The UK’s home heating market is set for a major shake-up as Octopus Energy announces the launch of a new heat pump priced to compete directly with traditional gas boilers, and in some cases, beat them. This move intensifies a brewing price war with rival British Gas, promising to make greener heating more accessible for homeowners.
Octopus’s new self-designed heat pump could see homeowners paying as little as £2,500 for purchase and installation. This pricing is significantly lower than the current typical outlay for heat pumps, which can range from £7,000 to £13,000 before government grants.
This aggressive pricing strategy follows British Gas’s recent announcement of heat pump installations starting at £2,999. While Octopus already offers installations from £3,000, their new unit aims to undercut this significantly. Including the government’s £5,000 to £6,000 voucher, Octopus states the overall cost for their new heat pumps will begin at the £2,500 mark. Most consumers are expected to pay between £3,000 and £3,500, depending on their home’s size – a figure comparable to, or even cheaper than, installing a new gas boiler.
Why This is a Game Changer for UK Homes
Heat pumps, which draw warmth from the outside air and run on electricity, are pivotal to Britain’s net-zero ambitions. As an increasing portion of UK electricity comes from renewable sources like wind and solar, heat pumps offer a significantly greener alternative to gas boilers.
However, adoption has been sluggish. The primary barriers have been the prohibitive upfront costs and the need for home adaptations in many properties. Official figures reveal a slow uptake of the government’s boiler upgrade scheme, with only 7,600 vouchers issued out of an available 30,000 in the current financial year since its launch in May 2022. A price war spurred by major suppliers like Octopus and British Gas could be the catalyst needed to bring down these costs and accelerate adoption.
Innovation Driving Down Costs
Greg Jackson, Octopus’s chief executive, highlighted that breakthroughs in manufacturing and design are behind the cost reduction. “It’s designed to be lower cost hardware, lower cost to install and to be able to cover a bigger percentage of UK homes. It’s a serious breakthrough,”
The innovative new heat pump was designed by engineers at Octopus’s research and development centre in Slough and the team at RED, a Northern Irish heat pump business acquired by Octopus last year.
What’s Next?
Octopus has already started manufacturing these new devices and plans to launch them in the second half of this year. The company intends to sell the heat pumps not only to its own customer base but also to third parties, potentially broadening their impact across the market.
This development is a significant step towards the government’s goal of rapidly increasing heat pump installations to cut carbon emissions from homes.
If you’re considering making the switch to a more environmentally friendly heating system and want to explore options from a company driving innovation in this space, you might want to check out Octopus Energy. As a bonus, by using the referral link below, you can save £100 when you sign up! You can find out more and see if their offerings suit your needs here: