- The Boiler Upgrade Scheme cuts the cost of a heat pump by £7,500
- The scheme will end in 2028
- VAT on heat pumps has been slashed to 0% for the next five years
Following Ofgem’s latest Energy Price Cap announcement that energy prices will increase by 10% from 1 October, it’s worth considering if you can save by installing a heat pump.
It’s an investment, with the average cost of a heat pump being between £6,000 and up to £30,000.
There are grants available, however, to help lower the cost you’ll pay, like the Boiler Upgrade Scheme (BUS), which offers £7,500 off of the price of heat pumps.
In this guide, we’ll go into more detail about the BUS and others available, as well as eligibility. We’ll also cover alternative ways to fund heat pumps if you’re not eligible for any of the grants.
If you’ve already done your research and are ready to receive quotes on heat pumps, fill out our form and our trusted suppliers will be in touch with free quotes.
UK heat pump grants – at a glance
1. The Boiler Upgrade Scheme – provides heat pump grants in England and Wales
2. ECO4 – provides heat pump grants in England, Scotland and Wales
3. Warmer Homes Scotland – provides heat pump grants in Scotland
4. Nest – provides heat pump grants in Wales
5. Home Upgrade Grant – provides heat pump grants in England
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What government grants are available for heat pumps?
There are currently a number of government grants available. While most of these schemes provide financial support to cover some heat pump costs, others cover all of the cost to help low-income households.
Use the table below for an overview of available grants:
Am I eligible for free heat pump grants?
The eligibility criteria for heat pump grants vary significantly depending on which one you apply for. For example, you might need to live in a specific type of property, as well as meet certain income or financial criteria. You might also need to live in a building with a low energy efficiency rating.
It’s important that before you apply, you understand and meet all of the eligibility requirements. Doing this can help save time and frustration. Typically, the organisation overseeing the grant will include the requirements and publish them on the relevant scheme’s website.
Below, you can find out each scheme in more detail, as well as how it works, eligibility requirements and the pros and cons of each.
The Boiler Upgrade Scheme
The Boiler Upgrade Scheme aims to help people replace their boilers with a more eco-friendly alternative, like heat pumps.
The scheme will now run until 2028, instead of its original 2025 date, following the March 2023 government announcement of its latest Net Zero strategy.
Despite the benefits of the scheme, just over a quarter of the public are aware of the scheme and the Warm Homes Discount, according to our latest National Home Energy Survey.
How does it work?
With this grant, homeowners in England and Wales are able to get £7,500 off the cost of a new air source or ground source heat pump, or £5,000 towards a biomass boiler.
You will need to work with a MCS-certified heat pump installer, who will apply on your behalf.
Using the BUS will reduce the average heat pump cost from £10,000 to £2,500, a massive saving.
What’s more, according to our calculations, a heat pump for the average household will save you £4,340 compared to a gas boiler, over its lifeplan.
Unfortunately, the government is dedicating a relatively paltry £450m to this scheme, meaning a maximum of just 60,000 homes will be able to take advantage of the grant over its first three years, so jump on it while you can.
Eligibility requirements for the Boiler Upgrade Scheme
All homeowners, small landlords and private landlords in England and Wales are eligible to apply for the grant.
However, they must meet the following requirements to be eligible:
- Have a valid EPC rating
- You aren’t planning to install a hybrid heat pump system, such as a gas boiler and air source heat pump
- The system you install has to meet certain standards, such as minimum efficiency levels, which your installer can advise you on
- Have a capacity of less than 45kWh
- You must be replacing a fossil fuel heating system, such as oil, gas, or electric
Earlier this year, Ofgem updated its insulation guidance for BUS. The scheme’s new guidance means that homeowners will no longer be required to install cavity wall or loft insulation in order to qualify for the scheme.
The change in guidance is aimed at removing a significant barrier to heat pump adoption, and accelerate the UK’s transition away from natural gas boilers.
Although the BUS is open to both domestic and non-domestic properties in England and Wales, there are some properties that won’t qualify.
The government states that new-build properties are not eligible for the scheme, with the exception of self-builds that have either been “built mainly using the labour or resources of the first owner” or have never been owned by a business or organisation.
The BUS is also not available for social housing or any properties that have already received a heat pump or biomass boiler installation, funded by the government or an Energy Company Obligation (ECO) scheme.
How to apply for the Boiler Upgrade Scheme
If you’re interested in applying for the BUS, the good news is that the process is pretty simple – you mostly let the installer do the hard work.
