Decarbonising residential heating: local conditions and spatial spillovers driving heat pump uptake

Arvanitopoulos, Theodoros, Wilson, Charlie and Morton, Craig 2025. Decarbonising residential heating: local conditions and spatial spillovers driving heat pump uptake. Energy Policy Item availability restricted.

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Abstract

Air source heat pumps are the principal means of decarbonising residential heating. What drives local uptake of heat pumps? We present and examine a unique, highly disaggregated, spatial-temporal dataset for heat pump diffusion across Great Britain at the local authority level from 2010 to 2020. We find an average total installed cost of £1,075/kW and a negative learning rate of -3.3%, with most installations in owner-occupied houses. Using spatial econometric models, we investigate how local conditions drive heat pump installations. We find early adopting local areas tend to be rural, off the gas grid, with prior use of solid fuel or oil for heating, and participate in renewable and community energy projects. Early adopting areas benefit from a combination of more readily accessible properties, low-carbon energy skills, and local supply chains. We find robust evidence of spatial spillover effects that show early adopting areas serve as deployment test beds, indirectly stimulating deployment in contiguous areas. We reason that spatial spillovers are driven by installer availability and local supply chains materialised around installation activity. We estimate for every three heat pumps installed, one heat pump is subsequently installed in a neighbouring local authority with less advantageous conditions. This implies an important policy trade-off for low-carbon heat between maximising effectiveness (incentivise early adopters) and widening equality of access (support later adopters). Concerted policy action to tackle fragmented supply chains and skills shortages which inflate installation costs of heat pumps relative to gas boilers is also urgently needed.

Item Type:	Article
Status:	In Press
Schools:	Schools > Business (Including Economics)
Publisher:	Elsevier
ISSN:	0301-4215
Date of First Compliant Deposit:	15 July 2025
Date of Acceptance:	15 July 2025
Last Modified:	17 Jul 2025 10:45
URI:	https://orca.cardiff.ac.uk/id/eprint/179851

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