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Heat and Buildings Strategy: £450m grant scheme launched to help homes switch gas boilers for heat pumps

Homes will not be forced to switch to heat pumps

The Strategy was originally envisioned as two separate policy packages – one for heat and one for buildings – and slated for publication last year.

After delays to combine the two, Covid-19 related delays and delays over reported Conservative Party infighting over the Strategy’s contents, it is finally here. For households, the big announcement is a new three-year boiler upgrade scheme, under which homes will be able to claim grants of up to £5,000 each to help them replace gas boilers with low-carbon heat pumps.

The Department for Business, Energy and Industrial Strategy (BEIS) claims that the grants will mean that homeowners will pay a similar sum for a new heat pump as for a new boiler.

A total of £450m is being put aside for the grant scheme and BEIS hopes to allocate the funding over a three-year period. To help reduce the costs of running a heat pump, the Government has stated that it will work with businesses to improve technologies and scale up production.

A £60m innovation fund will be launched in the coming weeks, with producers competing for a share of funding for smaller, cheaper, more efficient systems.

The innovation fund will be financed through the £1bn package for net-zero technologies announced by Chancellor Rishi Sunak at this year’s Budget. There were, recently, reports that BEIS was mulling changes to the Climate Change Levy Framework, to reduce rates for electricity and/or increase them for gas. Further details have now been revealed; consultations into potential courses of action will be launched next year.

BEIS’s overarching ambition on heat pumps is for them to cost the same as gas boilers, both in terms of upfront cost and operational cost, by 2030. A cost reduction of between 25% and 50% from current levels is expected by 2025. At present, homes account for around one-fifth of the UK’s annual national emissions, largely because of fossil-fuelled heating and energy inefficiency.

“Recent volatile global gas prices have highlighted the need to double down on our efforts to reduce Britain’s reliance on fossil fuels and move away from gas boilers over the coming decade to protect consumers in the long-term,” BEIS Secretary Kwasi Kwarteng said.

“As the technology improves and costs plummet over the next decade, we expect low carbon heating systems will become the obvious, affordable choice for consumers. Through our new grant scheme, we will ensure people are able to choose a more efficient alternative in the meantime.”  

Hydrogen footnote

Hydrogen is notably absent from BEIS’s plans for decarbonising home heating in the near term. The Department said in a statement that it must “take no-regrets action now whilst supporting ongoing trials and other research and innovation on our future heating systems, including hydrogen”.

A decision on the potential role for hydrogen in heating domestic buildings will be made in 2026, following the completion of a Hydrogen Village trial in 2025, supported by the Government and by gas network operators.

What about non-domestic buildings?

At this stage, BEIS has not published the full Heat and Buildings Strategy on its website, so information regarding the heating of commercial buildings and heat for industrial processes is not yet available. This article will be updated with this information as edie receives it.

Sarah George

© Faversham House Ltd 2022 edie news articles may be copied or forwarded for individual use only. No other reproduction or distribution is permitted without prior written consent.

Comments (1)

  1. Keiron Shatwell says:

    If the Government spent that money on insulating all of Britain’s homes to the highest standards then it would probably reduce emissions by more than replacing all the gas boilers and reduce fuel poverty at a stroke.

    And can anyone tell me if a Heat Pump will heat my home with its microbore piping and a 300L hot water tank that MUST reach 60C at least once a week (Legionella rules). If they can’t then forget it.

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