Are boiler prices about to go up due to the Clean Heat Market Mechanism? Opinion

The government has confirmed that the new Clean Heat Market Mechanism will launch in 2024. Heating Engineer Andy Gibbs gives his views on what it could mean for installers.

A tax by any other name, is still a tax. The Government announced it will be going ahead with what it calls the Clean Heat Market Mechanism, or the CHMM. Let’s not beat around the bush with long-winded names, it’s a tax on boilers, so let’s refer to it as what it is, Boiler Tax.

Let’s have a quick (if that’s possible) look at what it means for everyone.

The Government set each manufacturer a target  of how many heat pumps they must sell, dependant on how many boilers they currently sell that subsequently get installed. Just selling a load isn’t enough. And for every heat pump they fail to sell, they get fined. Searching around on social media, some were saying that can be up to £3000 each time, so that’s not a small amount.

Now I’m crap at maths, so let’s use small numbers to keep it simpler.

Boiler manufacturer A currently makes 100 boilers.
Their target is 4%.
So they have to sell 4 heat pumps.
But sadly, they only sell 2.
That’s a 6 grand fine coming their way.
Now multiply all  those numbers by a thousand.
And the total they must pay in fines is vast.

The targets increases over the next two years as well, which is lovely.

So those are huge fines, and the manufacturer won’t simply just pay them, they’ll have to do something to recoup those losses. The easiest way to do this, as far as I can tell, is to pass the cost on where they can, and that means raising boiler prices. So each and every affected manufacturer could put up the cost of a boiler overnight, and that could be as much as £300 per boiler.

That cost will come down the line to you as the installer, and then you’ll have to pass it to your customer. End of discussion on that part of the boiler tax.

Now I wouldn’t mind so much if all those fines went back into the industry, to help with training new entrants, research or maybe funding those who just cant afford a heat pump. But are those fines going to do that or are they simply going to be popped in the Treasury coffers, and spent on HS2, Eat Out to Help Out, or parties in the garden at Downing Street?

You can lead a horse to water, but you cannot make it drink. Ultimately, a manufacturer can make as many heat pumps as possible, but if there is no market to sell them into, they will be hit financially, and that seems unfair to me.