Are There Government Grants for Air Source Heat Pumps?

✔ The Boiler Upgrade Scheme will pay you £5,000 to buy an air source heat pump

✔ The scheme will run until April 2025

✔ VAT on heat pumps has been slashed to 0% for the next five years

Air source heat pumps are taking the world by storm. Despite this, they only account for 5% of the world's heating – although, they have the potential to supply more than 90% of global space and water heating (The International Energy Agency, 2020).

To encourage more people to invest in low-emission heat pumps, the UK government is offering a number of grants to Brits – including the Boiler Upgrade Scheme, which will offer up to £5,000 off the price of heat pumps.

Not only will this make eco-friendly heating more affordable for people around the country, but it’ll also help the UK hit its target of net-zero emissions by 2050. However, not every home in the UK is suitable for heat pumps, so make sure to do your research before investing!

Want to hear more about which heat pump grants are on offer, and – more importantly – whether you’ll qualify for them? Scroll down, and we’ll tell you everything you need to know.

If you’re ready for a change and would like to compare your options, it’s time to get in contact with local suppliers. Simply pop a few details in our easy-to-use tool, and we’ll get you in touch with experts in the area who will give you free heat pump quotes.

What’s on this page?

What government grants are available for heat pumps?

There are currently a number of government grants up for grabs. While most of these schemes provide financial support to cover some of the cost of air source heat pump installation, others cover all of the cost to help low-income households.

So, what schemes are in place to help Brits afford heat pumps? Let’s take a look.

The Boiler Upgrade Scheme

Initially called the Clean Heat grant, the Boiler Upgrade Scheme aims to help people replace their boilers with a more eco-friendly alternative, like heat pumps.

Running from April 2022 until April 2025, this scheme will replace the Domestic Renewable Heat Incentive (RHI), which will close to new applicants on 31 March 2022.

How does it work?

With this grant, homeowners in England and Wales will be able to get £5,000 off the cost of a new air source heat pump from April 2022 – and £6,000 off the price of a ground source heat pump.

The scheme will operate on a “first-come, first-served basis,” with customers having to rush to register their interest with air or ground source heat pump installers.

Overall, this will reduce the average cost of an air source heat pump from £10,000 to £5,000, which is a massive saving – and enough to allow you to break even.

According to our calculations, a heat pump for the average household will break even just before the end of its 20-year lifespan, and will ultimately save you £100 over a gas boiler.

Unfortunately, the government is dedicating a relatively paltry £450 million to this scheme, meaning a maximum of just 90,000 homes will be able to take advantage of the grant over the next three years – so jump on it while you can.

Who’s eligible for the scheme?

All homeowners, small landlords, and private landlords will be eligible to apply for the grant.

However, all applicants must have a valid Energy Performance Certificate (EPC) – typically one which has been issued in the last 10 years – with no outstanding recommendations for loft or cavity wall insulation.

While we don't yet know the precise details on how applying for grants will work, the government has proposed two stages of application:

• Applying for the voucher — This will be led by the homeowner and will take place before installation 
• Redeeming the voucher — This will be led by the installer, which will confirm proof of the installation

Renewable Heat Incentive (RHI)

Once your heat pump is installed, you can actually get paid for the energy you produce by joining the government’s Renewable Heat Incentive (RHI) scheme.

The scheme covers biomass boilers, solar water heating systems, and certain heat pumps.

Remember, this initiative will end in March 2022, and will be taken over by the Boiler Upgrade Scheme.

How does it work?

In a bid to encourage the use of renewable heat technologies, the RHI scheme provides quarterly cash payments for the energy that domestic heat pumps produce.

Payments are made over a period of seven years, through the Domestic RHI scheme, and are based on the amount of renewable heat generated by your system.

Who is eligible for the RHI?

You can apply for the RHI scheme if you live in either England, Scotland, or Wales. You’ll also need to:

• Own your home
• Be a private or social landlord
• Get a Microgeneration Certification Scheme (MCS) certificate for your heat pump
• Have an up-to-date domestic Energy Performance Certificate (EPC)

Generally, new-build properties won’t be eligible for the scheme – unless you’re building your own home.

Warmer Homes Scotland

The Scottish government’s Warmer Homes Scotland programme offers financial support to low-income households struggling to keep on top of energy bills.

How does it work?

Households can access the scheme by calling Home Energy Scotland, which will analyse which home improvements should be made. Any eligible households will then be put in touch with Warmworks, the managing agent of the Warmer Homes grant.

The scheme covers wall insulation, loft insulation, draught-proofing, boilers and heating, and renewable and micro-renewable heating systems.

Who’s eligible for Warmer Homes Scotland?

