For many UK households, switching to a heat pump isn’t a question of willingness, but the affordability of electricity. The current energy pricing structure actively penalises greener choices by loading environmental levies onto electricity. These levies add around £140 a year to the average household electricity bill, while gas is taxed less heavily. Even though heat pumps are up to three times more efficient than a gas boiler, they can still cost more to run, putting off environmentally conscious homeowners who are already feeling the squeeze from rising living costs.

Electricity pricing is holding back heat pump adoption

The new research of 2,000 UK homeowners from Mitsubishi Electric and Opinion Matters shows that 33% of homeowners would consider switching to a heat pump if electricity cost the same or less than gas. But for many, the bar is even higher: 15% of those surveyed said they would only consider switching if their annual energy bill was at least £500 cheaper.

New academic modelling in the report by Dr Ed Manderson, Lecturer in the Department of Economics at the University of Manchester, reveals that an increase in electricity pricing clearly correlates with a decrease in heat pump installations. A 7% fall in electricity prices (equivalent to a 10-point drop in the price index) would lead to about a 9% rise in domestic heat pump installations. The same trend appears in the commercial market: rebalancing electricity prices could boost uptake by around 9%, of which the true effect across the whole market would likely be considerably larger.

Russell Dean, Deputy Divisional Manager, Mitsubishi Electric said: “Our research reveals a critical tipping point in public sentiment: the desire to reduce emissions is being outweighed by the reality of energy bills. If we are to bring about considerable reform in how we heat our buildings in the UK, we must look at reforming an electricity pricing system that disproportionately penalises those who opt for low-carbon alternatives.

Mitsubishi Electric’s own research of residential and commercial heating installers also shows that they are ready to help accelerate the shift, with 93% believing they have the skills and experience to install heat pumps – an increase from 61% last year.

Urgent reform is needed

It’s clear that a significant disruption to the status quo of how heating is fuelled in the UK is required if the UK government’s target of 600,000 heat pump installations per year by 2028, or the Climate Change Committee’s 7th Carbon Budget recommendation that by 2040 half of UK homes are heated with a heat pump, is achieved as a pathway to net zero emissions by 2050.

George Clarke, Architect and Mitsubishi Electric Ecodan Ambassador, comments, “The technology is ready, and installers are ready to make the switch from gas heating to heat pumps, but the inflated price of electricity remains a major issue for both consumers and businesses. That’s why we’re calling on the government to remove green levies from electricity to encourage more people to move away from carbon-intensive gas and oil heating.”

Mitsubishi Electric is calling for urgent action to remove the cost barriers holding back heat pump adoption. To overcome this, government and industry must work together to create a fairer and more affordable path to low-carbon heating.

Key actions recommended in the report include:

• Rebalance green levies

Shift green levies away from electricity to reflect the UK’s net zero goals. Current levies add £140 to electricity bills, but just £50 to gas, making heat pumps more expensive to run than gas boilers.

• Decouple electricity from volatile gas prices

Decouple electricity prices from volatile gas markets. With more electricity now coming from renewables, this move would lower running costs for heat pump users and improve energy fairness.

• Expand and promote financial support schemes

Expand and promote support schemes like the Boiler Upgrade Scheme. One in three homeowners, unaware of the grant, said it would make them more likely to switch. Affordability must be addressed — especially as 15% of households say they need £500+ annual savings before they’d consider a heat pump.

“Opting for sustainable heating solutions must be a viable solution to the volatile cost-of-living problems facing UK homeowners. Rebalancing the cost of electricity and gas could turn the tide on heat pump adoption and will be key to meeting net zero ambitions,” Russell adds. “Heat pumps are ready. Installers are ready. Consumers and businesses are interested. Now the energy system needs to catch up.”

To read the full report, visit: Heat Pumps: Accelerating the Switch