What Is the Clean Heat Market Mechanism (CHMM)? UK Heat Pump Law Explained 2026
From April 2025, one of the UK government’s most significant and least publicised heating policies quietly came into force. The Clean Heat Market Mechanism (CHMM) doesn’t require you to rip out your gas boiler. It doesn’t add a direct charge to your energy bill. But it is reshaping the cost of boilers, accelerating the rollout of heat pumps, and ultimately influencing what you’ll pay to heat your home for years to come.
This guide explains exactly what the CHMM is, why the target jumps from 6% to 8% in April 2026 a 33.33% increase in the obligation and what it means for homeowners in Cheshire, Warrington, and Greater Manchester who are thinking about upgrading their heating.
| +33.33% Increase in manufacturer heat pump quota from 6% (Year 1) to 8% (Year 2) of boiler sales |
What Is the Clean Heat Market Mechanism?
The Clean Heat Market Mechanism (CHMM) is a UK government obligation introduced under powers established in the Energy Act 2023. It launched on 1 April 2025 and places a legal duty on large boiler manufacturers those selling more than 20,000 gas boilers or more than 1,000 oil boilers per year in the UK to ensure that a set percentage of their total boiler sales volume is matched by qualifying heat pump installations.
In plain English: for every 100 boilers a major manufacturer sells into the UK market, they must also be responsible for a certain number of MCS-certified heat pump installations. If they fall short, they face a financial penalty a payment in lieu for each missing credit.
| 📌 Key Point: Not a Ban. Not a Tax. It’s a Market Obligation. The CHMM does not ban gas boilers. It does not directly charge homeowners. It places the obligation on manufacturers, not on households. Any pricing effect on boilers is a downstream consequence of manufacturer decisions, not a government surcharge on your purchase. |
The 6% to 8% Quota Increase Why It Matters
The CHMM is structured in phases, with targets rising over time to drive progressive heat pump market growth:
- Year 1 (April 2025 – March 2026): Heat pump installations must equal 6% of each major manufacturer’s eligible UK boiler sales.
- Year 2 (April 2026 – March 2027): The target rises to 8% an increase of 2 percentage points, which represents a 33.33% increase in the size of the obligation.
This escalation is deliberate. The government’s long-term ambition is 600,000 heat pump installations per year by 2028. The CHMM is designed to give manufacturers a stable, escalating signal to invest in heat pump supply chains, reduce unit costs through economies of scale, and build installer capacity ahead of higher future targets.
| 📊 The Maths: Why 2% Becomes 33.33% Going from 6% to 8% is an increase of 2 percentage points. But as a proportion of the original 6% obligation, that 2 percentage point rise represents a 33.33% increase in the size of the quota (2 ÷ 6 = 0.333). That’s a significant ratchet in commercial pressure on manufacturers in a single year. |
How Do Manufacturers Earn Credits?
Manufacturers earn CHMM credits when a qualifying heat pump is installed by an MCS-certified contractor. The installation must be:
- Registered and notified through the Microgeneration Certification Scheme (MCS)
- Installed in an existing building (new-build installations are excluded from the credit calculation)
- A full heat pump system hybrid heat pump/gas boiler combinations do not count as full credits under Year 2 rules
This is where MCS certification becomes critical to the policy’s mechanics. Every installation Aquila carries out is MCS-registered, meaning our customers’ heat pumps generate the credits that manufacturers need and that demand drives investment in lower-cost, higher-quality heat pump technology. You can verify MCS standards at mcscertified.com.
What Happens If Manufacturers Miss Their Target?
If a manufacturer cannot source enough MCS-certified heat pump installations to meet their quota, they must pay a payment in lieu to the government for each missing credit.