To get a heat pump grant through Warmer Homes Scotland, applicants must:

• Be a homeowner or the tenant of a private sector landlord
• Live in the home as their main residence
• Have lived there for at least 12 months
• Live in a home that is no bigger than 230 square metres, with an energy rating of 67 or lower
• Live in a home that meets the tolerable living standard set out in the Housing (Scotland) Act 2006
• Not have received support for energy efficiency improvements through Warmer Homes Scotland funding in the last five years

The individual must also be one of the following:

• A pensioner with no working heating system, who is also in receipt of a passport benefit
• Aged 75 or older, and in receipt of a passport benefit
• Pregnant and/or caring for a child under 16, and in receipt of a passport benefit
• Someone with a disability, who is also in receipt of any level of Personal Independent Payment (PIP)
• Someone with a disability, who is also in receipt of high rate Disability Living Allowance (DLA)
• Someone with a disability, who is also in receipt of low/medium rate Disability Living Allowance (DLA), and in receipt of an income-related benefit
• A carer in receipt of Carers Allowance
• Someone who has been injured or disabled serving in the Armed Forces, and is in receipt of Armed Forces Independence Payment/War Disablement Pension
• Someone who has an injury or disability from an accident or disease caused by work, and is in receipt of Industrial Injuries Disablement Benefit

Nest Wales

Created by the Welsh Government, Nest aims to reduce the impact of fuel poverty in Wales by making low-income homes more energy efficient.

How does it work?

If a household is struggling to pay energy bills, they can call Nest’s helpline (run by the Energy Saving Trust), which analyses whether they’re eligible for support.

If the household meets certain criteria, they will be referred to British Gas, which will then conduct a “whole house assessment” – a property survey that analyses which home improvements should be made.

The benefits available under the Nest scheme include:

• A new central heating system
• A new energy-efficient boiler
• Cavity wall insulation
• External wall insulation
• Internal wall insulation
• Loft insulation
• Room thermostats and heating controls
• Water tank and pipe insulation
• Air source heat pump
• Ground source heat pump
• Draught-proofing

Who’s eligible for Nest?

If you’d like to get support from Nest, you must:

• Own or privately rent your home (not from a local authority or housing association)
• Have an energy inefficient home that is expensive to heat
• Receive a means-tested benefit, or have a chronic respiratory, circulatory, or mental health condition

The means-tested benefits that qualify are:

• Child Tax Credit (with an income below £16,105 a year)
• Council Tax Reduction
• Housing Benefit
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Income Support
• Pension Credit
• Universal Credit
• Working Tax Credit (with an income below £16,105 a year)

How much do heat pumps cost without grants?

Installing a typical heat pump system costs around £10,000 to £13,000.

This sounds like a lot, but when you consider that heat pumps typically last for 20 years – twice as long as the average gas boiler – it makes a little more sense.

Running costs will vary depending on a number of factors, including the size of your home, how well insulated it is, and what room temperatures you are aiming to achieve.

On average though, when you include all costs, you'll save £100 by getting a heat pump instead of a gas boiler.

Plus of course, you'll help the climate and avoid costly gas price rises.

How much money can you save with heat pumps?

The amount of money you’ll save with heat pumps will depend on what energy system they’re replacing.

To give you a better idea, we’ve outlined how much money you could save by switching to heat pumps from different systems in the chart below. These figures are based on the installation of a standard air source heat pump in an average four-bedroom detached home in England, Scotland, or Wales.

Data from the Energy Saving Trust, June 2021

How much can you reduce your carbon footprint with heat pumps?

Similar to annual savings, the amount of CO2 you’ll reduce by using heat pumps will depend on what system you use now. But, as you can see in the chart below, you can reduce your emissions drastically by switching from every system – whether old or new.

Data from the Energy Saving Trust, June 2021

To put this into perspective, let’s compare these CO2 reductions to an everyday task – like driving a car.

On average, a new diesel car will emit 127 grams of CO2 per kilometre.

If we apply this to the smallest CO2 reduction of 2,350kg (swapping from a new electric storage heater), that’s the equivalent of driving 18,503km every year with a new diesel car. As for the largest saving of 11,300kg of CO2 a year (swapping from coal), that’s the same as driving 88,976km.

Since the average person drives 11,900 km a year, that means swapping coal for a heat pump is the same as taking 7.4 cars off the road each year.

Next steps

For a lot of people, the Boiler Upgrade Scheme is the main scheme that will help them afford heat pumps.

But if you simply can’t wait, why not get a head start on your research? It’s a good idea to figure out what heat pumps actually are, how to find the best models, and how to get the most affordable options.

Luckily, we’ve got everything you need to know waiting for you on our pages below – and if you're already on board, it’s time to get a heat pump for your home. To speed up the process, try using our custom-built tool.

All you have to do is provide a few quick details about your property, and we’ll put you in touch with our expert heat pump suppliers, who will send you free quotes to compare.

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