The new heat pump grant: is It good enough?

✔ The Boiler Upgrade Scheme cuts at least £7,500 off the cost of a heat pump

✔ But only 60,000 homes will benefit in its first three years

✔ And there’ll still be around £2,500 left to pay for a new heat pump

The Boiler Upgrade Scheme will make it significantly easier for households to afford greener heating systems, reducing heat pump costs by £7,500.

You won’t need to fill in a lengthy application, either – if you register your interest with an installer, they can apply on your behalf, then include the discount in your purchase.

This is a welcome step, but is the grant big enough to make switching over your entire heating and hot water system profitable? We’ve analysed the data to answer that question for you.

And if you want to find out how much you could save by using the Boiler Upgrade Scheme, just use our simple comparison tool.

Once you’ve filled in a few details, our suppliers will be in touch with quotes for you to compare. You’ll find the right deal in no time.

Will the grant cover the costs?

The Boiler Upgrade Scheme will not completely cover the costs. The purchase and installation of an air source heat pump comes to £10,000 on average, which means you’ll pay £2,500 out of your own pocket.

Although this financial help is useful, some have argued that it’s simply not enough – with high energy bills preventing 43% of Brits from buying green tech, according to our National Home Energy Survey.

The gap in funding is even more significant for ground source heat pumps, which typically require you to spend around £24,000 or £49,000 for a horizontal or vertical installation respectively, according to the Energy Saving Trust.

With the government discounting each unit by £7,500, that means you’ll still pay either roughly £16,500 or £41,500.

The grant also won’t cover any of the running costs of your new heat pump, which are currently around £244 per year more expensive than a gas boiler.

Heat pumps are three times more efficient than gas boilers, but unfortunately, electricity still costs four times as much as gas.

Electricity currently costs 27.35p per kilowatt hour (kWh). While that’s still very expensive, it’s less expensive than it was at the height of the energy crisis.

We expect the cost of electricity to decrease over the next few years, and the price of gas to keep climbing, meaning it’ll become cheaper to run a heat pump than a gas boiler – but for now, it’s more expensive.

Greenpeace UK’s Caroline Jones also called the grant insufficient, saying: “Sadly, the government has stopped short of what’s required to transform our housing into the clean, affordable, energy efficient homes that we all want and need to be living in.

“Housing is one of the hardest sectors to decarbonise but the government is making it all the more difficult by leaving half its tools in the toolbox, with unambitious policies and inadequate funding.

“More money must be provided to rapidly increase the number of homeowners switching to heat pumps over the next few years, with full costs covered for families on low incomes.”

And shadow energy secretary Ed Miliband said: “As millions of families face an energy and cost of living crisis, this is a meagre, unambitious and wholly inadequate response. People can’t warm their homes with yet more of Boris Johnson’s hot air, but that is all that is on offer.”

Will heat pump costs decrease over time?

The cost of heat pumps will fall by 40% over the next decade, according to research by Delta-EE.

If the government maintains its current level of subsidies, that would put the average cost of an air source heat pump 10 years from now at just £1,000.

And a ground source heat pump would cost an extremely reasonable £2,400.

However, the price of electricity is four times higher than gas, which makes heat pumps more expensive.

But Reading University professor Jacopo Torriti said the outlook was brighter than you may think.

Professor Torriti told The Eco Experts: “We will have to brace for a period of high prices into 2022, but then predictions are better all the way to 2030.”

He added: “The good news is that if we switch heating to electricity in the future, then we will be less dependent on gas – and with more generation coming from renewable sources, energy prices will be lower (and more volatile).

“I don’t see the price of electricity as an obstacle to the uptake of electric vehicles and heat pumps. Quite the opposite: charging electric vehicles (especially at night) will become cheaper than using petrol, and this will trigger further uptake of electric vehicles.”

Heat pump running costs

A ground source heat pump’s running costs for a three-bedroom household will typically come to around £939 per year.

The average air source heat pump will cost about the same, though this can vary significantly, depending on where you live in the UK.

Will the grant help the UK achieve net zero targets?

The grant will help, but just barely.

That’s because the government has dedicated a relatively tiny £450 million to the initiative, which means just 60,000 homes will be able to access the grant in its first three years.

This ensures that the grant will scarcely make a dent in the UK’s residential emissions, let alone its total carbon footprint.

There are 23.6 million homes with gas boilers in the UK, which is why the CCC has said the government needs to install at least 3.3 million heat pumps by 2030 to reach its goal of net-zero emissions by 2050.

This grant, even if it’s enthusiastically snapped up by the public – and it hasn’t been so far, due to government negligence – will result in 60,000 installations.

That’s 2.7% of the amount needed in 33% of the time we have left until 2030.

Plus, with 73% of Brits unaware of the government’s heat pump grant, it’s unlikely that the uptake will be as high as hoped.

If you work in an orchard with thousands of trees, and you pick a single apple during a harvest, have you helped the orchard to reach its goal of picking all the fruit?

Technically, yes. But you may as well not have bothered.

And if you’re the only one who’s able to pick apples, it means there won’t be a harvest.

Will people get behind the grant?

They haven’t got behind it so far, because for the most part, they don’t know it exists.

Cutting the cost of air and ground source heat pumps by £7,500 is a positive move, but the uncertainty that comes with a new heating method puts a lot of people off.

It would cost the average household £2,500 to buy an air source heat pump.

That’s less than a gas boiler, though with rising energy prices meaning electricity still costs considerably more than gas, a heat pump’s running costs are still higher.

A heat pump will provide an average 20-year saving of £4,891 over a gas boiler, according to our research, but only because its lifespan is 5-10 years longer.

The Boiler Upgrade Scheme’s success will also live or die by how well the government publicises it, and after its awful first year and the disastrous farce that was the Green Homes Grant, we have our doubts.

Will there be new grants in the future?

There will almost certainly be more government grants for heat pumps in the coming years.

The Boiler Upgrade Scheme won’t get the country anywhere near the government’s own goal of installing 600,000 heat pumps per year by 2028.

If this government is serious about heat pumps taking a prominent role in our green, zero-emissions future, it will have to invest more money into lowering the cost for consumers.

A new grant also may come sooner rather than later. After all, the Green Homes Grant was intended to last for 18 months, but was cancelled after just six.

If you want to save £7,500 while the scheme still exists, just pop a few details in this quick form to receive free heat pump quotes tailored to you and your family’s needs.