UK heat pump subsidies cost taxpayers nearly 500 million pounds in 2025/26 analysis finds

A new analysis from the Energy and Utilities Alliance shows that UK heat pump installations in existing homes remain heavily dependent on public subsidies. In 2025/26, 91 percent of the 49,880 air source heat pumps installed received government support through schemes like the Boiler Upgrade Scheme, ECO, SHDF, and HUG programs. The total cost to taxpayers and bill payers reached 498.6 million pounds, or about 437 pounds per tonne of CO2 saved over the lifetime of the units. That figure sits above the government's own carbon valuation, making heat pump retrofits one of the more expensive abatement options currently available. The report raises a practical question for anyone tracking climate policy delivery. If 9 out of 10 installations still need a subsidy, the market has not reached the point where heat pumps compete on cost alone. For policymakers and investors watching the UK's heat pump rollout, the numbers suggest that scaling up will require either much lower installation costs or a sustained commitment to public funding. The piece is worth reading for the specific cost per tonne figure and the breakdown of which subsidy programs are carrying the load.