We need to drastically increase the number of heat pumps installed to achieve the government’s targets of 600,000 installations by 2028 as part of the UK’s wider goal of reaching net zero by 2050. As part of Nesta’s Innovation Gaps in Heat Pump Installation project, there are two issues we have looked at: one relating to individual engineers joining the industry; the other about heat pump firms recruiting more employees. Here we will focus on the latter.

Apart from big players such as Octopus (which have entered the industry relatively recently), the heat pump sector is dominated by microbusinesses (fewer than five employees) and sole traders. Our research has shown that heat pump firms are operating at capacity and some have to turn down viable jobs they do not have the resources to address. Helping those existing SMEs to expand is one of the fastest ways to increase the capacity of the sector to meet national targets and consumer demand as well as supporting highly skilled and profit-making businesses across the UK.

Heat pump firms say they want to install more heat pumps and want to take on more staff to do this. However, they face important barriers that make it hard for them to expand. Through this project, we sought to understand better what those barriers are in order to identify potential contributions we can make to reduce them.

We spoke to six heat pump installers who worked at or for businesses with between five and 50 employees. This is relatively large compared to most firms in the domain but it is firms of this size rather than sole traders that are the most capable of quickly taking on new staff.

The six installer firms we spoke to raised the following three issues that directly affect their ability to to take on new staff (note that there are further indirect barriers which are discussed below):

The challenge of employing experienced heat pump engineers

There are relatively few trained heat pump engineers in total, they are thinly spread across the country and there is little churn within the sector. In microbusinesses and SMEs, those with the most expertise tend to own the company they work for and are not looking to move away from self-employment. As such, making a skilled, experienced recruit in this sector is extremely challenging. Consequently, few heat pump firms seek to employ experienced engineers because they foresee the challenges of identifying such applicants.

The challenge of employing experienced gas-trained staff

Experienced gas engineers are good candidates to join the heat pump workforce. However, although they have the necessary plumbing and engineering skills, they usually lack detailed heating system design and heat pump-specific installation knowledge. Many gas engineers are uncertain about the potential of a career in heat pumps. For heat pump firms, even those who are interested are often difficult candidates to take on because they expect a salary commensurate with their career stage in gas, even though they are unskilled in heat pumps and require training.

The challenge of employing college leavers into junior roles

Due to the barriers discussed above in recruiting experienced heat pump installers, according to our interviews, college graduates are often the preferred new appointees for heat pump firms wishing to expand. However, their relative lack of on-the-job experience as well as limited teaching on heat pump systems in college courses means that employing firms must commit to training new recruits. Training costs plus salary make this type of recruitment an expensive process. There is always the risk that new hires may decide to leave the firm after they complete their training, either to take up work elsewhere or to set up on their own.

College graduates are also less likely to actively seek employment in heat pump firms. Their knowledge of heat pump technology is usually limited. They also lack necessary information about the sector, its growth trajectories, and salary and career progression to make an informed decision.

Colleges can provide a good pool of candidates for heat pump firms. However, the connection between local colleges and local employers is not always strong. From our research so far, it seems that only some heat pump firms have established a relationship with their local college.

These three factors compounded means that, while recruiting junior staff is the route most favoured by heat pump businesses, recruiting college graduates is not always straightforward.

Taking the difficulty of hiring talent as the main barrier to heat pump firm expansion, we have identified three opportunity areas that are ripe for future work.

1. How might we make training financially viable for firms?

As has been highlighted, it is both expensive and risky to train new recruits. We need to find ways to de-risk training and make it financially viable, perhaps through government support or finance initiatives whereby training costs are repaid only when the new recruit is profitable for the firm.

2. How might we help junior staff without any experience in heat pumps become more ready to be hired by heat pump firms?

Junior staff lack knowledge in heat pump installation as well as access to information that will help them choose a career in heat pumps. However, graduates and early career individuals are often more motivated to learn new skills and make long-term plans for their careers than more experienced engineers. They do need to be equipped with additional knowledge to ensure that they are ready to be taken on by heat pump firms. They may also be more attracted to careers with a social and environmental purpose but might need some nudging to consider a career in heat pumps. Innovations that help with skills acquisition and that guide college leavers into heat pumps will help solve this issue.

3. How might we help experienced plumbers “catch up” to become experienced heat pump installers in a short time?

When hiring an experienced heat pump installer, the ideal combination is for that person to be skilled in heat pumps, a good plumber and a good team leader. A combination of all three characteristics is difficult to find. Therefore, the key might lie in hiring experienced plumbers with enough transferable skills and team leadership experience who can quickly retrain to install heat pumps.

Although our focus was identifying barriers to staff recruitment, interviewees noted other barriers to the expansion of their businesses. These are noted here in order to demonstrate that, while innovation to help firms recruit is important, firms face other barriers to their operations that also discourage them from recruiting new staff.

• Frequent changes in government policy: it is more difficult for heat pump firms to make long-term personnel plans when there is uncertainty around government policy, the grants given for heat pumps and the government’s unclear position on alternative technologies such as hydrogen.
• High capital costs required: heat pump firms need to be able to deal with asynchronous cash inflows and outflows. For instance, when installing heat pumps under the Boiler Upgrade Scheme, it might take a few weeks for a company to receive the £5,000 disbursement.
• Cost of living crisis and economic uncertainty: firms are less keen to take risks and hire additional personnel during the cost of living crisis and amid uncertainty about the future economic prospects.

Our research shows that heat pump demand outstrips the capacity to install heat pumps. Nevertheless, there are lots of barriers that make it difficult for heat pump firms to expand in confidence. We need to find ways to make training for heat pump installers financially viable and increase the number of college graduates becoming heat pump installers. It’s also vital to find ways to aid the transition of experienced gas engineers into heat pumps.

As the next steps, we will test some of these ideas further and prototype solutions using our speed-testing technique. This is our process to rapidly test concepts, get real-world feedback and inform our next steps. We are also testing an idea around heat pump employer support to help employers in the early stages of hiring a new employee.