Cutting heat pump grants to fund defence ‘self-defeating’, energy boss warns

Emily Beament, Press Association Environment Correspondent

Cutting heat pump subsidies to pay for defence spending would be “self-defeating” as reducing reliance on gas is a matter of national security, the boss of Octopus Energy has warned.

Under its “boiler upgrade scheme”, the Government provides grants of up to £9,000 to support households to transition to the technology, which currently costs more upfront than traditional oil or gas boilers.

They work by using electricity to move heat from the air outside to warm homes, much like a fridge running in reverse.

The Government has backed the technology as part of its climate goals and to help bring down household bills, which are currently soaring as volatile fossil fuel markets are hit by the Middle East conflict.

But – amid concerns that they are a subsidy used mainly by middle-class households – there have been reports ministers are preparing to slash the amount of money available for the grants to fund higher defence spending.

Greg Jackson, founder and chief executive of Octopus, one of the largest energy firms in the UK, said it would be “a tragedy” to undermine the nascent domestic heat pump industry and keep people hooked on heating with gas.

“From a national security perspective, reducing our dependence on gas is an important part of defence,” he said, pointing to Russian President Vladimir Putin’s “leverage”, and funding for the war on Ukraine, from gas, and the reliance on gas from the Middle East.

“We’re giving other countries power over Britain, and it’s making British families and businesses poorer.

“So the very top picture is it would be self-defeating to fund defence by cutting security.”

He said it was “ignorant” to see heat pumps as expensive kit for middle-class families, and the boiler upgrade scheme was not about installing the technology in just a few hundred thousand homes.

Instead, he said, it was about creating the ability to scale the industry that would “ultimately fit millions of heat pumps” that were cheap, straightforward and suitable for British homes.

He likened it to the Chinese government introducing grants to buy electric vehicles for 12 years to get the now-globally dominant industry up and running.

Octopus has invested significantly in the heat pump sector, with a factory in Portadown, Northern Ireland, employing 100 people and producing 10,000 “Cosy” heat pumps a year, and with around 1,500 employed in the technology across the country, from fitters to software developers.

“The industry can’t yet stand on its own two feet, but it’s getting there, it’s so tantalisingly close,” he said.

It would be a “tragedy” to throw away the work to foster the nascent domestic industry, and end up reliant on imported kit, he argued.

He also said data from the company’s 10,000 installed own-brand heat pumps showed 99.6% of households were saving money, with an average saving of £230 – some 30% of the heating bill – if they are on the right tariff and 40% if they have removed their gas supply altogether.

“It is a tragedy that so many people are currently stuck with gas boilers, when they could have heat pumps,” he said.

“The quicker we build this industry, we can bring those people the savings.

“The incredible thing is, you’re going to cut bills, you’re going to improve national security and, by the way, it is of course better for the climate.”

He warned: “It would be perverse and extremely damaging not to grasp the opportunity to keep on building this industry and to actually go further because with some more policy change, we can speed up Britain’s decoupling from the global gas market.”

Action to shift costs off electricity bills have already helped, he said, while there is also a need to cut the bureaucracy attached to installing a heat pump.

Octopus is bringing out new products, including a heat pump system that can retrofit cooling into existing homes as well as heating, but if the boiler upgrade scheme is cut, he warned, these benefits will not be realised.

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