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The Climate Crisis Has Manufacturers Ready — But Is the Market?

In a modest industrial facility in Craigavon, Northern Ireland, Octopus Energy is producing what it hopes will be the future of home heating in the UK. As temperatures in London touch 29°C — a sign of intensifying climate change — the urgency to decarbonize domestic heating has never been clearer.

Inside the Octopus factory, workers like Patrick Doran are building next-generation heat pumps designed to run on electricity rather than fossil fuels. “It’s like levels in a game,” Doran says, describing the multistage manufacturing process he's trained on in under a year. The factory, which can currently produce 600 units per month, is set to double its capacity with a second production line coming online soon.

Yet, a crucial question lingers: with capacity rising, will homeowners actually buy?

The Heat Pump Gap: Government Goals vs. Reality

The UK government has set an ambitious target — 600,000 annual heat pump installations by 2028. But current sales are falling far short: fewer than 100,000 units were installed in 2024. This gap is especially concerning given the urgency of reducing emissions from home heating, which accounts for roughly 14% of the UK’s total carbon output.

The surge in demand seen across Europe in 2022, sparked by the Ukraine war and soaring gas prices, has since tapered. As natural gas prices stabilize, heat pumps are struggling to compete on cost with traditional gas boilers.

Competitive Edge: Octopus' In-House Innovation

Unlike most utility companies, Octopus has opted to design and manufacture its own heat pumps, giving it control over both product innovation and cost structure. According to Aimee Clark, Head of Commercial at Octopus, the goal is to deliver a “plug-and-play” solution that can fit into the majority of UK homes.

The unit itself features novel technology — including a patented internal metal plate that cools the system by routing refrigerant through areas that collect heat from internal electronics, improving efficiency. The casing also uses grey insulation beads to minimize energy loss, the same kind used in cavity wall insulation.

The result? A high-performance heat pump that the company believes offers competitive Coefficients of Performance (CoP) — a key metric indicating how many units of heat are generated per unit of electricity used.

Smart Monitoring and Customer Insights

Octopus heat pumps are fitted with advanced sensors that track performance in real-time. Customers can monitor this data through a smartphone app, while Octopus technicians can remotely diagnose and respond to any major drops in efficiency.

This level of oversight is crucial, experts say. Steven Metcalf at the University of Warwick notes that installation quality alone can shift a CoP from 2.5 to 4, dramatically affecting running costs.

Public Perception: Price, Comfort, and Policy

One of the biggest barriers to mass adoption remains customer skepticism. Octopus reports that most of its heat pump users say their energy bills are comparable to or cheaper than with gas, with similar or better indoor comfort. But across the UK, lingering concerns remain about cost, installation hassle, and noise.

Northern Ireland, ironically where Octopus manufactures its pumps, lacks a national grant scheme for heat pump adoption — despite having the highest reliance on oil heating systems in the UK. This policy vacuum discourages uptake in regions that could benefit most.

Industry leaders say consistent policy support and fossil fuel taxation could shift the economics in favor of electrification. Paul Kenny, Director General of the European Heat Pump Association, says many factories are “running far below capacity” due to weak consumer incentives and fluctuating subsidies.

Europe’s Hesitation and the Need for Consistency

The heat pump sector saw record growth during the energy crisis, but as gas prices fall, demand has cooled across Europe. Manufacturers from Vaillant to Mitsubishi — which also has a heat pump factory in Scotland — are facing similar challenges.

“There’s a mismatch,” says Zhiwei Ma of Durham University. “We’ve got the tech, we’ve got the production, but adoption isn’t scaling fast enough.”

The takeaway is clear: building heat pumps is no longer the challenge — winning over consumers is.

A Make-or-Break Moment

As climate targets approach and energy infrastructure modernizes, the role of heat pumps is undeniable. Octopus Energy and others are ready. But until policy aligns with public perception and price points become more competitive, the full-scale transformation of domestic heating in the UK may remain just out of reach.