The government has confirmed that the Clean Heat Market Mechanism will go ahead in January 2024.
The Clean Heat Market Mechanism (CHMM) means that UK boiler manufacturer’s will add a green gas levy charge to their boiler prices. Effective 1st January 2024.
Recent changes in the governments Clean heat Market Mechanism scheme, aimed at spurring on the sale and installation of air and ground source heat pumps in domestic homes, will mean that the UK’s biggest boiler manufacturer’s, including Worcester Bosch and Baxi, will need to add a green gas levy charge to their boiler prices, effective 1st January 2024.
What is the Clean Heat Marketing Mechanism?
The Clean Heat Market Mechanism (CHMM) is a government framework policy to increase the sale and installation of low-carbon heating technologies. The policy aims to improve energy efficiency in homes to meet carbon emission targets. Its focus being on amplifying the adoption of ground and air source heat pumps as alternatives to gas and oil heating systems for heat and water.
Why is the CHMM being introduced?
The CHMM intends to speed up the adoption of heat pumps in UK homes and reduce the usage of natural gas in heating homes and commercial buildings. As it contributes to carbon emissions and climate change, by reducing the use of fossil fuels, the government hopes the CHMM will assist in its Net Zero 2050 commitment.
Current number of annual gas boiler installations in the UK: Around 1.5million.
Current number of annual hat pump installations in the UK: Around 66,000.
Government target of Heat pump installations by 2028: 600,000
With the current number of heat pump installations in the UK around 60,000 annually,
From the statistics above, you can see that current heat pump installation rate is far below the CHMM target, and well below the number of boiler installs completed each year.
How does the CHMM affect Boiler manufacturers?
To encourage manufacturers to meet the heat pump targets, the government will impose fines on manufacturers that fall short. The CHMM will start in April 2024, and manufacturers will earn “credits” for heat pump installations. Failure to meet the target will result in fines of £3,000 per missing credit.
In year one of the scheme, manufacturers will have to match 4% of their boiler sales with heat pump sales. This will rise to 6% in year two. And will gradually increase each year thereafter until heat pump sales match around a quarter of their boiler sales.
How does the CHMM affect UK Homeowners?
Market leading boiler manufacturer Worcester Bosch has already indicated that the CHMM fines will be passed on to the consumer, which could lead to a price increase on gas boilers of up to £300. Baxi have recently released a statement that a £120+VAT levy payment will be added to all of their gas boiler sales.
Many boiler installation companies and family-run businesses will not be able to afford to absorb these green gas levy charges and as a result will be forced to pass the cost on to the end user – the homeowner.
Should I get a new boiler or a heat pump?
When deciding between whether you should get a new boiler or a new heat pump, above all it is important to consider the specific needs of your home and the best products at the best price.
Heat pumps are becoming more cost-effective due to government funding, but they may not be suitable for every home. They work best in well-insulated or new build homes with large radiators, solar panels, or underfloor heating. Older homes with poor insulation may not be as well-suited for heat pumps.
If you live in a less insulated, older home, a hybrid heat pump could be a great option. This system combines a hybrid heat pump and a boiler to power the heating system, using the home’s existing gas pipes. It intelligently switches between heat pump only, heat pump and gas combined, or gas only, depending on cost-effectiveness, to maintain high efficiency and low costs.
A new boiler may be the most cost effective option for you if your home is older or not well insulated. Upgrading your old boiler can lead to significant energy bill savings through improved efficiency.
We hope this information helps you make an informed decision about your heating system upgrade. If you have any further questions on this matter, please don’t hesitate to reach out and ask us.