Utility Week

16 | FEBRUARY 2022 | UTILITY WEEK Heat Analysis Octopus makes big play on heat pumps Lucinda Dann visited the UK's first R&D centre for heat pumps to find out how and why Octopus Energy is preparing to install them on a mass scale from April 2022. T he government's boiler replacement scheme may be for only 30,000 heat pumps per year for three years from April 2022, but Octopus Energy is expecting it to act as a catalyst for revolution within the heat pump sector. As such, it has spent the past few months busily preparing for the launch of the scheme at its new £10 million heat pump research and development centre in Slough. The company has set itself an ambitious goal: reducing the cost of installing a heat pump to the point where it costs no more than a standard fossil fuel boiler within 18 months. And the company says it is laser focused on achieving this. It expects some of that cost reduction to come from buying hardware directly from manufacturers, and the rest from quicker installations and a strategy of focusing on the easiest homes first. Building an army One of the main issues keeping costs high is a shortage of heat pump installation engi- neers because currently it is still something of a cottage industry, Octopus says. Therefore, its focus ahead of the scheme's launch in April is training an army of engi- neers to carry out the work. Most of the effort of staff at the R&D cen- tre is currently focused on training, and around 1,000 trainees are expected to pass through Octopus's programme a year. The first recruits started their courses in November and training completion times can vary depending on previous experience. Around 400 engineers, enough to assemble 100 teams, are expected to be ready for the scheme's launch. The company says the trades which are taking the training course include labourers, people with heating and plumbing experi- ence, and electricians. All of the engineers taking part in Octo- pus's training scheme will be employed by the company itself, with many of the elec- tricians having been working on installing smart meters until now. John Szymik, chief executive of Octopus Energy Services, says the cost of installation is high partly because highly skilled trades- people are being tied up in every aspect of the installation process, including unloading the heat pump off the van. Octopus's model will be different, he says, due to the company's size and resources. "We will have a big pool of electricians who will appear just for the necessary bit." Initially the company will be looking only to take on installations in London and the home counties, expanding to other areas soon a–er. "We won't necessarily be able to cover the whole market by April, but we are working towards it," he says. Focusing on the 40% that are ready to go Inside a nondescript warehouse on the Slough Industrial Estate are two full-sized three bed houses, complete with carpets, radiators and fitted kitchens. One has been designed to modern standards, while the other is to 1970s specifications. The company says the two houses repre- sent around 40% of the UK's housing stock and have been built to allow engineers on its heat pump training programme to work within real-life spaces to connect the new technology. They are also representative of the types of houses Octopus will be targeting as it hopes to create momentum in the market. "Up until now the heat pump market has been a cottage industry, with most installa- tions being really bespoke off-gas grid pro- jects which require extensive planning and surveying," says Szymik. "Our job is to create a market." Houses built to modern specifications, of which there are nearly 3.7 million, or 17% of the UK housing stock, are ready for a heat pump today. These homes will not require any additional insulation, making them the quickest and cheapest installations. Another 12%, around 2.5 million homes, have been built to 1970s standards, which will require only some additional insulation to achieve the best efficiencies. Despite claims that homeowners will have to change all of their radiators to much larger ones, Szymik expects to only change at most one radiator per house based on a whole heat loss calculation for each room. He adds that Octopus is only interested in the retrofit market at first rather than new- build or commercial, and will look to install heat pumps in both new and existing cus- tomers' homes. Although the company is interested only in a specific section of the housing market, the scheme is open to all homeowners, and Szymik does not anticipate that this will cre- ate any problems. "Any increase from the scheme will be helpful," he says, "even if it is not all taken up by the target market of well-insulated homes who could have a heat pump installed tomorrow." Key to encouraging the uptake of heat pumps will be being able to interrupt the usual decision-making process which sees customers opt to replace an existing gas boiler when it breaks with another one. But Octopus is confident that customer demand will be high based on the limited marketing it has done around heat pumps up until now. "We did a marketing campaign where we asked people if they were interested in get- ting a heat pump and being part of a trial, but it was so popular and we got so much interest that we had to turn it off a–er two days," says Aimee Clark, head of commer- cial, electrification of heat. Around a quarter of those emailed said yes immediately, she adds. Octopus will not be looking to offer financing to customers to cover the upfront

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