CHMM Scrapped? What The Recent News Means For Installers

by | Feb 22, 2024 | Business Services, Doing Work, Growing the Business, Technical Knowledge

The Clean Heat Market Mechanism (CHMM) has been in and out of the news since its introduction at the end of last year. It’s a controversial plan, to say the least, and is now expected to be scrapped – although no official statement of this has been released to date. 

In its current form, it will have huge consequences for the heating & plumbing industry. But at the same time, constant changes and u-turns in government policy are making the years ahead difficult to predict. 

While many see the CHMM as deeply flawed, getting rid of it will mean a bump in the road for the Government’s Net Zero strategy. But what about the installers on the ground? What changes might be heading their way throughout 2024 and beyond?

What is the Clean Heat Market Mechanism?

The Clean Heat Market Mechanism was designed to boost the uptake of heat pumps. With a target of 600,000 annual installations, boiler manufacturers were expected to drive this push and either match or substitute 4% of their boiler sales with heat pumps. Heavy fines of £3,000 for each heat pump short of their target were implemented as an incentive.

Recent News

Most manufacturers have put up their boiler prices by about £100 to £120 as they expect to be fined heavily by the CHMM.

Since the plan came into effect on January 1st, boiler manufacturers like Baxi and Worcester Bosch have put up their prices by £120. What this has effectively done is pass on the fines manufacturers are expecting to pay directly to the consumer.

Some see this as manufacturers attempting to profit from the plan. However, manufacturers have denied these accusations saying that the CHMM’s goals are unachievable with the current state of the industry and therefore are entirely unfair. Both Worcester Bosch and Baxi have released statements saying that the fines they’ll be forced to pay pose a very real threat to their business. In their eyes, the price hike is an unfortunate necessity.

You can read these statements here:

Now, following criticisms of what’s often referred to as the “boiler tax”, Claire Coutinho (Secretary of State for Energy Security and Net Zero) has suggested the plan could be scrapped entirely. This is to combat the increased boiler prices and fines being pushed onto homeowners.

What does this mean for installers?

For installers, one of the biggest issues at the moment is the whole uncertainty of everything. There is still no clear decision on whether the CHMM is going to be scrapped, modified, or left unchanged. 

As is widely reported, the constant u-turns and toing and froing make it difficult for heating & plumbing businesses to properly plan for the future. Especially when so many engineers fail to see heat pumps as a viable option for older UK homes, installers are faced with the decision to go ahead with planning for a heat pump takeover (business strategy & training courses included) or stick with gas boilers until the very end (at which point it could be more difficult to adapt).

On the flip side, constant policy changes damage the buyer’s market. Homeowners may be less open to new boilers or even heat pumps if they’re unsure where the industry is headed. 

A cancelled CHMM will send boiler prices down to about pre-plan levels. Installers can expect to see more boiler work as a result of this.

However, this does raise the question of partial refunds for customers and installers who’ve bought new boilers since January 1st. These prices have been artificially raised by manufacturers because of expected fines which, if the CHMM is scrapped, won’t have to be paid.

Is it still worth doing heat pump training?

Perhaps the most burning question is whether you should still go ahead with heat pump training courses. Gas engineers already have most of the skills and qualifications needed to become an MCS certified heat pump installer, but courses are still 2-4 days long. In terms of lost work hours, this can mean a sizable dent in your monthly turnover. Find out more about this here

It’s difficult to say where the CHMM might move, and what role heat pumps will play in the future of heating. However, with the available grants, it could still be a good idea to become heat pump qualified – even if it’s just to expand your services. Staying ahead of the game is crucial to keep your business thriving, regardless of whether the solution is heat pumps or something else.

What about the wider industry?

A scrapped CHMM might mean lower boiler prices, but it also could mean manufacturers have little incentive to boost heat pump installations

Without some sort of framework in place, it can seem like the Government will have effectively given up on its target of 600,000 heat pump installations each year by 2028. Just recently, news broke that the Labour Party has even dialled back on its promised £28 billion green investment funding. 

Perhaps the solution towards a net zero future and healthy heating industry is an amended, rather than scrapped, Clean Heat Market Mechanism. What are your thoughts?

Next steps:

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