Net Zero secretary Claire Coutinho has called on the competition regulator to carry out an inquiry into the home heat pump market to see whether consumers are “getting a fair deal”.
“The Competition and Markets Authority strongly consider carrying out a review of this market to assess how competition is working in the home heating appliance market and to understand whether any weakness in competition is contributing to prices being higher than they would be in a well-functioning market, or risks doing so as the sector transitions to low-carbon heating,” says Secretary of State for Energy Security & Net Zero Coutinho.
The minister wrote to the CMA chief executive Sarah Cardell in a 14 March letter that was made public yesterday.
Home emissions are a key part of the government’s target to cut greenhouse gas emissions by 80% by 2050 compared to 1990 levels.
The UK’s housing stock accounts for around 14% of the country’s emissions, the country’s second-largest source of greenhouse gases after surface transport, which accounted for 23% of emissions in 2021, according to a Climate Change Committee study.
Coutinho writes to the CMA: “During this transition, it is more important than ever that consumers can be confident that vigorous competition between companies in the heating market will ensure that they are getting a fair deal, with competitive pressures keeping the prices of heating appliances as low as possible.”
The CMA’s Cardell in her letter responding to Coutinho writes that the regulator “will review your request carefully and consider potential work in this area alongside potential work in other priority markets for potential initiation during the second half of the year”.
The CMA’s letter to the government is dated 25 March, but was also publicly released yesterday.
However, the regulator points out it published a report last May called, ‘Consumer protection in the green heating and insulation sector’.
It highlighted three concerns the regulator harbours about the sector.
The body said that it can be hard for consumers to “identify trustworthy businesses”, it was concerned about firms making “misleading claims” as well as limited price transparency across the industry, and whether standards bodies offer enough consumer protection.
However, a quarterly report on heat pump upgrades by Ofgem in February found that the government’s Boiler Upgrade Scheme, set up two years ago, has issued just £133m in grants from its £300m budget to persuade householders to ditch gas boilers for low-carbon home heating.
This comes after Prime Minister Rishi Sunak last September scrapped plans to require all landlords to upgrade their properties to a minimum energy performance certificate rating of C by 2028, citing the need to protect tenants from unfair price hikes in rent due to the cost of renovations.
This leaves landlords free to lease their properties with an energy performance certificate rating of E.
Also, last September the government announced it would lift grants for heat pumps to £7,500 from £5,000 per household.
Installing a heat pump typically costs between £10,000 and £15,000, while replacing a gas boiler ranges between £2,000 to £4,000.
