UK’s heat pump grant scheme set for overhaul to encourage uptake

Pictured: A home fitted with an air-source heat pump. Image: OVO Energy

At present, the scheme caps grants for air-source heat pumps at £5,000 and for ground-source heat pumps at £6,000. Properties need to meet certain requirements to access this maximum, including standards on energy efficiency. If they do not meet these standards, they will need to install insulation before re-applying.

The Government is proposing that the energy efficiency standard be removed or reduced. It hopes that this change could help larger or more inefficient properties to access the higher levels of grant funding they need, given the steep upfront cost of heat pumps.

Also on the table are changes to expand grant funding for those looking to fit biomass boilers and ovens.

The Department for Energy Security and Net-Zero (DESNZ) is consulting on proposed changes to the Boiler Upgrade Scheme until 12 October.

Energy Efficiency Minister Lord Callanan said: “While a heat pump can be installed for a similar price to installing a gas boiler, the support we’ve put in place means it is an option for more and more households.

“Today’s changes go even further and will mean even more people could benefit from making the switch, offering them the option for a low-emission, low-cost form of heating their homes.”

The Boiler Upgrade Scheme was first announced in 2021. It has allocated around £81m of its £450m budget. Green groups have long called for an increased budget and scheme timeline, given that the scheme in its current form will not push the UK to its 2028 target of 600,000 heat pump installations annually from 2028.

Cost challenges

A heat pump installation trial led by the Energy Systems Catapult last year was more than ten times oversubscribed, showing how many homes and businesses are exploring the switch.

Nonetheless, many of those who applied believed that their home would not be suited to a heat pump because of its age, layout and/or energy efficiency. While these concerns could be overcome in most cases, the majority of homes said they would still struggle with the upfront cost even with Boiler Upgrade Scheme support.

Several major businesses have pledged to bring down heat pump costs. British Gas, for example, is matching installation costs and is also exploring innovations for lower-cost units. OVO and Octopus have set out similar options, while Utilita is looking to install heat pumps in local “clusters” to cut costs for customers.

Debate around good policymaking for net-zero in a cost-of-living crisis has been lively in recent weeks. The Conservative Government has fiercely criticised London’s decision to expand its Ultra-Low Emission Zone and is also considering backsliding on some electric car and clean energy targets to be seen as cost-cutting.

Greenpeace has stated that the Government is “absolutely right to make the installation of heat pumps cheaper and more accessible”. However, it has also said that “cutting corners” on insulation is an unwise move, given the quick payback period in terms of savings on energy bills.

Greenpeace UK campaigner Georgia Whitaker said: “Rather than taking one step forward, two steps back, the government should be ramping up investment for both heat pumps and insulation – delivering a nationwide programme to make homes warmer, cleaner and cheaper to run side-by-side, not pitting one energy-saving scheme against the other.”