Written evidence submitted by Energy & Utilities Alliance (EUA) (WFP0062)

The Energy and Utilities Alliance (EUA) provides a leading industry voice helping shape the future policy direction within the sector. Using its wealth of expertise and over 100 years of experience, it acts to further the best interests of its members and the wider community in working towards a sustainable, energy secure and efficient future. EUA has six organisational divisions - Utility Networks, the Heating and Hotwater Industry Council (HHIC), the Industrial & Commercial Energy Association (ICOM), the Manufacturers of Equipment for Heat Networks Association, the Hot Water Association (HWA), the Manufacturers’ Association of Radiators and Convectors (MARC).

The Energy and Utilities Alliance (EUA) is a company limited by guarantee and registered in England..

Summary

There are 25.4 million dwellings in England and Wales according to the 2021 census[1] and approximately 23 million homes in the UK are heated by natural gas boilers. In 2024, just under 1.5 million natural gas boilers were installed into homes with around 90,000 heat pumps installed in comparison. The cost of a natural gas boiler today is around £2,500 versus £13,200 for an air source heat pump (other types cost more)[2].

In 2021, government set an ambitious target to install 600,000 heat pumps per year by 2028[3]. It was considered unachievable by industry at the time and is supported by current market trends. A seven-fold increase in heat pump installations from current levels would be required to hit the 2028 government target. On average, around 920,000 homes must be retrofitted each and every year, starting in 2025 to reach net zero by 2050.

We also believe that there is very little support in place to retrofit and decarbonise non-domestic properties of which there are around 1.8 million buildings[4]. At present, there are no training grants available for heating engineers who want to upskill to retrofit non-domestic buildings with a low carbon alternative.

Installers and skills

EUA has consistently alerted the Department for Energy Security and Net Zero (DESNZ) to our concerns over the lack of trained installers to fit heat pumps. This is supported by other organisations in the heating industry as well as the Electrification of Heat Demonstration Project report published in December 2024 which highlighted the skills shortage as a barrier to heat pump uptake.

In the 2021 Heat and Building Strategy, DESNZ claimed that heat pump targets could be delivered with 12,400 heat installers by 2025 and 50,200 by 2030. Under scrutiny however, these numbers are Full Time Equivalent, not the total number of real installers. The assumption made is that heat pump installers will only fit heat pumps. That is not how the heating engineer model currently works in the UK.

There are circa 130,000 Gas Safe Registered heating installers across the UK undertaking a range of jobs on a daily basis – like plumbing a bathroom or kitchen. They do not solely fit or fix heating appliances. It is therefore misleading to base heating engineer figures on Full Time Equivalent. The consequences of doing this is to seriously underestimate the labour force required to deliver DESNZ’s strategy. The Heating and Hotwater Industry Council (HHIC), at the request of DESNZ, calculated that the UK needs 150,000 trained installers to meet the 600,000 heat pump per year by 2028 target[5], compared to the 33,000 FTE backed by DESNZ. Two-thirds of the 150,000 will need to be new entrants to industry.

The Heat Pump Association (HPA) has also completed work on this subject and concluded that to meet the 2028 and 2035 targets, a significant increase in the total workforce is required including 70,786 FTE individuals qualified to install heat pumps, 98,083 trained and active individuals and 132,252 trained individuals but who are not actively working in the role[6].

The natural expectation is that many of the individuals currently involved in fitting and fixing heating appliances will re-train as consumer demand for heat pumps increases. However, a cautionary note must be struck given the average age of engineers (as of 2023) on the Gas Safe Register is 45.4 with the average age of engineers leaving or retiring from the Gas Safe Register sitting at 45.2 years old – meaning a relatively large exodus could happen soon from the industry. This indicates that there is likely to be a shortage of heating engineers making the switch from installing natural gas heating appliances to electric ones as they leave the sector or retire.

Moreover, because heat pump systems are a more complicated technology which normally requires a hot water storage system, physically heavier and take longer to fit (normally three to five days), a longer training course is necessary. Training tends to take about five days and costs around £1000 to attend. As many heating engineers are self-employed, this means they are taking a financial hit when attending the training course. The Heat Training Grant has helped to alleviate some of these issues.

Recent reports have found that 39% of currently trained heat pump engineers end up not actually installing the technology due a lack of consumer demand. This is a concern because if there is no obvious market for these engineers to operate in, fewer will bother to complete the necessary training and make the switch to installing low carbon heating appliances[7]. Upfront costs for the consumer are likely the key reason for the sluggish uptake of the technology in buildings in the UK, partly due to the high price of electricity which means very few savings are achieved despite the investment from the consumer.

