As the CEO of one of the UK’s largest heat pump manufacturers, it will be no surprise that I want to see UK-made heat pumps dominate the market. In the words of the Chancellor at the Spending Review, “where things are made, and who makes them, matters.” In my own sector, it matters first and foremost because the UK is set to have Europe’s largest heat pump market, but to date has done its level best to deter investment in manufacturing capacity.
It would be madness to create such a substantial market and miss the economic opportunity to supply this domestically. Critically, with some 5,000 jobs in boiler and related manufacturing in this country, a failure to develop a corresponding large heat pump manufacturing sector will not just mean a lost economic opportunity, but a net economic loss.
Net Zero has rightly been sold as not just an environmental necessity but as an economic opportunity, the defining industrial opportunity of the century. These words will ring hollow, presenting an open goal to those seeking to undermine Net Zero, if we see long-standing manufacturing jobs phased out to meet targets and replaced by imports instead of new, green, domestic jobs.
Historically, while there has been much focus on policies to drive demand for heat pumps, there has been very little on developing a UK manufacturing base. True, there was the £30 million Heat Pump Industrial Accelerator (HPIA), but with so little certainty on heat policy in recent years, heat pump manufacturers (including my own) lacked the confidence to invest.
Many factors determine the location of manufacturing, but the size of the local market for your products is usually at the top. Bold ambitions were set out in the 2021 Heat in Buildings Strategy to create that market, but virtually none were delivered. This created deep uncertainty about the future size of the UK heat pump market, a terrible state of affairs when considering long-term manufacturing investments. Two years on from the launch of the HPIA, unsurprisingly, less than a third of the money has been awarded.
The next five years are key for heat pump manufacturing investment; fail now, and I believe the opportunity will pass us by.
This investment picture is all the more frustrating given that the UK is ideally suited to develop a major heat pump manufacturing sector. With almost 20 million boilers to replace by 2050, the UK will ultimately have a huge heat pump market. We also have a skilled and established boiler and air-conditioning manufacturing sector that can transition at a relatively low cost. At present, there is significant global undercapacity in heat pump manufacturing worldwide, which justifies investment in new capacities in new markets.
But the longer the UK takes to create the conditions to attract that investment, the more capacity grows elsewhere and the weaker the case for investment in new UK facilities. The next five years are key for heat pump manufacturing investment; fail now, and I believe the opportunity will pass us by.
I am cautiously optimistic that the Government’s new Industrial Strategy, with its plan for the clean energy industries setting out specific steps to support heat pump manufacturing, represents a turning point for our sector and the Government’s approach to it.
While many of the actions have been bouncing around Whitehall for years, (Future Homes Standard, certainty of support schemes, energy price rebalancing), the specific inclusion of heat pump manufacturing in the strategy is a recognition of the sector’s potential to deliver major growth and investment and of the Government’s desire to deliver it.
Critically, here is a clear statement of the Government’s determination to ensure heat policy decisions are made in a manner that supports industrial growth.
