Thousands more households will be able to get a free £7,500 grant to put toward the cost of a heat pump after the Government confirmed extra funding.
The Department for Energy Security and Net Zero (DESNZ) has committed an extra £30million in funding this financial year for its Boiler Upgrade Scheme, which is part of its wider Warm Homes Plan. The budget is set to be almost doubled next financial year as well, to £295million.
On top of this, the Government has announced it will change planning rules that require heat pumps to be at least one metre from the property boundary, after figures from Octopus Energy showed 34% of those who order a heat pump are put off or cancel their order due to planning permission. There will be around £3.2 billion in funding for warmer homes in 2025/26, helping around 300,000 households, officials said.
Heat pumps are being widely looked at as the replacement for gas boilers. They're often described as "like a fridge in reverse" as they extract energy from the air, the ground or water, then it transfers the heat to where it is needed.
The Government said heat pumps used effectively with a smart “time of use” electricity tariff could save around £100 a year compared to a gas boiler, while better insulation could cut bills by around £200 a year.
But they’re expensive to install. The Energy Saving Trust estimates that an air source heat pump can cost between £14,000 and £19,000 to install, while a ground source heat pumps can cost between £28,000 and £34,000.
Minister for energy consumers Miatta Fahnbulleh said: “The idea at the heart of our Warm Homes Plan is a simple one – all families deserve the security of a home they can afford to heat. But for too long, that has been out of reach for far too many people who have been left with draughty homes and sky-high bills. That is why we are taking immediate action today to make cleaner heating available to more households.”
Boiler Upgrade Scheme - what you need to know
To apply for the Boiler Upgrade Scheme, you must live in England or Wales and own your property. You must be replacing fossil fuel heating systems - this can include oil, gas, electric or LPG (liquefied petroleum gas) - with a heat pump or biomass boiler, and have a valid Energy Performance Certificate (EPC).
If you're eligible, you could get £7,500 towards an air source heat pump, £7,500 towards a ground source heat pump, or £5,000 towards a biomass boiler. As this is a grant, the money doesn't need to be paid back to the Government.
You don't apply for the Boiler Upgrade Scheme grant yourself - instead, you need to find an MCS-certified installer to claim the grant on your behalf. Homeowners can find the cheapest and nearest tradesman on the MCS website - make sure you compare prices to get the best quote.
Once you agree a price, the installer will then apply for the grant. You'll then be contacted by Ofgem to confirm that the work is being done on your behalf. You new heat pump must also be installed within 120 days of applying for the grant, otherwise the grant won't be valid.