Some leading boiler companies have announced boiler installation costs are set to rise as they prepare for the "inevitable" fines they will receive from the government's Clean Heat Market Mechanism scheme
Boiler companies announce boiler costs are set to rise by as much as £120, blaming the government's Clean Heat Market Mechanism(Image credit: Getty Images)
Boiler manufacturers have announced boiler costs are set to rise by as much as £120 following the government's introduction of a Clean Heat Market Mechanism.
Some of the leading UK boiler providers have announced they will increase prices as they will not be able to meet the government's high heat pump targets with the government aiming to use the scheme to help meet their target of 600,000 heat pump installations a year.
The Clean Heat Market Mechanism will result in all boiler companies who fail to meet their heat pump quota being fined, which boiler companies claim will be "inevitable", and have announced these costs will be passed down to customers.
What is the Clean Heat Market Mechanism?
The Clean Heat Market Mechanism (CHMM) is part of a comprehensive strategy in the UK to promote investment and innovation in the heating industry, with a focus on making heat pumps more attractive to consumers.
Supported by policies such as the Energy Security Bill and Powering Up Britain, the CHMM aims to create a stable policy environment and provide incentives for the heating industry.
Key objectives of the CHMM include:
Reducing upfront costs of heat pumps to encourage their installation
Lowering running costs of heat pumps compared to fossil fuel boilers
Increasing the number of skilled heat pump installers and maintaining high installation standards
Promoting innovations to enhance the appeal, efficiency, and ease of adoption of heat pumps
To facilitate adoption of heat pumps and stimulate market growth, the government has introduced financial support measures like the Boiler Upgrade Scheme (BUS) and the Heat Training Grant.
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The CHMM is set to be introduced in April 2024 to March 2025 and will require boiler companies to equate 4% of their total sales to heat pumps in the first year and 6% in the second year, otherwise fines will be placed on these companies.
The CHMM requires boiler companies to allocate 4% of their total sales to heat pumps in the first year and 6% in the second year(Image credit: Vaillant)
Why will this cause an increase in gas boiler costs?
Boiler companies claim the government's targets in the scheme are unrealistic and will force them to impart the cost of the fines onto consumers.
Worcester Bosch noted that the heat pump market in the UK had not reached a "sufficient scale" yet. The company anticipates facing "inevitable" fines as a result of regulatory changes, which would likely be transferred to its customers.
The company emphasised that this decision was not driven by commercial motives but rather as a response to changes in legislation.
Worcester Bosch put out a statement saying the fines over the next four years alone they would inevitably receive would be "close to turnover."
Vaillant also stated they would be placing additional charges for their boiler as a spokesperson stated: “There are multiple factors announced by the Government that will impact Vaillant. The current process does not allow manufacturers the full visibility of how many heat pumps sold are MCS registered.
“Given the changing market dynamics and push for heat pump installations generated by CHMM, we in the current circumstances are left with no option but to act.”
Worcester Bosch say the demand for the demand for heat pumps in the UK market is not yet at a "sufficient scale" to meet the government's targets(Image credit: Worcester Bosch)
How much will the increase be?
Gas boiler manufacturers, including Worcester Bosch, Vaillant, and Baxi, have stated they are set to implement price hikes of up to £120 as soon as the CHMM is introduced.
Worcester Bosch has announced a £120 increase for all its gas boilers, while Vaillant plans to raise prices by £95. Baxi, on the other hand, disclosed a "market mechanism levy" of £120 on its residential gas boilers.
A Department for Energy Security and Net Zero spokesman said: “We have not required any increase to the price of gas boilers.
“Targets are realistic and fully achievable, providing industry with flexible options to support our ambition to make heat pumps easy and affordable to install.
News Editor Joseph has previously written for Today’s Media and Chambers & Partners, focusing on news for conveyancers and industry professionals. Joseph has just started his own self build project, building his own home on his family’s farm with planning permission for a timber frame, three-bedroom house in a one-acre field. The foundation work has already begun and he hopes to have the home built in the next year. Prior to this he renovated his family's home as well as doing several DIY projects, including installing a shower, building sheds, and livestock fences and shelters for the farm’s animals. Outside of homebuilding, Joseph loves rugby and has written for Rugby World, the world’s largest rugby magazine.