It is also important to recognise that the heating industry will be operating in a skills competition with other industries. Workers entering the job market may choose an alternative pathway with future labour requirements likely including retrofitting private rented domestic housing; energy infrastructure upgrades; water industry investments; new housebuilding targets; major public sector infrastructure like schools, hospitals, prisons, HS2, Hinkley Point and Sizewell. There is no guarantee that new entrants to the market will automatically choose heat pump installations over the roles listed, especially if it is not seen to be particularly lucrative or desirable. It is unlikely that fitting only heat pumps would provide sufficient income compared to the other plumbing skills in this sector.

Currently there are only around 9,000 trained MCS heat pump installers in the UK. A new generation of heating installers will therefore need to be trained to fit both heat pumps and natural gas boilers as part of the transition. One key aspect will be ensuring there are enough engineers to service and maintain heating appliances so that annual servicing can be done as part of the product’s warranty. There is already a shortage of heating professionals who can repair and service heat pump systems to ensure consumer satisfaction.

Government seems to be focusing on the generation side of the heating industry, rather than the skills required for the decarbonisation of domestic, industrial or commercial sectors. Non-domestic retrofits involving heating pumps are complex and the industry is still struggling to achieve consistent good results. Skills levels do need to improve. Many non-domestic buildings may also connect to heat network zones, which will require a slightly different set of skills again. To date, there does not seem to be a comprehensive plan from government on how they plan to address the skills gap and labour shortages.

Clean Heat Market Mechanism

A key flaw of the Clean Heat Market Mechanism (CHMM) – to be introduced from April 1st 2025 – is the likely negative impact the policy will have on workforce training and upskilling.

Under the CHMM, heating appliance manufacturers will be penalised for every heat pump unit not installed as a proportion of their boiler sales[8]. In many cases, heating appliance manufacturers are currently the ones who are providing training to the many heating engineers on the Gas Safe Register. This training provision could be cut to pay the fines imposed by DESNZ leading to potential skills shortage and will make heat pump targets across the UK increasingly difficult to meet. While the fine level has been set at £500 for Year 1 of the scheme, we are still concerned at what subsequent increased fine levels will do to training budgets and we believe this point has not been fully addressed by DESNZ.

Certified installers

Currently, there is no consistent approach by government towards the required accreditation for heat pump installers. For any heat pump installation that is subsidised or funded by government, such as the Boiler Upgrade Scheme, the installer must be Microgeneration Certification Scheme (MCS) certified. This requirement does not exist for non-government funded installs. Requiring all heat pump installs to be completed by MCS or an equivalent alternative accredited installer would help increase both heat pump and installer numbers, helping to provide consumers greater protection and enhancing the reputation of heat pumps to what is a mostly a sceptical consumer base via quality installs.

The Electrification of Heat Demonstration Project’s report highlighted that the “variable quality assurance results do indicate an inconsistency in design and installation standards”. It is widely thought that poor installations have a negative impact on the wider public’s perception of low carbon heating appliance. Ensuring the best quality install at the first of asking is therefore critical to delivering a wider roll out of low carbon appliances. This is why all heat pump installations should be covered via an accreditation scheme like natural gas boilers are through the Gas Safe Register and other industry schemes such as Benchmark.

Gas engineers currently require different training elements for different appliance types – whether that be domestic or commercial appliances or for changing pipework etc – a similar approach should be adopted for low carbon technologies such as a domestic heat pump versus an industrial one so that these installations are the best possible.

Moreover, current F-gas requirements make no reference to best practice for installations of heat pump systems compared to gas appliances. This can lead to poor consumer feedback on appliance efficiency, especially as some heat pump engineers are also on the Gas Safe Register and therefore treat heat pump systems as boilers although they do not work the same way. Currently, there is no real policing of this and Benchmark should be used in the future to help deliver quality installations.

Boiler Upgrade Scheme

Despite the scheme now entering its third year, the installer base remains relatively small with 1,286 installer accounts registered on the BUS[9]. That is up from 1,005 from year one. Across both year one and two, the top 30 installers were responsible for around 38% of the total number of applications. This might change given there has been an increase in consumer uptake of the BUS during year three. However, there is clearly a limited pool of installers due to a general lack of consumer demand for the technology compared with natural gas boilers.

There are also regional disparities to heat pump installations across the UK via the BUS. These could be driven by access to skilled and certified installers with the majority in the South West and South East where installs are higher. Socio-economic factors are also likely to be a cause for this too.

The BUS encourages big firms to capture the heat pump market as the subsidy is hoovered up by larger companies, at the expense of smaller installer firms which are then squeezed out. This reduces the opportunity for installers from these small firms to fit low carbon technologies, lessening the chances of hitting DESNZ targets. If there is a smaller installer base, costs of installations are also unlikely to reduce too.

January 2025