UK Government publishes outcomes for Clean Heat Market Mechanism 

December 18, 2023

The UK government has recently outlined the outcomes of its Clean Heat Market Mechanism (CHMM) consultation, a significant step towards promoting sustainable home heating solutions. This scheme, set to launch in 2024, outlines specific requirements and targets for obligated parties.

Key outcomes from the consultation include:

Heat pump credit targets: For the first two scheme years, targets for generating or acquiring heat pump credits are set at 4% and 6% of a manufacturer's relevant fossil fuel boiler sales, respectively. 

Increased flexibility for obligated parties: Adjustments include an increased allowance for carrying forward unmet targets from 25% to 35%. The limit for carrying forward surplus heat pump credits has also been reduced from 25% to 10%. 

Reduction in payment-in-lieu: The payment-in-lieu for missing credits is now £3000 per credit, balancing compliance incentives with reduced liabilities for parties. 

Minimised administrative burdens: Initially, heat pump manufacturers are not required to produce supply chain plans, though this may be reconsidered in future years. 

These developments suggest the government’s preference for a gradual implementation of the CHMM, allowing for future adjustments and ongoing policy engagement.

The CHMM is a critical element in the UK's strategy to shift from fossil fuel heating to more sustainable alternatives, directly contributing to the country's decarbonisation goals.

In light of these changes, it is crucial to understand the potential impact of the anticipated boiler price increase, estimated at around £120. This increase could significantly affect some SNIPEF's members, particularly those bound by fixed-price contracts. In response, SNIPEF plans to engage with the government and manufacturers early next year. We aim to clarify the reasons behind these price adjustments and evaluate the CHMM's overall impact on the industry. This proactive approach is part of our commitment to keeping our members informed and supported during these dynamic times in the market.

Read CHMM outcomes report and SNIPEF submission here.

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