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The New Heat Pump Grant: Is It Good Enough?

The Boiler Upgrade Scheme cuts at least £5,000 off the cost of a heat pump

But only 90,000 homes will benefit – at most

And there’ll still be around £5,000 left to pay for a new heat pump

The Boiler Upgrade Scheme will make it significantly easier for households to afford heat pumps.

The government initiative, which runs from April 2022 to April 2025, will reduce the cost of air source heat pumps by £5,000, and cut the price of ground source heat pumps by £6,000.

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.

heat pump outside a home

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 £5,000 out of your own pocket.

Although this financial help is useful, some have argued that it's simply not enough – with 69% of people stating that cost is the most important factor when evaluating which low-carbon product to purchase.

The gap in funding is even more significant for ground source heat pumps, which typically require you to spend £14,000 to get them fully set up, according to the Energy Saving Trust.

With the government discounting each unit by £6,000, that means you’ll still be charged around £8,000.

The grant also won’t cover any of the running costs of your new heat pump, which are currently £280 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.

As of July 2022, electricity costs 28p per kilowatt hour (kWH) — it's expected to rise to 47p per kWh in October 2022.

If the cost of electricity decreases over the next few years, and the price of gas keeps climbing, it may 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 has risen from 17.2p per kWh to 28p per kWh in just over a year, 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.”

cat on a radiator

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 between 75,000 and 90,000 homes will be able to access the grant.

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, will result in 90,000 installations – 2.7% of the amount needed in 33% of the time we have left until 2030.

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?

Maybe. Cutting the cost of air and ground source heat pumps by £5,000 and £6,000 respectively is a positive move, but it’s not enough for most households.

It would still cost a household £5,000 or £8,000 to buy a heat pump and overhaul their existing heating system.

That’s a lot to ask of families dealing with the fallout of the COVID-19 pandemic, rising energy prices, and an increasingly high cost of living.

A heat pump will provide an average 20-year saving of £100 over a gas boiler, according to our research, but most families can’t afford the initial payment.

The Boiler Upgrade Scheme’s success will also live or die by how well the government publicises it, and after 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 will only last three years, and 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. The Green Homes Grant was intended to last for 18 months, but was cancelled after just six. If the government repeats its mistakes, we could see another heat pump grant before the end of 2022.

If you want to save £5,000 or £6,000 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.

josh jackman
Josh Jackman Senior Writer

Josh has written about eco-friendly home improvements and climate change for the past three years. His work has featured on the front page of the Financial Times; he’s been interviewed by BBC One; and he was the resident expert in BT’s smart home tech initiative.

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