Heat pump program costs are on track but could jump to $2.7B: PBO – National

The Parliamentary Budget Officer estimates Ottawa’s program to get homes off heating oil and on to heat pumps could cost $797 million over the course of the program, in line with the budget allocation of $750 million.

However, the total cost could reach $2.7 billion if all eligible households successfully apply.

The Oil to Heat Pump Affordability (OHPA) program was first launched in 2022, and as of the 2023 budget released last March, the five-year cost was pegged at $250 million by the end of the 2026/27 fiscal year.

In the November’s fall economic statement, the government increased the budget by $500 million for the enhanced OHPA program, bringing the total to $750 million.

This additional money was reallocated from an existing program under Environment and Climate Change Canada.

This version of the program is offered in Newfoundland and Labrador, Prince Edward Island and Nova Scotia.

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In other provinces, residents are eligible to apply for the original version of OHPA, a grant of up to $10,000 from the federal government to help switch from heating oil to a heat pump.

According to Parliamentary Budget Officer (PBO), around 10,000 households across Canada were approved for and/or received funding through OHPA between March 2023 and mid-October 2023.

If this trend continues, the PBO estimates the program will cost $183 million by the end of this fiscal year and then $205 million each year until the program ends at the conclusion of the 2026/27 fiscal year, for a total of $797 million.

To qualify for the OHPA program, households must have after-tax incomes at or below the media level and must purchase more than 1,000 litres of heating oil annually, among other criteria.

Based on this, the PBO says there are up to 244,000 households that could qualify for the OHPA program. If all these households successfully applied for the program, the PBO estimates it would cost $2.7 billion.

The PBO notes that in the fall economic statement, the government mentioned the program may be expanded to include homes heated by natural gas.

If this expansion happened, the PBO estimates over 1.6 million households would meet relevant program criteria.

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