EDF launches UK’s first heat pump tariff
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British energy company EDF has launched the Heat Pump Tracker tariff to never charge customers above the price cap, in what the company is calling a first for the UK.
The tariff was designed alongside experts from heating contractor CB Heating, which EDF acquired in November 2023.
The tariff offers six hours of discounted zero-carbon electricity every day to new and existing EDF customers with any heat pump technology.
With two off-peak windows from 4am to 7am and 1pm to 4pm, customers can shift their consumption without the burden of peak rates, states EDF in a release.
Philippe Commaret, managing director of customers at EDF, said: “Everyone plays a significant part in helping Britain achieve net zero which is why we’re pleased to be bringing a heat pump tariff to both new and existing customers in the market, helping them save at least £164 ($204.50) a year, no matter what type of heat pump technology they may have already installed in their homes.”
According to research from Mortar, cited by EDF, approximately 67% of British consumers are seeking greater control over their energy costs, with 42% of those without an air source heat pump admitting they have concerns about their current heating systems. The top causes for concern include rising costs (71%) and environmental impacts (40%).
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Policy push
EDF’s tariff follows a push in the UK to ease uptake barriers for consumers, with gas boilers set to be banned in new build homes as part of the government’s Future Homes Standard.
In March 2024, the UK government announced changes to the Boiler Upgrade Scheme, hoping to make it easier for homeowners to move away from gas boilers.
According to a government-issued statement in January, the change followed a sustained surge in applications after heat pump grants were increased by 50% last autumn.
Specifically, the average monthly number of heat pump applications from November 2023 to January 2024 was found to be 39% higher than the monthly average before the uplift.
In the same month, the UK’s Heat Pump Association (HPA) released their report Accelerating Heat Pump Deployment – Interim Domestic Heat Pump Tariff, in which they described how Great Britain has one of the highest electricity-to-gas price ratios (3.97) in all of Europe, nearly double the European Heat Pump Association’s (EHPA’s) recommended ratio of 2.
In response to this challenge, the HPA called on the Government to introduce a temporary Domestic Heat Pump Tariff Discount to counteract distortion in the domestic heating market caused by levies on electricity bills.
The discount would reduce the price of electricity used for domestic heating or hot water produced by hydronic heat pumps to an amount equivalent to exempting that proportion of electricity from levies.
Starting at 5p/kWh in 2024/25- 2025-26 and rising to 6p/kWh in real terms in 2026/27, the discount is estimated to require a maximum of £533 million ($664.8 million) of discounted costs over three years.
The HPA proposed that this should be introduced quickly as an interim measure to bridge the gap between today’s situation, and the time when wider electricity market reform is completed.
Commenting in a release, HPA CEO Charlotte Lee said: “Our research provides a roadmap to address the current distortion in the domestic heating market, which is undoubtedly hindering heat pump deployment.
“Reducing the price and electricity relative to gas is the sector’s number one policy ask. Action must be taken to change the energy price signals so that the lowest carbon heat is the lowest cost heat, which in turn will accelerate the deployment of heat pumps and support the government’s decarbonisation goals.”
EDF, citing Mortar’s research, adds that, despite the cost- and carbon-saving potential of heat pump, only 2% of respondents have an air source heat pump in their homes, with 26% of British consumers planning to instal an air source heat pump within the next five years.
Seven in 10 perceived not needing to replace their current heating system as a significant deterrent in switching to a heat pump, with 26% only likely to install a heat pump when they next carry out home renovations.
When the time comes to replace heating systems, however, 55% would consider monetary savings on their bills as the most important factor in their decision to switch.
