How Birmingham homes are saving £180 a year with heat pump retrofits

More than 1,400 Birmingham households have had ground-source heat pumps installed through the city’s Clean Heat Local scheme since March 2025, and the average annual energy saving per home is running at £180, according to Birmingham City Council data released this week.

The programme-funded by a mix of £4.2m from the UK government’s Heat Network Transformation Programme and £1.1m from the West Midlands Combined Authority-targets pre-1945 terraced houses, which make up roughly 38% of Birmingham’s 440,000 dwellings. These older properties are notoriously leaky, and the council estimates that retrofitting 2,000 homes by the end of 2027 will reduce overall city carbon emissions by 12,400 tonnes per year, equivalent to taking 2,800 cars off the M6.

From Digbeth to Kingstanding: where green tech is landing

In Digbeth, the Warwick Bar housing co-op on Floodgate Street became the first multi-occupancy building in the city to install a communal ground-source array last October. The 56 flats now draw heat from boreholes drilled 120 metres beneath the car park, displacing gas boilers that previously cost each tenant an average of £740 a year. Across town in Kingstanding, retired nurse Marjorie Taylor-who asked that her full name not be used-told the Birmingham Mail her three-bedroom end-of-terrace on Orchard Road saw her winter gas bill drop from £220 a month to £68 after the heat pump went in in February.

The technology is also showing up in newer builds. The 68-home St Joseph’s development on Bristol Road South, completed in April, comes with air-source heat pumps and solar PV as standard. Developer Lovell Partnerships says the average semi-detached there carries an EPC rating of A and a projected annual heating cost of £385-less than half the Birmingham average for a similar sized home of £890, according to the council’s energy advice service.

Prices, payback, and what comes next

Upfront cost remains the biggest barrier. A typical ground-source heat pump installation in Birmingham runs between £14,000 and £20,000, depending on ground conditions and property size. The Clean Heat Local grant covers up to £7,500 per household, and the Boiler Upgrade Scheme adds another £5,000. Even so, city officials concede that out-of-pocket costs of £1,500 to £7,500 still deter many low-income residents.

The council’s own analysis, published May 29, shows that gas prices in Birmingham have risen 14% since January 2025, making the payback period for a subsidised heat pump roughly 6.2 years-down from 8.5 years in 2023. That calculation assumes Octopus Energy’s current standard variable tariff of 27.8p per kWh for electricity, compared to 12.4p for gas.

Next month, a new ‘Heat as a Service’ pilot launches in Sparkbrook, run by the Birmingham Energy Institute in partnership with E.ON. Under the model, residents pay a flat monthly fee of £65 for heating and hot water, with no upfront installation cost. The council hopes to sign up 200 homes initially and expand across five wards by 2028 if the trial cuts aggregate energy demand by at least 25%.

For now, anyone interested can book a free home energy assessment by calling the council’s Warm Homes team on 0121 303 9900 or visiting the Energy Advice Centre on Alum Rock Road in Saltley. Applications for the Clean Heat Local grant are open until the end of September-or until the current funding pot of £1.9m runs out, whichever comes first.