Heat pump installations in the UK rose by 40% in 2024, according to a new market report from Market Data Forecast. That is the fastest growth rate since the Renewable Heat Incentive closed in 2022. Yet the total number of units sold, just under 70,000, remains a fraction of the 600,000 annual installations the government says it wants by 2028.
The gap between ambition and delivery is not new, but it is widening. As reported by Market Data Forecast, the UK heat pump market is projected to grow at a compound annual rate of 15% through 2034. At that pace, installations would reach only around 250,000 a year by the end of the decade, less than half the official target.
Who qualifies, and who doesn’t
The Boiler Upgrade Scheme, which launched in May 2022, now offers £7,500 towards an air-source heat pump. That is a significant improvement on the original £5,000 grant, but it still leaves a typical homeowner paying £5,000 to £10,000 upfront after the subsidy. Ofgem data show that take-up has been strongest in off-gas-grid areas, rural Scotland, the South West and Wales, where oil or LPG heating costs more than £1,200 a year.
For homes on the gas grid, the economics are tighter. A heat pump running at a seasonal coefficient of performance of 3.0 costs roughly the same to run as a gas boiler at current price caps, but the upfront cost is three to four times higher. The Energy Saving Trust estimates that a well-insulated 3-bed semi can save £100–£200 a year on heating bills with a heat pump. But the payback period, even with the grant, is 15–25 years.
What this misses
The market report focuses on unit sales and revenue, but it glosses over two barriers that matter more to homeowners: installer capacity and electricity-to-gas price ratio. There are roughly 3,000 certified heat pump installers in the UK, compared with 130,000 gas boiler fitters. Training a new cohort takes 18–24 months, and the government’s Heat Training Grant, £500 per trainee, has funded fewer than 500 places since 2023.
Meanwhile, electricity costs about four times as much as gas per kilowatt-hour. The Climate Change Committee has recommended lowering the ratio to 2.5:1 by shifting levies off electricity bills and onto general taxation. The Treasury has not acted. Until it does, heat pumps will struggle to compete on running costs for the 85% of homes on the gas grid.
What it costs a typical 3-bed semi
A typical installation for a 3-bed semi with 12,000 kWh annual heat demand costs £10,000–£14,000 including VAT. After the £7,500 grant, the homeowner pays £2,500–£6,500. Radiator upgrades, if needed, add £1,500–£3,000. Hot water cylinder replacement adds another £800–£1,500. The total outlay, even with the grant, is typically £5,000–£10,000, roughly three times the cost of a new gas boiler.
On the plus side, a heat pump adds an estimated 5–10 points to an EPC rating, lifting a D-rated home to a C or a C to a high B. That can increase property value by 2–5%, according to estate agent surveys. But the upfront cash remains the biggest hurdle for most households.
What to do and by when
If you are planning to replace a gas boiler within the next two years, apply for the Boiler Upgrade Scheme before 31 March 2027, when the current funding round ends. Check your home’s insulation first, a heat pump works best in a property with cavity wall or solid wall insulation and loft insulation to 270 mm. Contact MCS-certified installers for quotes; the Microgeneration Certification Scheme database lists all accredited fitters.
For those on oil or LPG, the case is stronger: switch now and save £300–£500 a year on fuel. For gas-grid homes, wait for the next government budget, if electricity price reform comes, heat pumps will become the obvious choice. Until then, the numbers do not quite add up for the mass market.
Frequently Asked Questions
For a typical 3-bed semi, the total installation cost is £10,000–£14,000. After the £7,500 grant, you pay £2,500–£6,500. Radiator upgrades and a hot water cylinder can add £2,000–£4,500 more.
It depends on your current heating fuel. If you use oil or LPG, you can save £300–£500 a year. On mains gas, the saving is typically £100–£200 a year, but only if your home is well insulated. Without insulation, running costs can be higher than a gas boiler.
