Electric heaters are the low-hanging fruit the Warm Homes Plan should tackle. It could save the average home almost a thousand pounds a year

As we start to see the Warm Homes Plan take shape, it is already clear it will be couched in terms of home economics rather than the environment. Climate change remains the underlying rationale for the strategy, but targets and communication will focus predominately on bill reductions and fuel poverty. The government grasps the hard reality that while people support action to reduce emissions, most cannot afford to be out of pocket to achieve this. A recent survey found that while over half of respondents supported a ban on boilers, two-thirds would not support policies that ‘increased costs for ordinary people’.

Importantly, many, perhaps most, will not just want to see no increase in costs but substantial savings that make a real difference to their bank balance each month. Research by Public First for its recent ‘Upgrade’ report found focus group participants notably unimpressed with modest savings of £10-15 a month. Of the barriers people cited to installing heat pumps, upfront costs and lack of savings came out on top. Of the reasons given by people for considering installing a heat pump, by far the most cited was ‘to reduce energy bills’ (49%), some way ahead of the next most cited reason of sustainability (27%).

In this context, while replacing gas boilers with heat pumps can reduce your energy bill, particularly with the most efficient installations and with flexible tariffs (Octopus estimates up to £219/year), this is unlikely to be enough to convince most people to transition currently. This provides a real challenge for home decarbonisation and the bill reduction objectives of the Warm Homes Plan.

None of this will be a major revelation to anyone working in clean heat. Electricity prices are still artificially and unreasonably high compared to gas, and heat pump deployment needs to increase significantly in order to slash costs. Industry and government are intently focused on driving down costs, but this takes time.  Electricity prices are unlikely to fall drastically in the next few years, even if the consultation on energy price rebalancing is finally published before Christmas. Reductions in installation and manufacturing costs require scale: hundreds of thousands of heat pumps rather than today's tens of thousands. Which gives us a bit of a chicken or egg-shaped problem. We need lots of people to install heat pumps in the next few years to reduce installation costs, but people won’t install a heat pump until we can reduce both installation and running costs.  

Focusing on a much-overlooked group of homes could really help address this conundrum in the next few years and, more importantly, drastically cut energy bills for consumers. Millions of UK homes are directly electrically heated by night storage and panel heaters. Anyone who has experienced these knows how poor the heating is and how shockingly expensive it is.

• There are 2.4 million direct electrically heated homes in the UK, about 8% of the total
• 24% of these homes are in fuel poverty, double the rate of the UK as a whole
• Heating the average home with electric heaters costs £1,900 a year, well over double that of a gas-heated home.
• Replacing night storage heaters with a GSHP in the average UK home reduces the heating bill by ~£1,100/year, a 60% reduction.

For most homes, direct electric heaters are a last resort, one people would be more than happy to change if given a viable alternative. For years, and for many homes, there genuinely wasn’t a viable alternative, but with heat pumps going into everything from off-grid farmhouses to studio flats in high-rises, this is no longer the case.

It is, therefore, curious that these electrically heated homes have been given so little attention when it comes to heat pumps. When the principal barrier to heat pump deployment is insufficient bill savings, why would you not focus on the homes where major savings are available right now? Moreover, if you’re going to spend significant sums of public money on subsidising upgrades to people’s homes, focus that money on the installations that will have the biggest impact on a householder’s bills. Currently, that’s replacing electric heaters with heat pumps, providing demonstrably better outcomes in terms of pounds off energy bills compared to replacing gas boilers or even insulation measures.

Millions of people across the country would be over the moon to have their storage heaters replaced with a heat pump, I know because that’s been the reaction of residents where we've done it. The Labour Party Manifesto, in setting out its ambitions for Warm Homes, targeted upgrading five million homes by 2030, slashing fuel poverty, and saving families hundreds of pounds of their energy bills.  With much of the low-hanging fruit on insulation already taken, only modest bill savings available from fabric upgrades, and heat pumps unlikely to provide major bill savings for gas-heated homes in the near term, the government is in need of easy wins to get its Warm Homes Plan off to a good start. Look no further than the ageing storage heaters attached to people’s walls all over this country.

Notes on assumptions used for calculations:

1. ASHP have an assumed COP of 300%
2. GSHP have an assumed SCOP of 325%
3. Gas boilers have an assumed SCOP of 87%
4. Direct electric heaters have an assumed SCOP of 100%
5. Energy prices used are Ofgem Oct 2024 price cap and EDF October Eco & tariffs for NSH
6. Lifetime assumptions for measures have been taken from the Public Sector Decarbonisation Scheme
7. GSHP lifetime assumption has been adjusted to account for the 100-year lifetime of ground array installation which accounts for approximately 40% of installation costs.
8. Installation costs have been taken from SHDF data
9. Payback periods for heat pumps account for the assumed £2,500 replacement cost of the boiler or night storage heater