The homeowner’s part of the application can be broken down into three simple steps:
- Contact a suitable MCS-certified installer, who will provide you with a quote for a heat pump installation. You can find a list of qualified installers on the MCS website.
- Once you’ve chosen an installer, they’ll ask you a few questions to confirm whether you’re eligible for the scheme.
- You’ll then agree on a quote with the installer, and they’ll begin the process.
Once you’ve carried out these three steps, the installer will apply for the BUS on your behalf through the Ofgem website.
To give you peace of mind, Ofgem will get in touch with you to confirm the installer is acting on your behalf. They might also contact you – either by phone or by visiting your property – to check the installation.
Once the application has been approved, the value of the grant will be taken off the amount you pay for the installation.
ECO4
ECO4 is the fourth stage of the government’s ECO scheme and aims to support low-income households who are unable to upgrade their homes and heating systems.
One of the key ways the scheme supports people is by replacing old boilers with greener alternatives, such as heat pumps and biomass boilers. The scheme can also provide solar photovoltaics (PV) in all electrically heated homes – but only if a biomass machine or District Heat Network are unsuitable.
How does it work?
To get support from ECO4, homeowners need to get in touch with one of the energy suppliers that are offering the scheme. They’ll then be taken through a telephone assessment, which will cover a few key topics, including income, whether they receive certain benefits, and their property’s energy efficiency rating.
The installer will then arrange a date to visit your home and confirm whether it’s suitable for the grant.
Think you’d benefit from ECO4? Check Ofgem’s list of energy suppliers to get started.
Eligibility requirements for the ECO4 scheme
The ECO4 scheme aims to support low-income and vulnerable households, and the eligibility requirements, according to Ofgem are:
- Your home has a low EPC rating (usually this means a ‘D’ rating or below)
- Your home must also have an existing electric heating system
- You are living at private domestic premises. If you do not own your own home, you must have the permission of your landlord, including if your property is owned by a social housing provided or management company
You could also be eligible if you receive at least one of the following benefits, meet the income requirements, and your home is classed as being in need of any energy efficiency improvements:
- Child benefit
- Income-based Jobseekers Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Income support (IS)
- Pension Credit Guarantee Credit (PCGC)
- Working Tax Credit and Child Tax Credit
- Universal Credit
- Housing Benefit
- Pension Credit Savings Credit (PCSC)
Remember, it is up to energy suppliers to decide which energy efficiency measures they want to fund, and how much funding they provide. You might be asked to contribute to the cost of your heat pump installation.
How to apply for the ECO4 scheme
There are a few options when it comes to applying for the ECO4 scheme, and they’re all pretty straightforward.
You can apply through the Gov UK website, or you can reach out to your energy supplier if they are considered to be an obligated supplier.
These include:
- British Gas: application portal
- E (Gas and Electricity): Email ECO@E.org
- E.ON Energy: application portal
- Ecotricity: Email compliance@ecotricity.co.uk
- EDF Energy: application portal
- Octopus Energy: application portal
- Outfox the Market: email hello@outfoxthemarket.co.uk or call 0800 103 2702
- OVO Energy: application portal
- Scottish Power: application portal
- Shell Energy: email eco@shellenergy.co.uk
- SO Energy (including ESB Energy): application portal or email eco@so.energy
- The Utility Warehouse: call 0333 777 0777
- Utilita Energy: application portal
Once you’ve applied using the online applications above, you’ll receive an email containing a unique reference number and a document. You will be asked for your permission to contact the Department of Work and Pensions to confirm your benefits.
You will then be contacted to arrange a free survey. This survey will be a 10-15 minute inspection of your home’s energy efficiency measures and is designed to be as minimally intrusive as possible.
Once completed, your application should be approved.
Home Energy Scotland Grant and Loan
The Home Energy Scotland Grant and Loan is for homeowners that reside in Scotland and enables them to get up to £15,000 as a grant. For heat pumps, this is a maximum of £7,500.
The amount you can get depends on what improvements you want to make, and for some improvements, the maximum grant is less. The good news is that you do not need to have to pay it back. You can also get an interest-free loan to cover some of the costs as well.
If you live in a rural area, you can apply for extra grant funding. You could get:
- Up to £1,500 extra for energy efficient improvements
- Up to £1,500 extra for clean heating systems, like heat pumps
You are not eligible for the scheme if you’re a:
- Private landlord
- Business
- Property developer
If you qualify and want to apply, contact Home Energy Scotland using the following methods:
- Phone 0808 808 2282 – Monday to Friday, 8am to 8pm, and Saturday 9am to 5pm
- Complete a contact form – An adviser from Home Energy Scotland will then get in touch
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. And for this scheme, the Scottish Government will usually meet all the costs.
