DESNZ puts average SHDF air-source heat pump cost at £12,200

UK – The average cost attributed to an air-source heat pump installation under the first wave of the Social Housing Decarbonisation Fund was £12,200, according to a new government evaluation. Ground-source heat pumps averaged £23,200, while clean-heat measures reached fewer than 5% of properties treated through the programme.

The Department for Energy Security and Net Zero published its evaluation of SHDF Wave 1 on 27 August. The programme delivered 31,693 measures across 16,056 social homes in England between March 2022 and July 2024 and was awarded £179 million in government funding.

Heat pump costs assessed

DESNZ puts the mean installation cost at £12,200 for an air-source heat pump and £23,200 for a ground-source heat pump.

The figures are drawn from scheme measure-cost data covering installations reported to the end of February 2025. They include costs attributed to individual measures but exclude expenditure such as administration, procurement and EPC inspections.

Measures with fewer than 25 installations were excluded from the analysis, meaning the figures should not be treated as direct benchmarks for current domestic installation prices.

Fabric dominated Wave 1

Fabric measures were installed in 14,379 properties, more than 90% of those covered by the analysis, while clean-heat measures reached 792 properties, just under 5%.

Of those receiving clean heat, 708 properties also received fabric measures. Just 84 received clean heat without fabric measures, supporting DESNZ’s conclusion that Wave 1 followed a predominantly fabric-first approach.

DESNZ said insulation installed through Wave 1 is likely to make homes more suitable for future clean-heat installations. However, the evaluation said the available data could not determine how ready individual properties are for conversion.

Heat pump barriers identified

Participating landlords also highlighted challenges around air-source heat pump deployment.

One reported difficulties liaising with distribution network operators because of the lack of a single point of contact and conflicting information. Another cited unclear government messaging as a barrier to communicating and marketing heat pumps to residents.

The evaluation nevertheless found strong evidence that Wave 1 increased retrofit capability among landlords and the supply chain. All projects were required to comply with PAS 2035:2019, while installers had to be TrustMark approved or equivalent.

Some supply-chain businesses interviewed were also working towards MCS accreditation for air-source heat pump and solar PV installations as they sought to expand their capabilities.

Delivery fell below original plans

At bid award stage, Wave 1 planned 43,763 measures across 20,229 properties. The final total was 31,693 measures across 16,056 homes.

DESNZ found that rising costs and other delivery challenges contributed to projects being descoped. Excluding projects that withdrew, projected spending per property increased from £17,763 at grant agreement stage to £23,416 in final March 2025 change-control data, a rise of 32%.

The SHDF has since been replaced by the Warm Homes: Social Housing Fund, which supports energy-efficiency upgrades and low-carbon heating in English social housing.