Ed Miliband could offer homeowners with heat pumps £200 off their bills – meaning it would take around 25 years to pay off the upfront cost.
The Energy Secretary would offer the grants to reduce the running costs of the green technology, under plans to phase out gas boilers.
Heat pumps typically cost around £5,000 once a taxpayer-funded subsidy of £7,500 is applied, so it would take decades to recoup the upfront cost through savings to bills.
Under the plans, all homes with heat pumps would see an average fall in energy bills of 15 per cent, paid for by taxpayers.
And the money would come from the £13.2billion ‘warm homes’ fund agreed by Chancellor Rachel Reeves at the spending review last month.
Industry figures are understood to have put forward the submissions to the Department for Energy Security and Net Zero to incentivise homeowners to quit gas boilers.
The cost of electricity per unit for consumers is about four times higher than gas, which can make heat pumps more expensive to run.
An additional £200 off bills could help to plug this gap.
Ed Miliband could offer homeowners with heat pumps £200 off their bills – meaning it would take around 25 years to pay off the upfront cost
Heat pumps typically cost around £5,000 once a taxpayer-funded subsidy of £7,500 is applied, so it would take decades to recoup the upfront cost through savings to bills (file image)
Under the plans, all homes with heat pumps would see an average fall in energy bills of 15 per cent, paid for by taxpayers (file image)
This could be funded through a levy on gas bills, covered by a Government fund. The cost to taxpayers would increase each year if more houses install heat pumps.
There could also be support for the 300,000 households that have already got the technology, and taxpayers could completely cover the cost of heat pumps for low-income families.
A Labour source said the proposals were not under active consideration by the department but were requests from the industry.
However, they added that Mr Miliband is looking to help those who do want to install the environmentally-friendly technology.
Heat pumps produce three to four times the energy they use, making them much more efficient than a gas boiler, but they also have a far higher upfront cost.
The UK’s climate change committee said earlier this year that half of homes should have pumps installed by 2040 to meet the country’s legal goal of net zero emissions by 2050, up from about only 1 per cent now.
There will be a consultation on the plans in October, according to The Times, and a Bill would need to pass through Parliament to enact them.
A spokesman for the Department for Energy said: ‘We do not recognise this speculation. Our clean energy mission is the best route to bring down bills for good.’
Meanwhile, the Conservatives announced they would remove blocks on building new nuclear power plants to lower bills if they win the next election.
They said the current ‘green tape’ adds millions of pounds to project costs.