In the event you do, you’re able to apply for an interest-free loan to cover them.
With the Warmer Homes Scotland scheme, funding is limited to:
- Central heating, including air source heat pumps
- Renewables
- Wall and loft insulation
- Draught-proofing
You won’t be able to receive funding for work that has already been completed or non-approved installers.
Homeowners and private tenants can apply if they meet the eligibility criteria for both their households and homes.
You need to have lived in your home for at least six months, unless you’re terminally ill. You also can’t apply if you’ve been supported by Warmer Homes Scotland since October 2023.
The requirements for your households are:
- Your household needs to have someone over 75 and has no central heating
- OR if someone is terminally ill – they’ll need to have a DS1500 or BASRiS certificate completed by a medical professional
- Receiving certain benefits
The requirements for your home are:
- It’s in council band A to F
- It’s your main home
- It has a poor energy rating – Warmer Homes Scotland can check this for you
- It has a floor area of 230m2 or less
- It’s fit to live in
If you qualify and want to apply, contact Home Energy Scotland using the following methods:
- Phone 0808 808 2282 – Monday to Friday, 8am to 8pm, and Saturday 9am to 5pm
- Complete a contact form – An adviser from Home Energy Scotland will then get in touch
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)
Home Upgrade Grant
Various local councils have been awarded funding under the second phase of the Home Upgrade Grant, which will help provide energy-efficient upgrades and clean heating systems to low-income households.
The scheme will run until March 2025, where it will have provided up to £630m to different authorities.
You can find a list of the local councils that have been granted funding on the government website.
How does it work?
The Home Upgrade Grant provides councils with 20% of funds as an upfront payment to help them resource and mobilise their projects.
There are various checks that councils will need to go through, including a questionnaire about their projects and how they intend to support low-income communities.
From the residents’ point of view, if you want to get involved in the scheme, you’ll need to start by checking whether your council is actually involved in the scheme.
If they are, they’ll ask you a number of questions to check your eligibility and assess how exactly they can help you. Although some households could be suitable for a green heating system, others might simply need more insulation installed.
Eligibility requirements for the Home Upgrade Grant
To access the Home Upgrade Grant, you’ll need to:
- Be living in a low-income household, with a combined gross annual income of less than £31,000.
- Be off the gas grid
- Have an Energy Performance Certificate between D & G
- Live in one of the local authority areas listed
Private rented properties are also eligible for the grant – but only if the landlord has four properties or fewer. Landlords are also required to contribute one-third of the total cost of any upgrades.
0% VAT
A zero rate applies to the installation of certain specific energy-saving materials from 1 May 2023 to 31 March 2027.
This applies to the groundworks necessary for the installation of ground and water source heat pumps.
Research the right pump for you, though, as every home is different. From here, talk to different installers about costs. If you don’t know where to start, simply fill in this form for a free quote across multiple suppliers.
How to get heat pumps for less without a grant or a loan
If you can’t afford to install a heat pump and don’t qualify for a grant and you would rather not take a loan or spread the cost over several months or years in some cases, try shopping around to find the cheapest option.
We can help by putting you in touch with our trusted suppliers. All you need to do is put in some details about your home using this form, and we’ll do the rest.
Expired heat pump grants
Over the past few years, the government and energy suppliers have introduced several different grants, some of which haven’t worked or have been restructured into other schemes.
These are:
- The Renewable Heat Incentive
- The Green Homes Grant
Expired: Renewable Heat Incentive (RHI)
In previous years, homeowners could install heat pumps and get paid for the energy they produce by joining the government’s Renewable Heat Incentive scheme. The scheme also covered biomass boilers and solar water heating systems.
However, the Incentive ended in March 2022, and has been replaced with the Boiler Upgrade Scheme.
Expired: The Green Homes Grant
The Green Homes Grant expired in March 2021 after only six months in operation. The Grant was a £2bn government initiative that aimed to cover two-thirds of the cost of home improvements aimed at reducing energy bills and carbon emissions, up to £5,000.
The grant you would have received was based on several eligibility factors, but if you received income-based or eligibility or disability benefits, the government would have paid 100% of your green home improvements, up to £10,000, including ground and water source heat pumps.
The scheme was due to run until March 2022 before it was cancelled, but the government only issued 39,000 vouches, just 6.5% of the original 600,000 target.
