Playbook: adopting electrification & heat pumps in 90 days

In 2024, heat pumps outsold gas furnaces for the second consecutive year in the United States, while the UK recorded a remarkable 56% surge in heat pump installations—reaching 98,345 units compared to 62,906 in 2023 (IEA, 2025). Globally, heat pumps now prevent an estimated 2.6 billion tonnes of CO₂ emissions annually, equivalent to approximately 7% of total global emissions. Despite a challenging year for European markets overall, the technology has reached a critical inflection point: installation costs after government incentives now match or undercut traditional gas boiler replacements in major markets, fundamentally altering the procurement calculus for building owners, facilities managers, and sustainability professionals. This playbook provides a structured 90-day framework for organisations seeking to transition from fossil fuel heating to electric heat pump systems, addressing technical specifications, financial considerations, regulatory compliance, and operational integration.

Why It Matters

The building sector accounts for approximately 30% of global final energy consumption and generates roughly 26% of global energy-related CO₂ emissions, with space and water heating representing the largest share of building energy demand (IEA Global Status Report for Buildings and Construction, 2024). In the UK specifically, heating buildings constitutes approximately 17% of total carbon emissions, making decarbonisation of thermal loads essential for meeting the nation's legally binding net-zero targets by 2050.

Heat pumps represent the most mature and scalable technology for electrifying building heating systems. Operating on the thermodynamic principle of transferring heat rather than generating it through combustion, modern air-source heat pumps achieve coefficients of performance (COP) between 3.0 and 4.5—meaning they deliver three to four-and-a-half units of thermal energy for every unit of electrical energy consumed. This efficiency advantage translates directly into operational cost savings and emissions reductions, particularly as electricity grids incorporate increasing shares of renewable generation.

The policy landscape has shifted decisively in favour of electrification. The UK's Boiler Upgrade Scheme now provides £7,500 grants for heat pump installations, up from £5,000 previously. The government targets 600,000 annual heat pump installations by 2028, creating both regulatory pressure and market opportunity. Similar incentive structures exist across the European Union and through the US Inflation Reduction Act, which offers tax credits up to 30% of installation costs. For procurement professionals, the question has evolved from whether to electrify to how quickly and efficiently the transition can be executed.

Key Concepts

Coefficient of Performance (COP) and Seasonal Performance Factor (SPF)

COP measures instantaneous efficiency—the ratio of heat output to electrical input at specific conditions. SPF provides a more realistic annual efficiency metric accounting for varying outdoor temperatures and operational modes throughout heating and cooling seasons. Modern cold-climate heat pumps maintain SPF values above 3.0 even in regions experiencing sustained sub-zero temperatures, with premium models achieving 3.5 or higher (European Heat Pump Association, 2025).

System Sizing and Heat Loss Calculations

Accurate heat loss calculations form the foundation of any successful heat pump installation. Unlike oversized gas boilers that modulate output with minimal efficiency penalty, heat pumps perform optimally when correctly matched to building thermal loads. The MCS (Microgeneration Certification Scheme) in the UK mandates room-by-room heat loss assessments, typically following the CIBSE Guide B methodology. Undersizing results in supplementary heating requirements; oversizing causes short-cycling and reduced efficiency.

Flow Temperature and Emitter Compatibility

Heat pumps operate most efficiently at lower flow temperatures (35-45°C) compared to traditional boilers (60-80°C). This characteristic necessitates evaluation of existing heat distribution systems. Underfloor heating represents the ideal pairing, while adequately sized radiators—typically requiring surface areas 1.5-2x larger than those designed for high-temperature systems—can accommodate lower flow temperatures without comfort compromise.

Grid Connection and Electrical Infrastructure

Heat pump installations require adequate electrical supply capacity, typically adding 3-12kW of load depending on system size. Properties with single-phase 60A or 80A supplies generally accommodate residential systems without upgrade, though larger commercial installations may require three-phase connections or Distribution Network Operator (DNO) approval. Assessment of existing electrical infrastructure should occur early in the project timeline.

