the decade, you may still be able to choose a gas boiler.
Here are some things to keep in mind when considering the impact of the CHMM on your loft conversion project:
Timing of your project: The earlier you are planning to start your loft conversion project, the more likely it is that you will need to choose a low-carbon heating system for clean heat in loft conversion.
Type of heating system: Not all low-carbon heating systems are equally suitable for loft conversion projects. For example, ground source heat pumps require a significant amount of space for the installation of the ground loop, which could make them impractical for some loft conversion projects. Consider low-carbon options that provide clean heat for loft conversion and are suitable for your specific project requirements.
Financial incentives: There are financial incentives available for homeowners who switch to low-carbon heating technologies for clean heat in loft conversion. You may be able to take advantage of these incentives to offset the cost of installing a low-carbon heating system.
It is advisable to professional help to discuss options for your home heating and also look at other renewable power sources such as solar power.
Please find a link to further information on the Clean Heat Market Mechanism: Clean Heat Market Mechanism
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