Leading energy companies, manufacturers and financial groups have written to the Energy Secretary of State, Claire Coutinho to express their support for the clean heat market mechanism. This follows reports that the government is considering scrapping the policy, following lobbying and “price gouging” from boiler manufacturers.

The letter notes that the mechanism does not require heating appliance manufacturers to increase the price of gas boilers: this is something they have chosen to do, in a move described as “price gouging” by the Secretary of State – who has asked the Competition and Markets Authority to investigates. E3G notes that the mechanism is already working, and is incentivising boiler manufacturers to create attractive clean heat consumer offers and encourage their installers to train up to install heat pumps. 

Signatories, including Daiken, OVO Energy and Good Energy, note that the policy can act as a “central pillar” in the UK’s clean heat landscape. Analysis shows that a third of the government’s 600,000 heat pump installations target was supported to be achieved through the clean heat market mechanism.

Juliet Phillips, UK energy lead for E3G says: “Britain needs to show long-term commitment to net zero and clean tech. Policy chopping and changing sends a confusing signal to households, industry and investors – undermining supply chain investments and delaying action needed for net zero. We urge the government not to cave into the demands of those who want to keep Britain hooked on volatile fossil gas markets.” 

Re: Support for the Clean Heat Market Mechanism

Dear Secretary of State,

Following recent reports that the Department for Energy Security and Net Zero is considering scrapping the Clean Heat Market Mechanism (CHMM), we are writing to you as a cross-industry coalition to express our support for the policy, and to encourage you to move ahead with its planned introduction this year. We believe that this policy will be essential in growing the retrofit market for heat pumps in line with the UK’s target of 600,000 installation per year by 2028. This market growth and increase in the deployment of highly efficient heat pumps will improve British energy security, boost affordable consumer deals, and futureproof the UK’s heating industry. 

Our analysis suggests that the CHMM will not present a disproportionate burden to manufacturers in the first two years. The 2024/25 first-year annual target of overall boiler sales (4%) requires the entire boiler manufacturing industry to increase sales by only about 5,000 heat pumps that year, roughly the same number of gas boilers the industry sold every day last year. This is highly achievable, meaning manufacturers are highly unlikely to face a deficit of credits, or associated charges. There will be sufficient demand for manufacturers to meet targets in the first two years of the scheme, especially in light of the welcome increase to the Boiler Upgrade Scheme.

The energy and renewables sectors, as well as house builders and high street lenders, are all moving to support the clean heat transition. A number of high street lenders are offering mortgage borrowers access to heat pumps for as little as £2,000; and there are a growing number of UK-based heat pump manufacturing sites. The CHMM, in conjunction with other policies, can be a central pillar in supporting the UK’s transition to clean heat.

We commend the Department for Energy Security and Net Zero’s efforts to address the challenge of heat decarbonisation in UK homes and we would be pleased to work with you to implement this world-leading policy.

Yours sincerely,

Juliet Phillips,

Programme Lead for UK Energy Team, E3G

 

Daikin

E3G

Electrify Heat

Good Energy

Ground Source Heat Pump Association

Heat Pump Federation

Kensa 

OVO Energy

Pepper Money 

Rendesco

Skoon

The Association for Decentralised Energy

The MCS Foundation