Sector-Specific KPIs for Heat Pump Adoption

Sector	Primary KPI	Target Range	Measurement Method
Commercial Office	Energy Use Intensity (EUI) reduction	25-40%	Annual kWh/m² comparison
Residential (Single Family)	Annual heating cost savings	£300-500	Utility bill analysis
Industrial (Low-Temp Process)	Thermal COP	3.5-5.0	Metered input/output
Multi-family Housing	Carbon intensity reduction	40-60%	kgCO₂e/dwelling/year
Retail	Payback period	4-7 years	NPV analysis with incentives
Healthcare	System uptime	>99.5%	Operational monitoring

What's Working

Integrated Installation and Energy Tariff Offerings

Companies like Octopus Energy have demonstrated that bundling heat pump installation with optimised electricity tariffs dramatically improves consumer economics and adoption rates. Their Cosy Octopus tariff provides 50% discounted rates during off-peak hours, enabling heat pump owners to pre-heat homes and hot water cylinders when electricity costs are lowest. This integration of hardware, installation services, and energy supply under a single provider simplifies the customer journey and reduces perceived risk. In 2024, Octopus Energy became the UK's largest heat pump installer, with over 200,000 homeowner enquiries—a 144% increase from 2023.

Installer Training at Scale

The chronic shortage of qualified heat pump installers has historically constrained market growth. Daikin's response—training over 6,132 installers across five national training centres in 2024 alone—demonstrates that manufacturer investment in workforce development can address bottlenecks. Their Sustainable Home Training Centres, operating in partnership with colleges and industry bodies, have achieved net promoter scores exceeding 90%, indicating high satisfaction with training quality.

Performance-Based Financing Models

Emerging financing structures that tie repayment to verified energy savings remove upfront cost barriers. Sealed, operating primarily in North America, covers all installation costs and recovers investment through a share of documented energy savings over time. This model eliminates the largest objection prospective adopters cite—high initial capital expenditure—while aligning installer and customer incentives around system performance rather than sales volume.

Cold-Climate Technology Advancement

Next-generation heat pumps using R290 (propane) refrigerant, such as Daikin's Altherma 4 series launched in late 2024, operate effectively at outdoor temperatures as low as -28°C while delivering water temperatures up to 75°C. These specifications eliminate the historic concern that heat pumps cannot serve colder regions or older buildings with high-temperature heating systems.

What's Not Working

Installer Capacity and Quality Inconsistency

Despite training initiatives, demand continues to outstrip qualified installer supply. The UK requires approximately 50,000 trained heat pump installers by 2030 to meet government targets, yet current certification rates suggest shortfall. Quality inconsistency among installations has generated negative consumer experiences, particularly involving incorrect system sizing, poor commissioning, and inadequate customer education on operational characteristics.

Policy Uncertainty and Incentive Volatility

The European heat pump market contracted 21-22% in 2024, largely attributable to reduced subsidies and policy uncertainty in key markets like Germany, which experienced a 50% sales decline. Manufacturers and consumers alike struggle to plan investments when incentive levels fluctuate unpredictably. Stable, multi-year policy frameworks demonstrably correlate with higher adoption rates.

Electricity-to-Gas Price Ratios

In several European markets, electricity prices remain 3-4x higher than natural gas prices per unit of energy, eroding the operational cost advantage that heat pump efficiency should provide. Without carbon pricing mechanisms that internalise the environmental cost of fossil fuels or targeted electricity tariff structures for heat pump users, the economic case remains challenging in certain jurisdictions.

Retrofit Complexity in Older Building Stock

Pre-1919 solid-wall properties and listed buildings present genuine technical challenges, often requiring fabric improvements (insulation, draught-proofing) before heat pump installation becomes viable. The additional cost and disruption of whole-house retrofit can double or triple project budgets, extending payback periods beyond acceptable thresholds for many owner-occupiers.

