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Government Announces An Increase To The Heat Pump Grant

Air source heat pump grant increases to £7.5k

We’ve been covering the UK’s journey towards a greener future, and in September 2023, Prime Minister, Rishi Sunak made an announcement regarding the heat pump grant introduced in 2021.

When the grant was initially announced, the UK Government revealed that the treasury would be providing £450 million to the public to encourage households to install heat pumps. This was to be available via a grant of up to £5,000, with the hope that we would phase gas boilers out of homes across England and Wales.

Now, with the latest announcement, this grant has been increased to £7,500 for each installation of air source or ground/water source heat pumps as part of the Boiler Upgrade Scheme (BUS).


How Does The Grant Increase Work?

Beginning in October 2023, these adjustments have come into effect. However, if you’ve already benefited from a BUS grant, you won’t be able to claim any additional funding.

For those currently holding a live voucher, it retains its original value—£5,000 for air source heat pumps or biomass boilers and £6,000 for ground/water source heat pumps. However, you have the option to forfeit your existing voucher and reapply for a new one at the enhanced value once the changes take effect.


Why Has The Grant Increased?

The idea behind the grant is to help cover the cost of heat pump installation. The government believe that with the extra funding, households will only need to pay out the same as a boiler installation.

However, this formerly wasn’t the case. Energy Efficiency Infrastructure Group, which includes WWF, the CBI and Eon UK, calculated that the grant would need to be nearer £6,000 to make the above statement true. (Source: Financial Times).

So with the grant being increased to £7,500, heat pumps have become more accessible to households. But again, this won’t be the case for everyone.

Heat pumps typically cost from £8,000  to £45,000, making them out of reach for most of the population – even with the increased grant.

And that’s not to mention that monthly energy costs wouldn’t be cheaper with a heat pump. Despite being more efficient than gas, electricity currently remains more costly.


Gas Boiler

How Effective Is This Strategy?

While there’s a prevailing message suggesting a seamless shift from gas boilers to heat pumps for households, the reality is less straightforward. Most existing homes, unless purpose-built, will likely need significant modifications to accommodate heat pump installations.

And, with the UK discontinuing new builds with gas boilers from 2025 and banning new gas boilers by 2035, there’s a looming challenge.

Currently, new developments are still underway without the necessary infrastructure for future heat pump integration, and experts emphasize that beyond the heating device cost, considerations for insulation, underfloor heating, and larger radiators must be addressed—raising the important question of who will bear these additional expenses.

Dr David Glew, head of energy efficiency and policy at the Leeds Sustainability Institute at Leeds Beckett University, has said:

“Needing to insulate your house might cost you tens of thousands of pounds and you’re only going to be saving several hundreds of pounds, so the economics of that doesn’t really add up.”

And again, this is only possible for those who can alter their homes. For anyone living in a listed or older building, renovations of this kind wouldn’t be possible.


In Conclusion.

The Heat Pump Grant stands as a potential opportunity for certain homeowners and professionals in the heating industry. However, it’s important to acknowledge that, like any initiative, it may not be suitable for everyone. Factors such as individual preferences, property considerations, and specific heating needs should all be taken into account when evaluating the viability of adopting heat pumps.

To put it simply, each home needs an assessment before heat pumps are installed. It’s not a one-size-fits-all situation.

For more news, updates, and guidance, visit our Going Green Guide or our Tradesperson Guide.

All data correct at time of publication.