Costs to install cleaner, more efficient heating solutions have been slashed by thousands of pounds as consumers can now receive grants through the government’s new £450 million Boiler Upgrade Scheme.
Homeowners across England and Wales can now benefit from £5,000 grants to fit clean heating systems when they come to replace their oil and gas boilers. This includes clean heating systems installed from 1 April this year.
Heat pumps are now much cheaper and more competitively priced against gas and oil boilers than ever before and thanks to these grants, it will be significantly cheaper for consumers to install a heat pump and closer to the cost of installing a traditional gas boiler, whilst improving the energy efficiency of their homes, reducing their energy bills and cutting emissions in the long-term.
Kick-start the British heat pump industry
It is hoped that the scheme will also help kick-start the British heat pump manufacturing industry, helping government and industry to achieve the aim of bringing down the cost of the technology to ensure they are no more expensive to buy and run for consumers than fossil fuel boilers by 2030 when more households will be looking to make the switch.
With the market for electric heat pumps set to rapidly expand in Europe over the coming years, there is also a huge export opportunity for British firms in research and development, production, supply chain and installation over the next decade, creating well-paid jobs across the country.
It will contribute to the 175,000 green skilled jobs we expect to be delivered by 2030 through the BUS and other government commitments made in the Heat and Buildings Strategy.
Energy minister Greg Hands said: “With a global spike in oil and gas after unprecedented pressures on global markets, the government is committed to ensuring households are better protected from unforeseen rises in fossil fuel prices by encouraging them to gradually move away from using gas and oil to heat their homes.”
£450 million over three years
The scheme has a committed budget of £450 million over three years from 2022-2025, with an annual budget allocation of £150 million and property owners will be able to get:
- £5,000 off the cost and installation of an air source heat pump
- £5,000 off the cost and installation of a biomass boiler
- £6,000 off the cost and installation of a ground source heat pump
In its Heat and Buildings Strategy, the government committed to working with industry to help meet the aim of heat pumps costing the same to buy and run as fossil fuel boilers by 2030, with big cost reductions of between a quarter and a half by 2025 expected as the market expands and technology develops.
Mass roll out of heat pumps across the UK
The Boiler Upgrade Scheme is designed to kickstart the mass rollout of heat pumps across the country in a similar way that government grants have accelerated the uptake of electric vehicles.
Business and energy minister Lord Callanan said: “We want to make it easier and more cost-effective for homeowners to move away from using expensive fossil fuels for heating. The Boiler Upgrade Scheme means they can make the switch to more efficient, greener alternatives today in an affordable and practical way.”
CEO and founder of Octopus Energy Group Greg Jackson said: “Heat pumps are up to four-times more energy efficient than gas boilers but they need to come down in price. The Government’s new scheme will not only reduce the cost – often to the same price as a boiler – but it’ll kickstart an industry so that sooner or later we won’t need subsidies. The scheme is super simple and we are already seeing it help families move to cheaper green heating.”
Boiler Upgrade Scheme is being administered by Ofgem.
Ofgem director of delivery and schemes Philippa Pickford said: “Ofgem is helping to create the infrastructure for net zero to thrive so we have clean, affordable and secure home-grown energy. Heat pumps are a proven scalable option to heat homes and businesses without reliance on fossil fuels.”
Laura Bishop, chair of the Ground Source Heat Pump Association said: “The GSHPA welcomes the launch of the Boiler Upgrade Scheme and grants of £6,000 for ground source heat pumps. Together with zero VAT, the scheme should help reinforce consumer confidence in investing in ground source heat pumps, but we’d like to see more Government ambition for the scheme. The GSHPA is urging Government to increase funding significantly for the Boiler Upgrade Scheme, so that it can make a more important contribution to domestic heat pump uptake and the transition to low carbon heat.”
Phil Hurley, chair of the Heat Pump Association said: “The Heat Pump Association welcomes the launch of the Boiler Upgrade Scheme and the financial support it will provide to those who opt for a heat pump. An upfront financial incentive like this will not just help to kickstart the industry by making the technology more accessible but will also provide heating installers with the confidence boost they need to upskill.
“With the capacity to train 40,000 installers each year, we have made huge strides as an industry to improve the heat pump training pathway, and we are hopeful that this scheme will inspire the workforce to take up the opportunities available.
Capacity to train 40,000 installers each year
“Heat pumps represent a readily available and long-term solution to fossil fuel heating and the scheme is a big step towards kickstarting the mass rollout needed to grow the sector and put the UK economy on track to meet net zero.”
Ian Rippin, MCS CEO said: “The Boiler Upgrade Scheme is a huge opportunity to increase momentum of the home heating revolution and an integral part of the shift towards net zero. We welcome the BUS as part of the drive to make home-grown energy more accessible and affordable. With heat pump installations and contractor certifications at an all-time high, this is the perfect time for a strong financial incentive for people to decarbonise their home heating.”
Charles Wood, Energy UK, deputy director of policy (new energy services and heat) said: “Energy UK welcomes the Boiler Upgrade Scheme as a mechanism to deliver clean heat to households across the country.
“Aligning this scheme with the government’s objectives for improving the energy efficiency of homes, and delivering the smart meter roll out, will enable energy suppliers to decarbonise their customers’ homes faster and more affordably.”
Volatile global fossil fuel prices
Philippe Commaret, managing director of customers at EDF said: “Heat pumps are a proven, low carbon technology which will help customers significantly reduce their carbon emissions at home.
“The grants available through the Boiler Upgrade Scheme will help even more households switch to clean, electric heating now, reducing the UK’s dependence on gas and protecting customers from increasingly volatile global fossil fuel prices.”
Chris Carberry, director at Smart Solutions Scottish Power said: “Now is the time to really accelerate the delivery of both energy efficiency improvements and clean home heating solutions, such as electric heat pumps. This will help to reduce our dependence on gas and ease the upward pressure on energy bills for households.
“We strongly welcome the government’s new Boiler Upgrade Scheme with upfront grants for households to install a heat pump, and look forward to further progress on the Heat and Buildings Strategy.”
Home Insulation and Energy Systems Quality Assured Contractors Scheme chief executive Faisal Hussain said: “The Boiler Upgrade Scheme should help consumers transition from fossil fuel to low-carbon technologies such as heat pumps. This in turn will help the climate and should give us the platform to achieve net zero-carbon by 2050.”
Correctly installed in homes
Director of Consumer Codes at Renewable Energy Assurance Ltd (which administers the Renewable Energy Consumer Code (RECC)) Rebecca Robbins said: “RECC welcomes the Boiler Upgrade Scheme. We will continue to assist with the scheme by providing information and assistance to both our member installers and consumers. Our aim is to ensure that the grant-issuing process is well-understood and straightforward for all concerned so that take-up will be high.
“To meet its net zero targets government needs to scale up installations of low carbon heating systems including heat pumps and biomass boilers. But, if the Boiler Upgrade Scheme is to deliver cost efficiency and greenhouse gas emissions reductions, we must ensure that heating systems are well-designed and correctly installed in homes that are well insulated.”
E.ON UK CEO Michael Lewis said: “Most people don’t even realise their gas boiler is one of the biggest contributors to the climate crisis, but insulating our homes and switching to lower carbon forms of heating are among the most effective actions we can take.
“I’m convinced we can be optimistic about our ability to make heat pumps and decarbonising heat a British success story. We’re already one of the largest heat pump installers with hundreds of customers around the country benefiting from cleaner, greener home heating. The Boiler Upgrade Scheme gives extra support for anyone looking to replace fossil fuel heating systems and can only give households extra confidence to switch.