Key Players

Established Leaders

Daikin – Global leader in heat pump technology with over 100 years of refrigeration and HVAC experience. Europe's largest hydronic heat pump manufacturer with production facilities across Belgium, Czech Republic, Germany, and Poland. Their 2025 partnership with Greater Manchester targets 64,000 installations over five years.

Mitsubishi Electric – Pioneer of the Ecodan air-source heat pump range, widely specified for both residential and commercial applications. Strong UK market presence with comprehensive installer training programmes and extensive spare parts availability.

Octopus Energy – The UK's largest heat pump installer and energy supplier, having integrated installation services with smart energy tariffs. Their UK-manufactured Cosy heat pump launched in 2024, with typical installed costs of £3,818 after the Boiler Upgrade Scheme grant—approximately 28% below national average.

Carrier Global Corporation – Major commercial and industrial heat pump manufacturer, offering systems up to several megawatts capacity for district heating applications.

Emerging Startups

Quilt – US-based startup that raised $53M across Series A and B rounds in 2024. Their smart ductless mini-split heat pumps feature over-the-air software updates that have delivered 20%+ performance improvements post-installation. Nearly 1,000 units installed across 16 US states and 5 Canadian provinces by late 2024.

Aira – European home electrification company offering end-to-end heat pump solutions in Germany, UK, and Italy. Backed by significant venture funding, they combine technology platform with employed installer workforce.

Vaillant Group – Though established in traditional heating, their aroTHERM plus range represents aggressive pivot toward electrification, with strong position in German and UK markets.

Key Investors & Funders

Breakthrough Energy Ventures – Bill Gates-founded climate technology investor supporting multiple heat pump and building electrification companies through patient capital deployment.

Energy Impact Partners – Lead investor in Quilt's Series A round, with portfolio focus on grid-edge technologies and building decarbonisation.

UK Infrastructure Bank – Provides financing for larger commercial and district heat pump projects, with £500M allocated to heat network development.

Boiler Upgrade Scheme (UK Government) – Directly funds £7,500 grants per installation, with budget extended through 2028. Over 50,000 grants issued in 2024.

Examples

Social Housing Pilot, Greater Manchester Combined Authority: In partnership with Daikin, GMCA launched a five-year programme targeting 64,000 heat pump installations across social housing stock. The initiative combines bulk procurement (reducing per-unit costs by approximately 15%), installer training investment, and tenant education programmes. Early results from 2024-2025 cohorts show average gas consumption reductions of 85% and resident satisfaction scores of 4.2/5.0. The programme explicitly addresses fuel poverty concerns through integration with fabric-first retrofit measures funded via ECO4 obligations.
Octopus Energy Cosy 6 Rollout, UK-wide: Octopus Energy's deployment of their UK-manufactured Cosy 6 heat pump achieved installations for 13.9% of customers at £500 or less (after the £7,500 BUS grant) between April 2024 and January 2025. By combining direct-to-consumer sales, employed installation teams, and smart tariff integration, they demonstrated that heat pump adoption could reach cost parity with gas boiler replacement. Their 91% success rate in beating national average installation costs indicates operational maturity in the installation supply chain.
NHS Estates Decarbonisation, Glenfield Hospital Leicester: The Leicester Partnership NHS Trust implemented a 500kW ground-source heat pump system serving hospital heating loads, partially funded through the Public Sector Decarbonisation Scheme. Commissioning in 2024, the installation reduced site gas consumption by 60% and demonstrated that even complex healthcare estates with stringent uptime requirements can transition to heat pump technology. The project included thermal storage to decouple heat generation from demand peaks, addressing grid capacity constraints.