- Year 1 penalty: £500 per missing heat pump credit
- Carryforward allowance: Manufacturers can roll up to 35% of their annual shortfall into the following year
- Credit trading: Manufacturers can purchase credits from other manufacturers who have exceeded their targets
The original penalty proposed by the previous government was £3,000 per missing credit. The current government reduced this to £500 for Year 1 to give the industry time to adjust, with the penalty structure subject to future review as market conditions develop.
| 💡 Why Did Some Boiler Prices Rise in 2024? Before the CHMM formally launched, some manufacturers including Vaillant and Worcester Bosch pre-emptively added surcharges of £95–£120 per boiler to their pricing in anticipation of compliance costs. When the scheme was delayed to April 2025 and penalties reduced from £3,000 to £500, some of those price adjustments were scaled back. With the quota now rising to 8% from April 2026, watch for further price signals in the market. |
How the CHMM Works Alongside the Boiler Upgrade Scheme (BUS)
The CHMM operates on the supply side driving manufacturers to invest in heat pumps. The Boiler Upgrade Scheme (BUS) operates on the demand side providing grants of up to £7,500 to homeowners who install a qualifying air source or ground source heat pump.
Together, these two policies form a pincer movement: the BUS reduces the upfront cost barrier for households, while the CHMM creates a commercial incentive for manufacturers to produce more heat pumps, lower prices through scale, and fund their own promotional activity.
- BUS grant (ASHP): £7,500 off the installed cost of an air source heat pump
- BUS grant (GSHP): £7,500 off the installed cost of a ground source heat pump
- BUS grant (biomass): £5,000 off the installed cost of a biomass boiler (limited eligibility)
- CHMM credit link: Only MCS-certified installations count as credits so BUS grants can only flow through MCS-registered installers like Aquila
Official BUS guidance is available at gov.uk Boiler Upgrade Scheme. The CHMM Amendment Regulations 2025 are published at gov.uk CHMM Impact Assessment.
Does the CHMM Mean I Have to Replace My Boiler?
No. The CHMM contains no provision that requires any homeowner or business to replace a working gas or oil boiler. Gas boilers remain fully legal and available. The obligation sits entirely with manufacturers, not with property owners.
What the CHMM does mean, over the medium term, is that:
- Heat pump prices should fall as manufacturers scale up production to meet rising quotas
- Installer capacity will grow as manufacturers invest in training to earn credits through MCS-registered installations
- The relative cost gap between a boiler replacement and a heat pump installation should narrow
- Boiler prices may carry a modest premium as manufacturers factor compliance costs into their pricing
What Does This Mean for Homeowners in Cheshire, Warrington & Greater Manchester?
For homeowners across WA, CH, SK, M, WN, and CW postcodes the timing matters. The 8% quota takes effect from 1 April 2026. Manufacturers will be working hard through 2025/26 to source qualifying installations, which means:
- Heat pump availability is improving more product range, better pricing, shorter lead times
- The £7,500 BUS grant remains live and fully funded for 2025/26 (£295 million budget confirmed)
- Combining the BUS grant with 0% VAT on energy-saving materials (applicable until 31 March 2027) means this financial year and next are among the best ever to install a heat pump
- As an Octopus Energy Approved Partner, Aquila can also help eligible customers access Octopus Cosy tariff pricing significantly reducing running costs
| 🏆 Why Choose an MCS-Certified Installer? Only MCS-certified installations qualify for BUS grants AND generate CHMM credits. At Aquila, every heat pump we install is MCS-registered, fully commissioned, and evidenced with an MCS certificate giving you the grant, the compliance, and the manufacturer warranty protection you’re entitled to. |
Summary: CHMM at a Glance
- What: A legal obligation on major boiler manufacturers to match heat pump installations against their boiler sales
- Who it affects: Manufacturers of 20,000+ gas boilers or 1,000+ oil boilers per year in the UK
- Year 1 target: 6% of boiler sales (April 2025 – March 2026)
- Year 2 target: 8% of boiler sales (April 2026 – March 2027) a 33.33% increase
- Penalty: £500 per missing credit (Year 1)
- Credit mechanism: MCS-certified heat pump installations only
- Effect on homeowners: No mandatory action; indirect influence on pricing and heat pump availability
- Works with: The Boiler Upgrade Scheme (BUS) up to £7,500 grant for qualifying installations
Ready to find out whether an air source heat pump is right for your home? Contact Aquila Heating & Plumbing for a free no-obligation survey. We’re MCS-certified, Octopus Energy Approved, and among the top 20 heating contractors on Trustpilot UK.
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