What’s more, more than 80% of homeowners reported poor experiences with the rollout process, and the application process was complicated whereby homeowners had to do a lot of work to receive funding.
How to avoid heat pump grant scams
There appear to be several fraudulent websites online that ostensibly claim to help you get funding you may be eligible for.
However, these sites are completely fraudulent and should be avoided at all costs.
Follow these simple steps to avoid getting scammed:
- Be wary of unsolicited offers: exercise caution when dealing with cold calls or emails offering solar incentives. Government agencies typically don’t target homeowners this way
- Seek official websites: check official government or grant websites to confirm that any offers that claim to be related to a scheme are genuine
- Verify identities: if you suspect you’re dealing with a scammer, ask them to confirm their identity. Representatives of legitimate businesses should be happy to provide you with official documentation
- Contact authorities: contact the relevant government departments or consumer protection agencies for advice concerning the legitimacy of any company or offer you’re uncertain about
How much do heat pumps cost without grants?
Without a grant, heat pumps can cost anywhere from £7,000 to over £30,000 to buy an install, depending on the size of your home and the type you’re getting.
An air source heat pump costs around £10,000 on average, whereas a water source heat pump can vary between £6,000 to £11,000.
This is a lot, but when you consider a heat pumps lifespan of 30 years, on average, which is 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.
You’ll also help the climate and avoid costly gas price rises.
What do I do if I don’t qualify for any heat pump grants?
The eligibility requirements on grants can be quite strict, so it’s worth seeing if you can receive funding on finance to help spread the cost.
Below are two examples of potential options for you.
Alternatively, consider other ways to help reduce your bills using our guide ‘Twelve ways to cut your carbon footprint’. All these ideas will, of course, help you reduce bills as a result.
Octopus Energy and Lloyds Bank heat pump grant
Lloyds Bank and Octopus Energy partnered in 2022 to help further reduce the cost of installing a heat pump. The scheme is open to existing Lloyds Bank customers, with Octopus current installing heat pumps in England & Wales.
You can receive the following benefits:
- £100 bill credit on your Octopus Energy account for all Lloyds Bank customers
- £2,000 cashback if you have a Lloyds Bank mortgage, qualify for its Eco Home Reward and have a Club Lloyds account at point of claim.
- Up to £7,500 towards your heat pump installation if you qualify for a government grant
You can request a quote from Octopus Energy’s website.
Aira’s green energy tariffs
Clean energy giant Aira launched two new green energy tariffs for its customers in the UK and Germany, as part of its strategy to expand its services and offer better access to clean energy tech across Europe.
The 100% green energy tariffs are powered by Octopus Energy and aim to help its users reduce energy costs, lead more sustainable lifestyles and drive decarbonisation.
The main tariff for Aira heat pump customers is Aira Zero. It enables them to maximise energy cost savings and reduce CO2 emissions.
It can help save German households up to €800 and UK households up to £500 on their annual energy bills.
Next steps
For a lot of people, the Boiler Upgrade Scheme is the main initiative 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 up the process, trying 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.
FAQs
Can I get a grant to install an air source heat pump?
All homeowners, small landlords, and private landlords in England and Wales can get a £7,500 Boiler Upgrade Scheme grant to install an air source heat pump.
Be quick, though: there are only 60,000 grants available.
If you live in Scotland or Wales and are a homeowner or private renter, you may even be able to get a grant to cover the entire cost of installation, by applying for either Warmer Homes Scotland or Nest Wales.
Who qualifies for a heat pump grant?
In England and Wales, you just need to be a homeowners, small landlord, or private landlord to qualify for a Boiler Upgrade Scheme grant.
To qualify for a Warmer Homes Scotland grant, you must be a homeowner or private renter in Scotland, and receive certain benefits.
And if you live in Wales, you can qualify for a Nest grant if you have an energy-inefficient home that you own or privately rent, and receive a means-tested benefit or have a chronic circulatory, respiratory, or mental health condition.
Can I get an air source heat pump for free?
If you live in Scotland or Wales, you may be able to get an air source heat pump for free.
If you qualify for a Warmer Homes Scotland or Nest grant, the authorities in your country will decide how much you should receive.
In some cases, they will completely cover the cost of your new heating system, meaning you can get an air source heat pump for free.
Do you need bigger radiators with air source heat pump?
Most homes in the UK need bigger radiators to get the most out of having an air source heat pump.
On average, these households will have to replace one-third of their radiators with versions that are 2.5 times bigger.
These larger radiators are the best way to disperse the relatively low heat provided by heat pumps.
