Government unveils Boiler Upgrade Scheme


New grants of £5,000 will be available from April next year to encourage homeowners to install more efficient, low carbon heating systems, like heat pumps that do not emit carbon when used, through a new £450 million three-year Boiler Upgrade Scheme.

According to government, these grants mean people choosing to install a heat pump will pay a similar amount as if they were installing a traditional gas boiler.

Through the Heat and Buildings Strategy, the government has set out its plan to incentivise people to install low-carbon heating systems in ‘a simple, fair and cheap’ way as they come to replace their old boilers over the coming decade.

This is set to ‘significantly reduce’ the UK’s dependency on fossil fuels and exposure to global price spikes, whilst supporting up to 240,000 jobs across the UK by 2035.

Business and Energy Secretary Kwasi Kwarteng commented on the announcement: “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 long term.

“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.”

The £450 million Boiler Upgrade Scheme is part of more than £3.9 billion of new funding announced by the government for decarbonising heat and buildings.

The £3.9 billion of new funding for decarbonising heat and buildings from 2022 to 2025 will be broken down as follows:

  • £1.425 billion through the Public Sector Decarbonisation Scheme
  • £950 million for the Home Upgrade Grant scheme
  • £800 million for the Social Housing Decarbonisation Fund
  • £450 million for the Boiler Upgrade Scheme
  • £338 million for the Heat Network Transformation Programme

Over the coming years, industry leaders expect electric heat pumps will cost the same as gas boilers to buy and run.

UK manufacturers are already making electric heat pumps more attractive to consumers and more affordable and the government wants to incentivise consumers to make the switch as quickly as possible.

To ensure electric heat pumps will be no more expensive to run than gas boilers, ministers want to reduce the price of electricity over the next decade by shifting levies away from electricity to gas.

A call for evidence is expected to be published with decisions made in 2022.

According to media reports, the new scheme is expected to fund 90,000 heat pumps.

Professor Matthew Leach, Professor of Energy & Environmental Systems at the University of Surrey, commented the announcement to ICON: “Heat pumps will play an important part in the UK’s plan to drive down greenhouse gas emissions to tackle climate change.

“While I welcome the Government’s announcement that grants will be available to subsidise heat pump installation, it’s crucial that this is only a first step in a long-term commitment to bring heat pumps into the mainstream, alongside other measures to improve the efficiency of our buildings.

“90,000 heat pumps is a small step on the UK’s net-zero carbon pathway; the expectation is that this stimulates suppliers to reduce costs and innovate in the technology so that future installations need less government support to be affordable, but this process of ‘learning by doing’ needs consistent and long term government policy.”

The announcement has been welcomed across the energy industry.

Greg Jackson, CEO and founder of Octopus Energy, commented: “This Heat and Buildings Strategy will help kick-start a cheap clean heating revolution, by bringing prices down for households and allowing companies to invest in scaling up their clean heating operations.

“When the new scheme launches in April, Octopus Energy will install heat pumps for about the same cost as gas boilers.

“Octopus has already committed £10 million investment to its research and development and training centre dedicated to the decarbonisation of heat, and has begun training engineers at the rate of 1,000 per year.

“But this is just the beginning. By scaling up the technology and supply chain in Britain, innovative companies like ours will soon be able to fit and run heat pumps without any government support, bringing us one step closer to making the UK the Silicon Valley of Energy and creating thousands of clean energy jobs throughout the country.

“Electric heat pumps are more efficient, safer and cleaner than gas boilers and can help make homes more comfortable with less energy.

“Today we’ve crossed a massive milestone in our fight against climate change and to reduce Britain’s reliance on expensive, dirty gas.”

To help grow the electric heat pump market and expand British manufacturing, a new £60 million Heat Pump Ready innovation programme is also being announced, part of the £1 billion Net Zero Innovation Portfolio.

Laura Bishop, Chair of the Ground Source Heat Pump Association, added: “The Ground Source Heat Pump Association warmly welcomes the release of the Heat and Buildings Strategy.

“We look forward to a consistent policy environment which will drive growth in our sector and the UK economy on the path towards achieving Net Zero.

“Ground source heat pumps represent a long-term infrastructure asset which delivers unrivalled efficiencies in generating clean heat, and we hope the policy will underpin the mass market roll out we have been anticipating for some time.”

The Heat and Buildings Strategy is available on the UK Government website.