A new analysis of official Government data has found that more than nine out of every ten heat pumps installed in existing UK homes during 2025/26 were supported by taxpayer or energy bill payer subsidies, at a combined cost approaching £500 million in a single year.

The report, “The cost of retrofitting heat pumps in the UK” produced by the not for profit body EUA, finds that of the 49,880 air source heat pumps installed in existing homes during 2025/26, 45,397 installations (91%) received support through Government-backed schemes including the Boiler Upgrade Scheme (BUS), ECO, SHDF and HUG programmes.

The analysis estimates that once direct grants, ECO levies and VAT relief are taken into account, the total cost to taxpayers and bill payers reached £498.6 million during the financial year.

Using Government carbon intensity factors and Ofgem consumption assumptions, the report calculates that the heat pumps installed in 2025/26 will deliver lifetime carbon savings of approximately 1.14 million tonnes of CO₂e, equating to a cost of £437 per tonne of carbon saved.

The report concludes that this cost is above the Government's own valuation of carbon and places heat pump retrofits towards the most expensive end of available carbon abatement measures.

Mike Foster, CEO of EUA, said:

"The most striking finding is not the number of heat pumps being installed, but the extent to which the market remains dependent on subsidy. When 91 per cent of installations rely on public support, it is impossible to claim there is a genuine consumer-led market.

"Taxpayers and energy consumers contributed almost £500 million last year to support fewer than 50,000 retrofit installations. Before asking households to fund even more support, ministers should be able to explain what value they are getting for that money.

"At £437 per tonne of carbon saved, this policy appears expensive compared with many other carbon reduction options available to government. At a time of intense pressure on public finances, value for money should matter. The Secretary of State is more interested in counting heat pumps than counting the cost. Taxpayers are entitled to demand both.''

The report warns that the scale of public support raises questions about the long-term sustainability of the current approach and whether ministers are paying sufficient attention to cost effectiveness when designing decarbonisation policies.

See the short report here