Will The Clean Heat Market Mechanism Affect Boiler Prices?

The types of heating systems that people will install into new and existing homes may start to change beginning with this year.

In April 2024, the first step of the government’s Clean Heat Market Mechanism (CHMM) scheme is set to launch, which is a complex policy of interlocking clean heat and clean energy targets that heating manufacturers need to follow to avoid potential fines.

The specific details are somewhat complex, but the primary aim of the scheme is to encourage the installation of heat pumps alongside green energy grants to help reduce the prices of installation and implementation of a heating system that is still relatively new in the UK.

How the system is set to work is that each manufacturer will earn credits for the number of heat pumps that are installed, and need to reach a target tailored to the size of their company or face fines for doing so.

There are some caveats, like how any company with a surplus of credits can sell them to other manufacturers to make sure they meet their targets, but several of them have responded to the scheme by raising the prices of their boilers, in some cases by as much as ten per cent.

This has a consequential effect on the price of boiler quotes and the stated reason, as well as the reason why CHMM is characterised as a levy or a tax is because the claimed demand for heat pumps in the UK is too low to meet the proposed targets.

It is deeply unfortunate that the clean heat scheme’s costs are potentially going to be passed directly onto consumers, and could lead to some people deciding to wait and see with their boiler or opt for a less efficient boiler with higher long-term costs, particularly with regard to maintenance and further replacement.

Exactly how the scheme will work in the long term remains to be seen, but this is an unfortunate short-term consequence.