Action Checklist

Weeks 1-2: Commission whole-building heat loss assessment following MCS or CIBSE methodology; obtain current energy consumption data for baseline establishment
Weeks 3-4: Assess existing electrical infrastructure capacity and engage DNO if upgrade required; review planning constraints for listed buildings or conservation areas
Weeks 4-6: Obtain minimum three quotations from MCS-certified installers; verify installer experience with similar building typology and system size
Weeks 5-7: Apply for Boiler Upgrade Scheme voucher (or equivalent regional incentive); explore supplementary funding through ECO4, Home Upgrade Grant, or corporate energy efficiency schemes
Weeks 6-8: Evaluate heat emitter adequacy; determine whether radiator upgrades or supplementary underfloor heating required to accommodate reduced flow temperatures
Weeks 8-10: Finalise contractor selection; agree commissioning protocol including refrigerant charge verification, control setup, and user training schedule
Weeks 10-12: Complete installation and commissioning; establish monitoring regime for performance verification during first heating season
Week 12 onwards: Register for smart energy tariff optimised for heat pump operation; schedule year-one performance review

FAQ

Q: Can heat pumps work effectively in older UK properties with solid walls and large radiators? A: Yes, though optimal performance requires careful system design. Many pre-1970s properties have radiators oversized for modern usage patterns, actually benefiting heat pump installation without replacement. However, solid-wall properties typically require improved insulation before heat pump installation delivers acceptable running costs. A qualified surveyor can determine whether your specific property requires fabric improvements first, and programmes like ECO4 may fund such works for eligible households.

Q: How do heat pump running costs compare to gas boilers given current UK energy prices? A: At standard electricity tariffs (approximately 24p/kWh) versus gas (approximately 6p/kWh), a heat pump with SPF of 3.5 delivers heating at approximately 6.9p/kWh—near parity with gas. Optimised time-of-use tariffs like Octopus Cosy reduce effective heat pump electricity costs to 4-5p/kWh equivalent, providing 20-30% savings versus gas. The economic case strengthens as gas prices incorporate increasing carbon costs and electricity decarbonises further.

Q: What maintenance requirements do heat pumps have compared to gas boilers? A: Heat pumps require less maintenance than combustion appliances—no annual gas safety certification required, no flue or combustion chamber inspection. Recommended annual checks include refrigerant system inspection (by F-Gas certified engineer), filter cleaning, and outdoor unit clearance verification. Most manufacturers recommend annual service visits, typically costing £100-200, compared to £80-150 for gas boiler servicing but without the same regulatory obligation.

Q: Will my existing hot water cylinder work with a heat pump? A: Potentially, though assessment is required. Heat pumps benefit from larger cylinders (typically 200-300 litres for family homes) with increased coil surface area for efficient heat transfer at lower flow temperatures. Many installations include cylinder replacement as part of the project scope. Unvented pressurised cylinders are preferred over vented systems for performance optimisation.

Q: How long does a typical installation take and what disruption should I expect? A: Residential installations typically require 2-4 days of on-site work, depending on complexity. Disruption includes temporary heating interruption (usually one day), external groundworks for refrigerant pipework, and indoor works for cylinder and controls installation. Commercial installations range from one week to several months depending on system scale and integration requirements.

Sources

International Energy Agency (2025), "Is a Turnaround in Sight for Heat Pump Markets?", IEA Commentary, January 2025.
European Heat Pump Association (2025), "Heat Pump Sales Up 9% in 2025 So Far", EHPA Market Statistics Release, June 2025.
Octopus Energy (2024), "Hot Property: 200,000 Homeowners Eye Octopus' Heat Pumps", Press Release, December 2024.
Daikin Europe (2024), "Greater Manchester and Daikin Sign Landmark 5-Year Deal to Accelerate Low-Carbon Heating", Press Release, October 2024.
UK Department for Energy Security and Net Zero (2024), "Boiler Upgrade Scheme Statistics", Quarterly Statistical Release.
Precedence Research (2024), "Heat Pump Market Size Worth USD 275.93 Billion by 2034", Market Research Report.
TechCrunch (2024), "Quilt Rides Heat Pump Heat Wave with Hefty $33M Series A", April 2024.
Microgeneration Certification Scheme (2024), "MIS 3005: Heat Pump Installation Standard", Version 5.0.