
Kristina Londakova
Principal Advisor
Heat pumps are a far more eco-friendly way to heat our homes, however expensive installation and running costs pose major barriers to their adoption. In a previous blog we found that as much as 30% of homeowners with gas boilers would consider switching if the price halved.
The UK Government’s Boiler Upgrade Scheme, a £5,000 subsidy for heat pumps, is a good way to encourage people to make the switch, but what other tools could we use to boost adoption? This is the question Nesta and The Behavioural Insights Team (BIT) sought to answer in our second trial on heat pump adoption.
Using our online experimental tool Predictiv, BIT recruited a sample of 8,016 UK homeowners who currently heat their homes with a gas boiler. We gave participants basic information on heat pumps, and told them to imagine their current boiler needed replacing within a year and that an engineer had assessed their home as suitable for a heat pump. They were then asked to choose between a replacement gas boiler or a heat pump. We randomly showed participants 3 of the following 8 heat pumps:
It’s first worth noting that this experiment has the same limitation as the first one: it likely provides upper estimates of actual adoption. This is because (i) we used stated intentions – a hypothetical scenario where this measure is a proxy for adoption is far from the hassles involved in real-life adoption journeys and (ii) we have assumed the participants’ homes are heat pump ready.
Reducing the upfront cost is still the most impactful solution policy-makers can use to promote heat pump adoption. However lower running costs and delayed payment via interest free loans also have the potential to significantly increase uptake, especially when coupled with the former approach.
Indeed, taken together, halving installation cost, reducing running costs and providing financing options could increase overall uptake of heat pumps by around 44 pp. Then again, this would be a potential upper bound, given these estimates are from an online experiment.
Our results suggest that providing an interest-free loan over 6 or 12 years is comparable to a £5,000 subsidy in driving uptake. It is cheaper to service an interest-free loan than provide subsidies, so policymakers should consider financing options. Provision of a loan is particularly valuable when running costs are reduced (increasing uptake by a further 8 pp, in addition to the main effects). This is perhaps intuitive, since taking on debt for a sizable investment is more appealing when that investment pays for itself over time.
In consumers’ eyes, reducing running costs is comparable to halving the upfront costs or spreading it over time. This implies switching the environmental levies currently imposed on electricity to gas tariffs can complement the current boiler upgrade scheme.
If you are a local council, bank or energy company interested in testing some of these heat pump solutions in the real world, please contact us to explore opportunities to collaborate.
Principal Advisor
Director, Head of Climate, Energy & Sustainability
Research Advisor
Head of Data Science
Research Advisor
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