Group purchasing is an approach where numerous customers come together to buy products and/or services at scale to achieve cost reductions.
Resource
Funding mechanism: Group purchasing
Group purchasing is an approach where numerous customers come together to buy products and/or services at scale to achieve cost reductions.
This approach has been particularly effective for solar PV technology, with average savings of 10-25% compared to typical market prices been observed in recent years.
A similar model could help partially address high upfront costs associated with heat pump technologies.
Local authorities could partner with a specialist group buying organisation to enact a group buying scheme forheat pumps in the area. They could promote the scheme through their website and social media platforms to encourage registration among households.
The specialist organisation would be responsible for negotiating the best price with heat pump suppliers and installers on behalf of participants.
Local authorities may receive some financial contributions from the specialist organisation depending on the number of successful installations, which could be used to fund other decarbonisation initiatives.
Case study: LIFE Street HP Reno
Overview
The Energiesprong Global Alliance, in collaboration with European partners, has launched the Street HP Reno project, aiming to reduce the cost of heat pumps for private individuals through collective purchasing. Energiesprong will collaborate with municipalities to find homeowners who are interested in collectively switching to heat pumps.
As the facilitator of the scheme, Energiesprong will also work with heat pump suppliers to develop a product that is easer to purchase for customers. Training will also be provided to heat pump suppliers and installers.
The project ran from October 2023 until October 2026.
Financials
The total budget for the project is €2,250,734, with €2,138,198 of this amount awarded by the European Commission.
Scale of deployment
The first collective heat pump purchase is expected to take place in France. If successful, the approach will be rolled out to other participating European countries, including the Netherlands, Belgium, Germany and Italy.
- Energie Sprong Global Alliance. (2024). The power of collective heat pump purchasing.
- European Commission. (2025). LIFE22-CET-LIFE Street HP Reno on LIFE Public Database.
Case study: Nesta study
Overview
Nesta aimed to explore whether group buying could be effective for heat pumps in the UK, following its success in solar PV deployment.
Method
The study executed the following method:
- Identify key stakeholders and map out what the group purchasing process could look like.
- Engage with key stakeholders (e.g., installers, wholesalers and group buying platform providers) to test the attractiveness of the proposition.
- Undertake focus groups with potential customers to understand whether group buying would increase their motivation to purchase a heat pump.
Financials
The total budget for the project is €2,250,734, with €2,138,198 of this amount awarded by the European Commission.
Findings and conclusions
- Supply chain were confident that economies of scale could be achieved, suggesting possible discounts of around 5% for heat pumps and related kit, particularly when offered as a standardised package.
- Aggregating similar properties in a local area could provide greater certainty over labour costs, reducing the need for installers to over-quote.
- Consumers were positive about group buying but their expectations of savings were ‘unrealistic’, with suggested discounts ranging from 25% to 75%.
- Group purchasing is most likely to appeal to customers who are happy to accept an ‘off-the-shelf’ package.
- While group purchasing has the potential to drive the UK heat market, there needs to be a sufficiently large work force to accommodate increased demand.
- Nesta. (2022). Group purchasing for heat pumps.
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