The first scheme of the partnership will offer lower cost air-source heat pumps to UK households. The move is designed to support the decarbonisation of domestic heating and encourage the retrofit of existing UK properties.

The pilot has launched through the Halifax brand as part of its Green Living Reward scheme. Customers using mortgage borrowing to fund the switch to an air-source heat pump will benefit from £1,000 cashback on completion of the installation. Halifax will provide borrowers with a referral link to arrange installation with Octopus Energy.

When used in conjunction with the Government’s boiler upgrade scheme, which provides grants of £5,000, the cashback brings the cost of installing a heat pumps to as low as £2000, which could mean heat pumps for some homes will cost less than many gas boilers.

It is estimated that around 40% (10 million) of UK homes are already suitable for the switch to a heat pump and another 4 million would be suitable with is additional efficiency measures are taken, such as installing loft insulation.

In addition to reducing homeowners’ costs, the new scheme also unlocks greener energy for UK households. Air-source heat pumps are a low carbon source of heating (75% lower carbon than a gas boiler) - running on electricity, increasingly from renewable sources and are 3-4 times more energy efficient than traditional gas boilers.

The pilot is also the latest in Octopus Energy’s roster of initiatives designed to wean the UK off fossil fuels and become more energy independent. Earlier this year, the energy supplier, which is the third biggest in the UK, acquired heat pump manufacturer Renewable Energy Devices (RED) in a move to build cheaper and better heat pumps for the UK.

Rebecca Dibb-Simkin, Chief Product Officer at Octopus Energy, commented:

“We’re always looking for ways to help people save money while accelerating the shift to a clean energy future. The pilot with Lloyds Banking Group comes at a crucial time for consumers facing a dual climate and cost of living crisis. It no longer needs to be a question of prioritising one over the other: heat pumps are greener than gas boilers, and thanks to Octopus, the government and Lloyds Banking Group they can be cheaper too.”

Jas Singh, CEO Consumer Lending, Lloyds Banking Group, said:

“Our partnership with Octopus adds another element supporting our strategy to help Britain live in better, warmer, greener homes and move the country towards its net zero target.

“Lots of homeowners who need to replace, or want to upgrade, a gas boiler may have considered the switch to a heat pump but see the cost as a barrier. This extension to our Green Living Reward scheme will make switching from a gas boiler to a new, more efficient, cheaper to run heat pump easier and more affordable than ever before.

“We won’t stop here. We are committed to playing our part in reaching net zero by continuing to support and encourage our customers to make greener choices for their homes. This pilot is just the first from our partnership with Octopus Energy; we will continue to innovate, we will continue to help make Britain’s homes better for their owners and better for the environment.”